<PAGE> 1
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended April 23, 1994
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission File No. 0-2633
VILLAGE SUPER MARKET, INC.
- - -----------------------------------------------------------------
(Exact name of registrant as specified in its charter)
NEW JERSEY 22-1576170
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
733 Mountain Avenue, Springfield, New Jersey 07081
(Address of principal executive offices) (Zip Code)
(201 467-2200
Registrant's telephone number, including area code
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No__.
Indicate the number of shares outstanding of the issuer's classes
of common stock as of the latest practicable date.
<TABLE>
<CAPTION>
June 1, 1994
<S> <C>
Class A, Common Stock, No Par Value 1,315,800 Shares
Class B, Common Stock, No Par Value 1,594,076 Shares
</TABLE>
<PAGE> 2
VILLAGE SUPER MARKET, INC.
INDEX
<TABLE>
<CAPTION>
Part I Page No.
Financial Information
<S> <C>
Item 1. Financial Statements
Consolidated Condensed Balance Sheets -
April 23, 1994 and July 31, 1993 . . . . . . . . . . . 3
Consolidated Condensed Statements of
Income - Thirty-eight and Thirteen Weeks Ended
April 23, 1994 and April 17, 1993. . . . . . . . . . . 4
Consolidated Condensed Statements of
Cash Flows - Thirty-eight Weeks
Ended April 23, 1994 and April 17, 1993 . . . . . . . 5
Notes to Consolidated Condensed Financial
Statements . . . . . . . . . . . . . . . . . . . . . . 6
Item 2.
Management's Discussion and Analysis of
Financial Condition and Results of
Operations . . . . . . . . . . . . . . . . . . . . . . 7-9
Part II
Other Information
Item 2. Change in Securities . . . . . . . . . . . . . . 10
Item 3. Defaults upon Senior Securities. . . . . . . . . 10
Item 6. Exhibits and Reports on Form 8-K . . . . . . . . 10
Signatures . . . . . . . . . . . . . . . . . . . . . . . 11
Exhibit 99(a). . . . . . . . . . . . . . . . . . . . . . 12
Exhibit 99(b). . . . . . . . . . . . . . . . . . . . . . 13
Exhibit 4(a) . . . . . . . . . . . . . . . . . . . . . . 14
</TABLE>
<PAGE> 3
Part I. FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
VILLAGE SUPER MARKET,INC.
CONSOLIDATED CONDENSED BALANCE SHEETS
(Dollars in Thousands)
<TABLE>
<CAPTION>
April 23, 1994 July 31, 1993
ASSETS
<S> <C> <C>
Current assets
Cash and cash equivalents $ 1,540 $ 6,619
Merchandise inventories 26,715 26,246
Patronage dividend receivable 2,449 2,950
Miscellaneous receivables 3,715 4,852
Prepaid expenses 490 569
Total current assets 34,909 41,236
Property, equipment and fixtures,net 71,496 74,131
Investment in related party 9,396 9,055
Goodwill, net 11,226 11,404
Other intangibles, net 3,112 3,299
Other assets 1,622 2,262
Total assets $131,761 $ 141,387
======== =========
</TABLE>
<TABLE>
<CAPTION>
LIABILITIES AND SHAREHOLDERS' EQUITY
<S> <C> <C>
Current liabilities
Current portion of long-term debt $ 5,300 $ 5,179
Long term debt reclassified current 22,100 --
Accounts payable to related party 23,566 23,400
Accounts payable and accrued exp 11,803 14,522
Deferred income taxes 535 438
Total current liabilities 63,304 43,539
Long-term debt, less current portion 11,399 39,470
Deferred income taxes 4,386 5,148
Shareholders' equity
Class A common stock - no par value,
issued 1,762,800 shares (including
447,000 in treasury at April 23, 1994
and July 31, 1993) 18,127 18,127
Class B common stock - no par value
1,594,076 shares issued and
outstanding 1,037 1,037
Retained earnings 39,693 40,251
Less cost of treasury shares (6,185) (6,185)
Total shareholders' equity 52,672 53,230
Total liabilities and
shareholders' equity $ 131,761 $ 141,387
========= =========
</TABLE>
See accompanying notes to consolidated condensed financial statements.
<PAGE> 4
VILLAGE SUPER MARKET, INC.
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(Dollars in Thousands Execpt Per Share Amounts)
<TABLE>
<CAPTION>
13 Week End 13 Week End 38 Week End 38 Week End
Apr 23,1994 Apr 17,1993 Apr 23 1994 Apr 17,1993
<S> <C> <C> <C> <C>
Sales $ 171,776 $ 169,431 $ 507,228 $ 510,056
Cost of sales 129,930 128,190 383,545 386,088
Gross margin 41,846 41,241 123,683 123,968
Operating and
administrative expense 40,402 37,698 115,663 113,232
Depreciation and
amortization expense 2,098 2,200 6,420 6,613
Operating income (loss) ( 654) 1,343 1,600 4,123
Interest expense 931 1,041 2,815 3,223
Gain (loss) on disposal
of assets (300) --- (381) 1,703
Income (loss) before
provision for income
taxes and cumlative
efffect of accounting
change (1,885) 302 (1,596) 2,603
Provision for income tax
expense (benefit) (754) 120 (638) 1,040
Income (loss) before
cumulative effect of
acccounting change (1,131) 182 (958) 1,563
Cumulative effect as of July
31, 1993 of change in method
of accounting for income
taxes --- --- 400 ---
Net income (loss) $ (1,131) $ 182 $ (558) $ 1,563
========== ========= ========== =========
Net income (loss) per share:
Weighted average
number of common shares
outstanding 2,909,876 2,909,876 2,909,876 2,909,876
Income (loss) before
cumulative effect
of accounting change $ (.39) $ .06 $ (.33) $ .54
Cumulative effect of
accounting change --- --- .14 ---
Net income (loss) $ (.39) $ .06 $ (.19) $ .54
========== ========== =========== =========
</TABLE>
See accompanying notes to consolidated condensed financial statements.
<PAGE> 5
VILLAGE SUPER MARKET, INC.
CONSOLIDATED CONDENSED STATEMENT OF CASH FLOWS
(Dollars in Thousands)
<TABLE>
<CAPTION>
38 Weeks Ended 38 Weeks Ended
April 23, 1994 April 17, 1993
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ (558) $ 1,563
Adjustments to reconcile net income (loss)
to net cash provided by operating activities:
Cumulative effect of accounting change (400) ---
Depreciation and amortization 6,420 6,613
Provision to value inventories at LIFO 500 300
(Gain) loss on disposal of assets 381 (1,703)
Changes in assets and liabilities:
(Increase) decrease in inventory (969) 697
Decrease in patronage dividend receivable 501 707
Increase(decrease in misc. receivables 1,137 (1,300)
Decrease in prepaid expenses 79 ---
Decrease in other assets 640 266
Increase (decrease) in accounts payable to
related party 166 (1,330)
(Decrease) in accounts payable
and accrued expenses (2,719) (766)
(Decrease) in income taxes payable ( 265) (240)
Net cash provided by operating activities 4,913 4,807
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (3,859) (1,302)
Investment in related party (341) (450)
Proceeds from sale of asssets, net 58 2,235
Net cash provided (used)
in investing activities (4,142) 483
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of long-term debt 10,000 ---
Principal payments of long-term debt (15,850) (3,853)
Net cash used by financing activities ( 5,850) (3,853)
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS ( 5,079) 1,437
CASH AND CASH EQUIVALENTS,
BEGINNING OF PERIOD 6,619 5,324
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 1,540 $ 6,761
========= =========
</TABLE>
See accompanying notes to consolidated condensed financial statements.
<PAGE> 6
VILLAGE SUPER MARKET, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
1. In the opinion of the Company, the accompanying unaudited consolidated
condensed financial statements contain all adjustments (consisting of normal
and recurring accruals) necessary to present fairly the financial position as
of April 23, 1994 and July 31, 1993 and the results of operations and cash
flows for the thirty-eight and thirteen weeks ended April 23, 1994 and April
17, 1993.
The significant accounting policies followed by the Company are set forth
in Note 1 to the Company's financial statements in the July 31, 1993 Village
Super Market, Inc. Annual Report.
Effective August 1, 1993, the Company adoped FASB Statement No. 109,
"Accounting for Income Taxes." Under Statement 109, the liability method is
used in accounting for income taxes. Under this method, deferred tax assets
and liabilities are determinded based on differences between financial
reporting and tax bases of assets and liabilties and are measured using the
enacted tax rates and laws that will be in effect when the differences are
expected to reverse.
As permitted by Statement 109, the Company has elected not to restate the
financial statements of any prior years. There was no effect from the change
in accounting on pretax income for the thirty-eight and thirteen weeks ended
April 23, 1994. The cumulative effect of the change increased net income by
$400,000 ($.14 per share) in the quarter ended October 23, 1993.
2. The results of operations for the thirty-eight weeks ended April 23, 1994
are not necessarily indicative of the results to be expected for the full
year.
3. At both April 23, 1994 and July 31, 1993 approximately 66% of the
merchandise inventories are valued by the LIFO method while the balance is
valued by FIFO. If the FIFO method had been used for the entire inventory,
inventories would have been $6,311,000 and $5,811,000 higher than reported
at April 23, 1994 and July 31, 1993, respectively.
<PAGE> 7
Item 2.MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
- - ------------------------------------------------------------------------------
RESULTS OF OPERATIONS
Sales for the third quarter of fiscal 1994 were $171,776,000, an increase
of 1.4% from the third quarter of the prior year. Same store sales increased
2.8% this quarter, which was partially offset by lower sales from closed
stores. Same store sales increased in the third quarter as a result of
additional promotional spending and possibly some improvement in the local
economy. Sales for the thirty-eight weeks ended April 23, 1994 were
$507,228,000, a slight decrease from the prior year. Same store sales
increased 1.7% in this period, which was offset by stores closed since a year
ago.
Gross margins as a percentage of sales for both the quarter and thirty-
eight weeks ended April 23, 1994 were 24.4% compared with 24.3% in both
corresponding prior year periods. High levels of sale item penetration and
price competition in the marketplace have prevented further increases in gross
margins.
Store operating and administrative expenses as a percentage of sales for
the quarter and thirty-eight weeks ended April 23, 1994 were 23.5% and 22.8%,
respectively, compared with 22.2% in the corresponding prior year periods.
The principal reason for these increases was the higher level of promotional
spending, chiefly couponing, which began in the second quarter and increased
further in the third quarter. Although the additional promotional spending
was partially responsible for the increase in same store sales, a larger sales
increase was expected in order to offset the cost of these coupons. Inclement
weather contributed to the lower than expected sales and also increased snow
removal costs. In addition, fringe benefit costs increased.
Interest expense decreased in both the quarter and nine month period in
fiscal 1994 due to lower debt levels and lower interest rates.
A net loss of $81,000 on the sale of the Morristown store was recorded in
the first quarter of fiscal 1994. An additional loss of $300,000 was recorded
in the current quarter due to the failure of the Company's former sub-lessee
to make required rent payments. The prior year nine month results include a
pretax gain of $1,703,000 on the sale of the Kingston store.
<PAGE> 8
LIQUIDITY AND FINANCIAL RESOURSES
On March 29, 1994 the Company replaced its expired $20,000,000
revolving/term loan agreement with a new $30,000,000 loan agreement with two
banks. The new agreement consists of a $10,000,000 term loan, a $12,000,000
revolving loan and a $8,000,000 convertible revolving loan. At April 23, 1994
the only balance outstanding on this facility was the $10,000,000 term loan
bearing interest at 8.49%, with monthly principal payments of $55,555 being
August 1, 1994 and a final principal payment of $5,555,556 due April 1, 2001.
The $12,000,000 revolving loan, which can be used for any purpose except
new store construction, matures March 31, 1997. Any balances outstanding
carry interest at prime or libor based interest rates at the Company's option.
The $8,000,000 convertible revolving loan is to be used only for capital
expenditures. Any amounts outstanding on this loan carry interest at either
fixed rates or prime or libor based interest rates at the Company's option.
Amounts may be borrowed through December 31, 1995. Principal repayments are
required based on the amounts borrowed with a loan maturity date of January 1,
2001.
At April 23, 1994 the Company does not meet the required interest coverage
ratio in this loan agreement. This constitutes an event of default under this
loan agreement. The Company is engaged in discussions with the two banks
regarding this situation. Without the further consent of the banks the
Company will not be allowed to borrow under the $8,000,000 convertible
revolving loan portion of the credit facility.
The Company also fails the current ratio required in another loan
agreement, which is an event of default. In addition the Company does not
meet a required coverage ratio in this agreement. Without a waiver, this
would prevent the Company from borrowing additional funds, executing new
leases or declaring dividends. Discussions are also underway with this
lender.
As a result of the events of default described above, the Company has
reclassified $22,100,000 of long term debt as a current liability in the April
23, 1994 balance sheet. There is no indication at this time that any of the
three lenders intend to request immediate payment of these amounts.
<PAGE> 9
Current liabilities exceed current assets by $28,395,000 at April 23, 1994
as compared to $2,303,000 at July 31, 1993. The current ratio decreased to
.55 at April 23, 1994 compared to .95 at July 31, 1993. These two changes
are primarily attributable to the reclassification of long term debt to
current liabilities in the amount of $22,100,000 discussed above.
The Company is currently in the process of remodeling two stores. A
remodel and expansion of an additional store is planned to begin shortly. A
planned expenditure for 1994 had been the purchase of land for a new
superstore. As this store has not yet received planning board approval, this
expenditure has been rescheduled for fiscal 1995.
<PAGE> 10
PART II
OTHER INFORMATION
Item 2. Changes in Securities.
On March 29, 1994 the Company entered into a $30,000,000 loan
agreement with two banks. The new bank agreement requires that the Company
maintain minimum levels of tangible net worth, interest and fixed charge
coverage ratios and maximum debt to tangible net worth ratios and capital
expenditure levels. Payment of dividends is also limited to 20% of the excess
of net income above $1,000,000 if all other financial covenants are met.
Item 3. Defaults Upon Senior Securities.
At April 23, 1994 the Company is not in compliance with the required
interest coverage ratio in the new loan agreement. This constitutes an event
of default. The Company is engaged in discussions with the two banks
regarding this situation.
The Company also fails the current ratio required in another loan
agreement, which is an event of default. In addition, the Company does not
meet a fixed charge coverage ratio in this agreement. Without a waiver, this
would prevent the Company from borrowing additional funds, executing new
leases or declaring dividends. Discussions are also underway with this
lender.
Each of these two agreements are cross defaulted with the other
agreement. There is no indication at this time that any of the three lenders
intend to request immediate payment of the loan amounts outstanding.
Item 6. Exhibits and Reports on Form 8-K
6(a)Exhibits:
Exhibit 4(a) Loan Agreement dated March 29, 1994
Exhibit 99(a) Press Release dated May 24, 1994.
Exhibit 99(b) Second Quarter Report to Shareholders
6(b) Reports on form 8-K.
None.
<PAGE> 11
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 thereunto duly authorized.
Village Super Market, Inc.
Registrant
Date: June 2, 1994 /s/ Perry Sumas
Perry Sumas (President)
Date: June 2, 1994 /s/ Kevin R. Begley
Kevin R. Begley
(Chief Financial Officer)
<PAGE> 1 EXHIBIT 99.A
VILLAGE SUPER MARKET, INC. REPORTS A NET LOSS
FOR THE THIRD QUARTER AND NINE MONTHS ENDED APRIL 23, 1994
Springfield, N.J. - May 24, 1994 - Village Super Market, Inc. reported a net
loss for the third quarter and nine months ended April 23, 1994, Perry Sumas,
President announced today.
In the third quarter, the Company had a net loss of $1,131,000. This compared
with net income of $182,000 in the third quarter of the prior year. Sales for
the quarter were $171,776,000, an increase of 1.4% from the prior year.
The loss for the quarter was principally attributable to an increase in
promotional spending, chiefly couponing. Although the additional promotional
spending was partially responsible for increased same store sales of 2.8%, a
larger sales increase was expected in order to offset the cost of these
coupons. Inclement weather contributed to lower than expected sales and also
caused increased snow removal costs.
Also contributing to the loss for the third quarter were lower than expected
gross margins, increased fringe benefit costs and an increase in the loss
recorded on the sale of the Morristown store due to the failure of the
Company's sublessee to make rent payments.
For the nine month period, the net loss was $558,000, which includes an
increase to net income of $400,000 for the cumulative effect of a change in
the method of accounting for income taxes. This compares with net income in
the prior year of $1,563,000, which includes a gain, net of tax, of $1,022,000
on the sale of a store. Sales for the nine months were $507,228,000. Same
store sales increased 1.7% for the nine month period.
At April 23, 1994, the Company did not meet the financial ratios required by
its debt agreements with three lenders. This constitutes an event of default
under these agreements. The Company is scheduled to meet with its lenders to
review this situation.
Village Super Market, Inc. owns and operates a chain of twenty-four
supermarkets under the Shop-Rite name in New Jersey and Eastern Pennsylvania.
The following table summarizes Village's results for the quarter and nine
months ended April 23, 1994.
<TABLE>
<CAPTION>
13 Weeks Ended
April 23, 1994 April 17, 1993
<S> <C> <C>
Sales $171,776,000 $169,421,000
Net Income (Loss) $ (1,131,000) $ 182,000
Net Income (Loss) Per Share $ (.39) $ .06
38 Weeks Ended
Sales $507,228,000 $510,056,000
Net Income (Loss) $ (558,000) $ 1,563,000
Net Income (Loss) Per Share $ (.19) $ .54
</TABLE>
LOAN AGREEMENT
Among
NEW JERSEY NATIONAL BANK
CHEMICAL BANK NEW JERSEY, NATIONAL ASSOCIATION
and
VILLAGE SUPER MARKET, INC.
March , 1994
<PAGE>
TABLE OF CONTENTS
Page
SECTION I - DEFINITIONS
1.1 Capitalized Terms.......................... 1
1.2 Interpretation............................. 12
SECTION II - REVOLVING LOAN
2.1 Amount of Loans............................ 13
2.2 Loans In Excess of Maximum................. 13
2.3 [Intentionally Omitted].................... 13
2.4 Principal Payment.......................... 13
2.5 Interest Payment........................... 13
2.6 Method of Borrowing........................ 13
2.7 Loan Selection............................. 15
2.8 Use of Proceeds............................ 15
2.9 Notes...................................... 15
2.10 Letters of Credit.......................... 16
2.11 Termination................................ 16
2.12 Interest Rates For Revolving Loan.......... 16
2.13 Calculation of Interest.................... 16
2.14 Increased Cost............................. 17
2.15 Indemnity Against Funding Losses or
Expenses................................ 18
2.16 Basis for Determining InterBank Rate
Inadequate or Unfair.................... 18
SECTION III - TERM LOAN
3.1 Term Note.................................. 19
3.2 Repayment.................................. 19
3.3 Interest Rate.............................. 19
3.4 Use of Proceeds............................ 19
SECTION IV - CONVERTIBLE REVOLVING LOAN
4.1 Amount of Loans............................ 19
4.2 Loans In Excess of Maximum................. 20
4.3 Conversion of Loans........................ 20
4.4 Principal Payments......................... 21
4.5 Payment of Interest........................ 21
4.6 Method of Borrowing........................ 21
4.7 Loan Selection............................. 23
4.8 Use of Proceeds............................ 25
4.9 Notes...................................... 25
4.10 Termination................................ 25
4.11 Interest Rates For Convertible
Revolver Loan........................... 25
4.12 Calculation of Interest.................... 26
4.13 Increased Cost............................. 26
4.14 Indemnity Against Funding Losses or........
Expenses................................ 27
4.15 Basis for Determining InterBank Rate
Inadequate or Unfair.................... 27
SECTION V - PAYMENTS, PROCEEDS AND TERM
5.1 Manner of Payment.......................... 28
5.2 Payment on Non-Banking Days................ 28
5.3 Late Payments.............................. 28
5.4 Prepayments................................ 28
5.5 Prepayment Fees............................ 28
5.6 Term....................................... 29
5.7 Interest Limits............................ 29
5.8 Borrowings................................. 29
5.9 Certain Notices............................ 30
5.10 Commitment Fees............................ 30
5.11 Payment Generally.......................... 30
5.12 Payments by Banks.......................... 31
SECTION VI - REPRESENTATIONS AND WARRANTIES
6.1 Organization and Authority................. 32
6.2 No Conflicting Agreements or Laws.......... 32
6.3 No Conflicting Litigation.................. 32
6.4 Ownership of Subsidiaries.................. 32
6.5 Liens Against Property..................... 33
6.6 Location of Property and Offices........... 33
6.7 Financial Information and Condition........ 33
6.8 Environmental Matters...................... 33
6.9 Taxes...................................... 34
6.10 Name and History........................... 34
6.11 Controlling Interests...................... 34
6.12 ERISA...................................... 35
6.13 Margin Stock............................... 35
6.14 Compliance with Loan Documents............. 35
6.15 No Claims or Offsets....................... 35
6.16 Compliance with Laws....................... 35
6.17 Wakefern................................... 35
6.18 Accuracy of Statements..................... 36
6.19 Survival................................... 36
SECTION VII - AFFIRMATIVE COVENANTS
7.1 Protection of Property..................... 36
7.2 Insurance.................................. 36
7.3 Financial Information...................... 38
7.4 Notices to Bank............................ 39
7.5 Further Assurances......................... 39
7.6 Complete Records........................... 40
7.7 Location of Offices........................ 40
7.8 Inspection of Property and Records......... 40
7.9 Bank Accounts.............................. 40
7.10 Debt to Tangible Net Worth................. 40
7.11 Decrease in Tangible Net Worth............. 41
7.12 Minimum Fixed Charge Coverage Ratio........ 41
7.13 EBIT to Interest Ratio..................... 41
7.14 Taxes and Laws............................. 42
7.15 Banks' Expenses............................ 42
7.16 Indemnification............................ 42
7.17 Cooperative Obligations.................... 42
7.18 Simultaneous Liens......................... 43
7.19 Closing Requirements....................... 43
SECTION VIII - NEGATIVE COVENANTS
8.1 No Liens................................... 43
8.2 Hazardous Substances....................... 43
8.3 Other Liabilities.......................... 43
8.4 Ownership and Organizational Changes....... 44
8.5 Dividend Limitations and Stock Repurchases. 44
8.6 Other Names................................ 45
8.7 Change in Fiscal Year...................... 45
8.8 Restricted Investments..................... 45
8.9 Different Business......................... 46
8.10 Prohibited Dispositions.................... 46
8.11 Management Changes......................... 47
8.12 Assignment of Leases....................... 47
8.13 Capital Expenditures....................... 47
8.14 Prepayments................................ 48
SECTION IX - EVENTS OF DEFAULT
9.1 Payments................................... 48
9.2 Other Obligations.......................... 48
9.3 Representations............................ 48
9.4 Consents................................... 48
9.5 Financial Information and Inspections...... 49
9.6 Insurance.................................. 49
9.7 Organizational Status...................... 49
9.8 Warrants and Tax Liens..................... 49
9.9 Tax Audit.................................. 49
9.10 Judgments.................................. 49
9.11 Lien on Property........................... 49
9.12 Loss or Destruction........................ 49
9.13 Insolvency................................. 50
9.14 Seizure of Property........................ 50
9.15 Note Purchase Agreement.................... 50
9.16 Leases..................................... 50
9.17 Enforceability............................. 50
9.18 Termination of Plan........................ 50
9.19 Other Liabilities.......................... 50
9.20 Material Adverse Change.................... 51
SECTION X - REMEDIES
10.1 Acceleration............................... 51
10.2 Other Remedies............................. 51
10.3 Terminate Financing........................ 51
10.4 Direct Recourse............................ 51
10.5 Other Creditor Remedies.................... 51
10.6 Collection Expenses........................ 51
10.7 Other Expenses............................. 52
10.8 Increase in Interest....................... 52
10.9 Additional Rights of Banks................. 52
10.10 Pari Passu................................. 52
SECTION XI - THE AGENT: RELATIONS AMONG BANKS, ETC.
11.1 Appointment, Powers and Immunities of Agent 52
11.2 Reliance by Agent.......................... 53
11.3 Defaults................................... 53
11.4 Rights of Agent as a Bank.................. 54
11.5 Indemnification of Agent................... 54
11.6 Documents; Notices......................... 55
11.7 Non-Reliance on Agent and Other Banks...... 55
11.8 Failure of Agent to Act.................... 56
11.9 Resignation or Removal of Agent............ 56
11.10 Amendments Concerning Agency Function...... 56
11.11 Liability of Agent......................... 57
11.12 Transfer of Agency Function................ 57
11.13 Non-Receipt of Funds the Agent............. 57
11.14 Several Obligations of Banks............... 57
11.15 Pro Rata Treatment of Loans, Etc........... 57
11.16 Sharing of Payments Among Banks............ 58
SECTION XII - MISCELLANEOUS PROVISIONS
12.1 Waiver..................................... 58
12.2 Written Modifications...................... 59
12.3 Demands and Notices........................ 59
12.4 Governing Law.............................. 59
12.5 Jurisdiction............................... 60
12.6 Partial Invalidity......................... 60
12.7 Successors and Assigns..................... 60
12.8 Additional Rights and Remedies............. 60
12.9 Further Assurances........................ 60
SECTION XIII - NO JURY TRIAL................... 60
EXHIBITS TO LOAN AGREEMENT
A CLOSING MEMORANDUM
B-1 REVOLVING NOTE (NJNB)
B-2 REVOLVING NOTE (CBNJ)
C-1 NJNB TERM NOTE
C-2 CBNJ TERM NOTE
D-1 CONVERTIBLE NOTE (NJNB)
D-2 CONVERTIBLE REVOLVER NOTE (CBNJ)
D-3 CONVERTIBLE REVOLVER NOTE - FIRST PRINCIPAL BALANCE
D-4 CONVERTIBLE REVOLVER NOTE - SECOND PRINCIPAL BALANCE
E SAMPLE OPINION OF COMPANIES' COUNSEL
F GUARANTY
G NOTICE OF BORROWING FORM
<PAGE>
NEW JERSEY NATIONAL BANK
LOAN AGREEMENT
This Loan Agreement is made this day of March, 1994,
AMONG NEW JERSEY NATIONAL BANK ("NJNB"), a New Jersey banking
corporation having its principal place of business at 51 John
F. Kennedy Parkway, Short Hills, New Jersey 07078; and
CHEMICAL BANK NEW JERSEY, NATIONAL ASSOCIATION, a national
banking association having an office at East 36 Midland
Avenue, Paramus, New Jersey 07652 ("CBNJ", each of CBNJ and
NJNB individually a "Bank" and collectively the "Banks"),
NEW JERSEY NATIONAL BANK, as agent for the Banks (in such
capacity, together with its successors in such capacity, the
"Agent")
AND VILLAGE SUPER MARKET, INC. (the "Borrower"), a New Jersey
corporation having its principal place of business at 733
Mountain Avenue, Springfield, New Jersey 07081,
Purpose: This Loan Agreement is intended to set the terms
of certain loans involving the Banks and the Borrower.
In exchange of the mutual covenants in the Loan Documents and
other good and valuable consideration, receipt and sufficiency of
which is hereby acknowledged, the parties to this Loan Agreement
hereby agree to the following terms, conditions and provisions:
SECTION I - DEFINITIONS
1.1 Capitalized Terms. The capitalized terms in this Loan
Agreement shall be defined as follows:
"Affiliate" of a Person means another Person who directly or
indirectly controls, is controlled by, or is under common control
with such Person.
"Banking Day" means any day excluding Saturday, Sunday and
any day that in the State of New Jersey is a legal holiday or a day
on which banking institutions are authorized by law to close.
"Basis Point" means one one-hundredth (.01) of a percentage
point.
"Borrower" means the "Borrower" named in the caption of this
Loan Agreement and its successors and assigns.
"Capital Expenditure" means expenditures which have been or
should be capitalized in accordance with GAAP, but excluding
expenditures under Capital Leases.
"Capital Lease" means any lease which has been or should be
capitalized on the books of the lessee in accordance with GAAP.
"COF" means each Bank's cost of funds for any borrowing
hereunder, as determined by each Bank severally in its sole
discretion.
"Collateral" means any Property in which the Banks have been,
or may be, granted an interest to provide security for any
Obligation, including all of the Borrower's present and future
deposit accounts of all kinds.
"Commitment" means in the aggregate initially $20,000,000
with respect to NJNB and $10,000,000 with respect to CBNJ, as such
amounts may be reduced from time to time pursuant to Sections 2.3
or 4.3 or otherwise hereunder, with the respective commitments as
to the individual credit facilities hereunder being as follows:
(a) Revolving Loan: NJNB - $8,000,000, CBNJ - $4,000,000; (b)
Term Loan: NJNB - $6,666,666.67, CBNJ - $3,333,333.33; and (c)
Convertible Revolver: NJNB - $5,333,333.33, CBNJ - $2,666,666.67.
"Commitment Letter" means the letter dated January 31, 1994
from the Banks to the Borrower that sets forth certain terms of the
loans that are being made pursuant to this Loan Agreement.
"Company" means any of Borrower and the Subsidiaries.
"Companies" means Borrower and all of the Subsidiaries.
"Conversion Dates" means the First Conversion Date and the
Second Conversion Date.
"Convertible Revolver" or "Convertible Revolver Loans" means
the revolving credit facility converting to a term loan provided
for in Article IV hereof.
"Convertible Revolver Notes" means collectively the
Convertible Revolver Notes of this date from Borrower to the order
of the Banks evidencing the Convertible Revolver, the Convertible
Revolver Notes to be dated as of each Conversion Date from the
Borrower to the order of the Banks and any amendments or
modifications thereof or substitutions therefor. A copy of each of
the initial Convertible Revolver Notes is annexed to this Loan
Agreement as "Exhibits D-1 and D-2". A copy of a form of
Convertible Revolver Note to be issued by the Borrower on each
Conversion Date is annexed to this Loan Agreement as "Exhibits D-3
and D-4."
"Current Maturities of Long Term Debt" means all payments
under notes, bonds, mortgages, Capitalized Leases and other
long-term indebtedness having an initial maturity of more than one
(1) year at inception, that will be due and payable by the
Companies within the next twelve (12) months after the applicable
balance sheet date, calculated on a consolidated basis in
accordance with GAAP, but excluding any balance due on the
Revolving Loan.
"Date of Closing" means the date of the execution and
delivery of this Loan Agreement.
"Debt to Tangible Net Worth Ratio" means the Companies' total
Liabilities over the Companies' Tangible Net Worth, calculated on
a consolidated basis in accordance with GAAP.
"Default" means any condition or event that, with notice or
lapse of time, would give rise to an Event of Default.
"EBIT" means Net Income of the Companies before interest
expense, taxes and any items of extraordinary income or expense,
all as computed in accordance with GAAP.
"EBIT to Interest Ratio" means, as of the end of each Fiscal
Quarter, EBIT (but excluding any gains or losses on the sale of any
stores) for the four (4) prior Fiscal Quarters (inclusive of the
most recently completed Fiscal Quarter) divided by total interest
expense for the Companies for such four Fiscal Quarters, all as
computed in accordance with GAAP; except that for the Fiscal
Quarter ended in January 1994, such Ratio shall be measured and
tested for only the one (1) Fiscal Quarter then ended and for the
Fiscal Quarter ended in April 1994, such Ratio shall be measured
and tested for only the two (2) Fiscal Quarters then ended.
"EBIT to Sales Ratio" means as of the end of each Fiscal
Quarter, EBIT before LIFO expense for the four (4) prior Fiscal
Quarters (inclusive of the most recently completed Fiscal Quarter)
divided by sales of the Companies for the same Fiscal Quarters, all
as computed in accordance with GAAP.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time, and the regulations promulgated
thereunder.
"Event of Default" means any event of default listed in
Section IX.
"Eurodollar Banking Day" means any Banking Day on which
dealings in dollar deposits are conducted by and among banks in the
London Eurodollar market and which is not a day on which banking
institutions in New York that serve as domestic correspondents for
the London Eurodollar market are authorized to close.
"Eurodollar Loan" means any portion of the Revolving Loan or
the Convertible Revolver that is based on the Eurodollar Rate.
"Eurodollar Margin" means a number of Basis Points determined
as follows:
If the EBIT to
Sales Ratio com-
puted at the end Then the Eurodollar
of the immediate- Margin for the current
ly prior Fiscal Fiscal Quarter shall
Quarter was: be:
< = .90 175 Basis Points
.91 to 1.00 160 Basis Points
1.01 to 1.30 150 Basis Points
> = 1.31 130 Basis Points.
"Eurodollar Period" means, as to each Eurodollar Loan, the
period commencing on the date specified by Borrower and ending on
a day that is a multiple of 30 days and is no more than 360 days
thereafter, as specified by Borrower in the applicable Notice of
Borrowing provided that:
(a) The first day of any Eurodollar Period shall be a
Eurodollar Banking Day;
(b) Any Eurodollar Period that would otherwise end on a day
that is not a Eurodollar Banking Day shall be extended to the
next succeeding Eurodollar Banking Day unless such Eurodollar
Banking Day falls in another calendar month, in which case
such Eurodollar Period shall end on the next preceding
Eurodollar Banking Day; and
(c) No Eurodollar Period shall extend beyond the Maturity
Date for the particular credit facility to which it is being
applied.
"Eurodollar Rate" means the rate per annum determined
pursuant to the following formula:
ED = [LIBOR]*
[ 1.00 - EDRP]
ED = Eurodollar Rate
LIBOR = London Interbank Offering Rate
EDRP = Eurodollar Reserve Percentage
(*the amount in brackets being rounded upwards, if necessary, to
the next higher 1/16 of 1%).
The Eurodollar Rate shall be adjusted automatically on and as of
the effective date of any change in the Eurodollar Reserve
Percentage as it applies to Eurocurrency liabilities, unless such
change does not effect the cost to the Banks of maintaining the
Eurodollar Loan during the Eurodollar Period.
"Eurodollar Reserve Percentage" means, with respect to
any Eurodollar Loan, the percentage applicable to new time deposits
representing the maximum aggregate incremental reserve, asset or
special deposit requirements of the Banks (disregarding any
offsetting amounts that may be available to the Banks to decrease
such requirements to the extent that such offsetting amounts arose
out of transactions other than those contemplated by this
Agreement) under Regulation D and any other applicable loan laws
with respect to new non-personal time deposits in an aggregate
amount equal to the amount of the Eurodollar Loan and for a time
period comparable to the number of days in the applicable
Eurodollar Period. The determination by the Banks of any
applicable Eurodollar Reserve Percentage shall be conclusive in the
absence of manifest error.
"First Conversion Date" means December 31, 1994.
"Fiscal Year" means the fiscal year for each Company
which is the 52 or 53 week period ending on the last Saturday of
the month of July of each calendar year.
"Fiscal Quarter" means the four fiscal quarters in each
Fiscal Year of the Borrower as adopted by the Borrower for
reporting purposes with the Securities and Exchange Commission
("SEC") or (if the Borrower is no longer a reporting company with
the SEC) as otherwise reasonably adopted by the Borrower in good
faith.
"Fixed Charge Coverage Ratio" means Net Income before
interest, taxes, LIFO, depreciation, amortization, gains and/or
losses on the sale of any store and rent expense for the four (4)
prior Fiscal Quarters (inclusive of the most recently completed
Fiscal Quarter) divided by the sum of interest expense, rent
expense, taxes and Current Maturities of Long Term Debt for such
period, all as computed in accordance with GAAP.
"GAAP" means generally accepted accounting principles,
consistently applied.
"Guarantor" means Village Liquor Shop, Inc., a wholly
owned subsidiary of the Borrower.
"Guaranty" shall mean the guaranty of Borrower's
Obligations to the Banks executed by Guarantor pursuant to a
Continuing Guaranty Agreement dated this date in favor of the Banks
in the form of "Exhibit F" to this Loan Agreement, as it may be
amended or supplemented from time to time.
"Hazardous Substance(s)" means any pollutants and
dangerous substances including radon, and any "hazardous wastes" or
"hazardous substances" as defined in the Industrial Site Recovery
Act (N.J.S.A. 13:1K-6 et seq.), the Spill Compensation and Control
Act (N.J.S.A. 58:10-23.11 et seq.), the Resource Conservation and
Recovery Act (42 U.S.C. 6901 et seq.), the Comprehensive
Environmental Responsibility Compensation and Liability Act (42
U.S.C. 9601 et seq.) or any other state or federal environmental
law or regulation.
"Interest Payment Date" means:
(a) as to any Prime Loan or any
Convertible Revolver Loan based on COF, the first day of
each month and the applicable Maturity Date;
(b) as to the Term Loan, the first
day of each month and the Term Loan Maturity Date;
(c) as to any Eurodollar Loan, the
last day of each Eurodollar Period; provided, however,
that when the applicable Eurodollar Period is 80 days or
more, interest shall also be payable on the fifteenth day
of the months of January, April, July and October.
"Interest Period" means any Prime Period or Eurodollar
Period.
"InsuRite" means Insure-Rite Ltd., a captive insurance
company owned by Wakefern, the Borrower and various other entities.
"Lending Office" means, for each Bank, the lending office
of such Bank designated on the signature pages hereof or such other
office of such Bank as such Bank may from time to time specify to
the Agent and the Borrower as the office by which its Loans are to
be maintained.
"Liabilities" means, at any date, (i) the amount of all
liabilities and obligations that, in accordance with GAAP, should
be classified as liabilities as shown on the liability side of a
consolidated balance sheet of the Borrower or Guarantor, as the
case may be at such date inclusive of all amounts for deferred
taxes and (ii) all guarantees and endorsements (including all
indebtedness and liabilities guaranteed, directly or indirectly in
any manner by Borrower or Guarantor, as the case may be).
"LIBOR" means with respect to any Eurodollar Loan the
rate at which the Agent is offered deposits in U.S. dollars at 4:00
p.m., London time, on the second Eurodollar Banking Day preceding
the date of such Borrowing in the London Interbank Eurodollar
Market for the relevant Eurodollar Period of the Eurodollar Loan
and in an amount approximately equal to the amount of such
Borrowing and in like funds. The Agent's determination of LIBOR
shall be conclusive in the absence of manifest error.
"Lien" means any mortgage, pledge, security interest,
encumbrance, collateral assignment, lien or charge of any kind
(including any agreement to give any of the foregoing), any
conditional sale or other title retention agreement or any lease in
the nature thereof.
"LIFO" means the LIFO provision for any period, computed
in accordance with GAAP.
"Loan" means any loan maintained by a Bank pursuant to
Sections II, III or IV hereof.
"Loan Agreement" means this Loan Agreement.
"Loan Document(s)" means this Loan Agreement, the
Guaranty and all documents, notes, assignments, certificates and
agreements of any kind listed, described or referenced on the
Closing Memorandum annexed to this Loan Agreement as "Exhibit A" or
otherwise executed in connection with this Loan Agreement.
"Maturity Date" means (a) as to any Revolving Loan, March
31, 1997 (the "Revolving Loan Maturity Date"), (b) as to the Term
Loan, April 1, 2001 (the "Term Loan Maturity Date") and (c) as to
the Convertible Revolver, January 1, 2001 (the "Convertible
Revolver Maturity Date").
"Net Income" means net income for the Companies
calculated on a consolidated basis in accordance with GAAP.
"Note Purchase Agreement" means collectively (a) the note
purchase agreement dated on or about August 18, 1987 involving
Borrower and Travelers, and (b) the note purchase agreement dated
on or about December 1, 1988 involving Borrower and Travelers, each
as amended from time to time.
"Notes" means collectively the Revolving Loan Note, the
Term Note and any Convertible Revolver Note.
"Notice of Borrowing" means the notice of borrowing as
described in Sections 2.6(A) and 4.6(A).
"Obligation(s)" means all debts, liabilities, duties and
obligations owing by any Company to either Bank, whether direct or
indirect, now existing or in the future created or acquired,
contingent or non-contingent, due or to become due, liquidated or
unliquidated, including those arising under the Term Loan,
Revolving Loan, Convertible Revolver, Prior NJNB Loan, commitments
of any kind by either Bank to, or on behalf of any Company, all
expenses of either Bank to protect its interests under any Loan
Documents, and all other debts and obligations relating to, or
arising under, this Loan Agreement or any other Loan Document.
"Obligor" means the Borrower or the Guarantor.
"Opinion Letter" means the opinion letter from the
Companies' counsel to the Banks and their counsel in the form
annexed as "Exhibit E" to this Loan Agreement.
"Permitted Encumbrance(s)" means any of the following:
(a) taxes, assessments and other governmental charges not yet due
and payable or that can be paid without penalty, or that are
currently being contested in good faith by appropriate proceedings;
provided, the Companies shall have set aside on their books
adequate reserves for any tax, assessment or other governmental
charge so being contested; (b) workmen's, repairmen's,
warehousemen's and carriers' liens and other similar Liens arising
in the ordinary course of business for charges not delinquent or
that are currently being contested in good faith by appropriate
proceedings provided, the Borrower shall have set aside on its
books adequate reserves for such Liens being contested; (c)
easements, rights of way, exceptions, encroachments, reservations,
restrictions, conditions or limitations that do not in the
aggregate materially interfere with or impair the intended use of
any property; (d) rights reserved to, or vested in, any
municipality or governmental or other public authority that do not
in the aggregate materially interfere with or impair the intended
operation or use of any property, (e) Liens against assets of any
Subsidiaries in favor of Borrower, (f) a purchase money mortgage in
favor of Norman Sevell on certain land in Westfield, New Jersey in
the original principal amount of $4,150,000, (g) liens on or in
shares of capital stock of Wakefern owned by Borrower to secure
Borrower's obligations to Wakefern to make capital contributions to
Wakefern and indebtedness owing to Wakefern with respect to the
purchase of inventory, (h) liens listed on Exhibit 6 to the
Principal's Certificate and consented to by the Banks, (i) liens
other than liens listed or described above securing in the
aggregate Liabilities of less than Two Hundred Fifty Thousand
Dollars ($250,000), and (j) liens in favor of the Banks.
"Permitted Dispositions" means (a) the sale or
disposition of the Companies' store facilities in Easton,
Pennsylvania, Florham Park, New Jersey, South Orange, New Jersey,
or Maplewood, New Jersey or its Bernardsville annex provided that
any such disposition is made in an arms length transaction or (b)
the sale or disposition of up to an aggregate of 50,000 square feet
of selling space of stores other than those listed in (a) above,
provided that any such disposition is made in an arm's-length
transaction, and provided further that the Revolving Loan has not
expired or otherwise matured or become due.
"Person(s)" means an individual, corporation,
partnership, limited partnership, limited liability company, joint
venture, trust, joint stock company, unincorporated organization,
association, governmental agency or political subdivision.
"Plan(s)" means each employee benefit plan maintained for
employees of any Company, as defined in Section 3(2) of the
Employee Retirement Income Act of 1974, as amended.
"Prime" or "Prime Rate" means the rate of interest that
NJNB adopts from time to time as its official Prime Rate. The
Prime Rate is not tied to any external rate of interest or index
and does not necessarily reflect the lowest rate of interest
actually charged at any given time by NJNB to any particular class
or category of customers of such Bank. Any change in the Prime
Rate shall be effective immediately when adopted by NJNB, without
notice to the Borrower.
"Prime Loan" means any Revolving Loan or Convertible
Revolver Loan based on the Prime Rate or any portion of any
Revolving Loan bearing interest at a rate that is based on the
Prime.
"Prime Period" means, as to each Prime Loan, the period
commencing on the Banking Day specified by the Borrower in an
applicable Notice of Borrowing or, as to any subsequent borrowing,
on the applicable Interest Payment Date and ending on the Banking
Day upon which Borrower chooses to repay that Prime Loan, provided
that no Prime Period shall extend beyond the Maturity Date of the
applicable credit facility.
"Principal's Certificate" means the principal's
certificate of this date given to the Banks by the president of
Borrower.
"Prior NJNB Loan" means the unsecured term loan in the
original principal amount of $4.44 million, which loan is pari
passu with the credit facilities described herein.
"Property" means all property, rights and interests
presently owned or in the future created or acquired by any
Company, whether tangible or intangible, including realty,
fixtures, goods, inventory, equipment, real property leases, stock,
instruments, chattel paper, bank accounts and equipment leases,
including the stock of the Subsidiaries, and the proceeds and
products of the foregoing.
"Revolving Loan" means the loans described in Section II.
"Revolving Note" means collectively the Revolving Notes
of this date from Borrower to the order of the Banks and any
amendments or modifications thereof. A copy of each Revolving Note
is annexed to this Loan Agreement as
"Exhibits B-1 and B-2".
"Second Conversion Date" means December 31,
1995.
"Section" means a section of this Loan
Agreement.
"Subsidiaries" means the Guarantor or any
other corporation or similar entity, a majority of the stock of
which is owned directly or indirectly by the Borrower or the
Guarantor.
"Sumas Family" means Nicholas Sumas, Perry
Sumas, James Sumas, Robert Sumas, William Sumas and John Sumas.
"Tangible Net Worth" means (x) total "assets"
less (y) total "liabilities". For purposes of this definition
"assets" and "liabilities" shall be determined in accordance with
GAAP, except that there shall be (a) excluded from the definition
of "assets" all intangible assets including organizational
expenses, patents, trademarks, service marks, copyrights, goodwill,
covenants not to compete, research and development costs, treasury
stock, and monies due from principals and Affiliates and all
unamortized debt discounts and deferred charges, and (b) deducted
from "assets" reserves for depreciation, depletion, obsolescence
and amortization and all other proper reserves that are required to
be maintained pursuant to the Loan Agreement or that, in accordance
with GAAP, should be established in connection with the business
conducted by the Companies.
"Term" means the duration of this Loan
Agreement as set forth in Section 5.6.
"Term Loan" means the loan described in
Section III.
"Term Note" means collectively the NJNB Term
Note and the CBNJ Term Note each of this date from the Borrower to
the order of NJNB and CBNJ, respectively, evidencing in the
aggregate the Term Loan and any amendments or modifications
thereof. The "NJNB Term Note" shall be in the original principal
amount of $6,666,666.67 and bear interest at the rate of 8.15% per
annum. The "CBNJ Term Note" shall be in the original principal
amount of $3,333,333.33 and bear interest at the rate of % per
annum. A copy of each Term Note is annexed to this Loan Agreement
as "Exhibits C-1 and C-2".
"Termination Event" means a "reportable
event" as defined in section 4043(b) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"), the filing of a
notice to terminate under section 4041 of ERISA or any other event
or condition that might constitute grounds under section 4042 of
ERISA for the termination of, or for the appointment of a trustee
to administer, any Plan.
"Travelers" means The Travelers Insurance
Company and The Travelers Indemnity Company.
"Wakefern" means Wakefern Food Corp., a New
Jersey corporation.
1.2 Interpretation. Unless otherwise
specified, the following rules of construction shall apply to this
Loan Agreement:
(A) The term "any" shall be construed as if
followed by the phrase "one or more"; the term "including" shall be
construed as if followed by the phrase "without limitation"; and
the term "days" shall be construed as if preceded by the word
"calendar", unless it is capitalized and is preceded by the word
"Banking".
(B) Singular words include the plural and
plural words include the singular.
(C) Title headings and subheadings are for
organizational purposes only and neither add to, nor limit, the
meaning of any provision.
(D) All accounting terms not specifically
defined herein shall be construed in accordance with GAAP and all
financial data required to be delivered hereunder shall be prepared
in accordance with GAAP.
(E) Any actions, determinations or decisions
to be taken by the Banks hereunder shall require the consent of
both Banks.
SECTION II - REVOLVING LOAN
Subject to the terms and conditions set forth
in this Loan Agreement and the full satisfaction of all
requirements in the Commitment Letter and of the Banks and their
counsel, and the absence of any Default or Event of Default, the
Banks severally will, from time to time, make loans to the Borrower
in proportion to their Commitments, in such amounts and under such
terms as set forth below:
2.1 Amount of Loans. The aggregate amount of
all loans and extensions of credit at any time outstanding under
the Revolving Loan shall not exceed TWELVE MILLION and 00/100
DOLLARS ($12,000,000). The Borrower may request that Revolving
Loans be made in the form of a Prime Loan or Eurodollar Loan in
accordance with the procedures, and subject to the limitations, set
forth in this Loan Agreement. Until the Revolving Loan Maturity
Date, in the absence of any Default or Event of Default; the
Borrower may borrow, reborrow and repay the Revolving Loan so long
as the aggregate outstanding balance is never in excess of
$12,000,000.
2.2 Loans In Excess of Maximum. If, for any
reason, the aggregate outstanding balance of the Revolving Loan
should at any time exceed TWELVE MILLION AND 00/100 DOLLARS
($12,000,000), all sums advanced shall nonetheless constitute
indebtedness under this Loan Agreement and shall be due and payable
upon demand.
2.3 [Intentionally Omitted].
2.4 Principal Payment. The Borrower shall
not be required to make principal payments prior to the Revolving
Loan Maturity Date except as required under Section 2.2 or if there
shall be an Event of Default. On the Revolving Loan Maturity Date,
the Borrower shall repay the entire principal balance of the
Revolving Loan outstanding as of the Revolving Loan Maturity Date
together with all accrued interest and other sums then outstanding
under the Revolving Loan, which shall all then be due and payable
in full.
2.5 Interest Payment. Accrued interest on
the daily principal balance is due and payable on each Interest
Payment Date. Any interest not paid when due, in the Banks'
discretion, and without limitation of any other right or remedy in
any Loan Document (including the right to charge a late fee or to
raise the interest rate after an Event of Default) may be added to
the principal amount outstanding under the Revolving Loan and
accrue interest at the Prime Rate and be payable upon demand.
2.6 Method of Borrowing.
(A) Notice of Borrowing. To borrow or
to select a type of loan under the Revolving Loan, Borrower shall
deliver to the Agent (or transmit by telecopier with the original
to be mailed or delivered to the Agent on the same day) by 11:00
a.m. of any Banking Day an irrevocable Notice of Borrowing signed
by an executive officer of the Borrower substantially in the form
of the annexed Exhibit G specifying each of the following:
(i) the proposed borrowing date
for a Revolving Loan which, (a) in the case
of a Prime Loan may be the same Banking Day
or, (b) in the case of a Eurodollar Loan
shall be a Eurodollar Day at least two
Banking Days thereafter;
(ii) the type of loan requested;
(iii) the amount of the proposed
borrowing which, in the case of a Prime Loan
shall be at least $300,000 and in multiples
of $100,000 and in the case of a Eurodollar
Loan shall be in multiples of $1,500,000;
(iv) in the case of a Eurodollar
Loan, the duration of the Interest Period
for each borrowing (which Interest Period
(a) shall be either 30, 60, 90, 180 or 360
days and (b) shall not extend beyond the
Maturity Date) and;
(v) instructions to the Agent as
to the deposit or transmittal of the
borrowed funds.
Amounts drawn on the Revolving Loan on the effective date of the
Loan Agreement shall be deemed to be Prime Loans.
(B) Determination of Rate. For any
Eurodollar Loan, two Eurodollar Banking Days before the first day
of the applicable Eurodollar Period, the Agent shall determine the
applicable Eurodollar Rate and advise Borrower of that rate by
telephone or telecopier. If by 11:30 a.m. of the day in which the
Agent quotes any rate Borrower shall not have advised the Agent (by
telephone with immediate telecopier confirmation) whether Borrower
wishes to receive the quoted rate, then the Agent may, in its
discretion, conclude that the Borrower has rejected the quoted rate
and chosen instead to receive a Prime Loan in an amount equal to
the Loan requested in the applicable Notice of Borrowing. The
Agent's determination of any rate shall be conclusive, absent
manifest error.
(C) Deduction for Amounts Due. If any
Revolving Loan is to be made on a day on which Borrower is to repay
any outstanding Loan, the Agent is authorized to apply proceeds
from the new Loan to make that payment and advance to Borrower only
the net amount of the new Loan after deducting the amount of the
existing Loan payment including principal and accrued interest that
had been due.
2.7 Loan Selection.
(A) Revolving Loan. During the term of
the Revolving Loan prior to 12:00 noon of the Banking Day prior to
the Revolving Loan Maturity Date, by delivering a Notice of
Borrowing pursuant to Section 2.6, the Borrower may (1) convert any
Prime Loan to a Eurodollar Loan by giving the Agent the Notice of
Borrowing two (2) Eurodollar Banking Days before the first day of
the applicable Eurodollar Period and (2) at the end of any Interest
Period convert any Eurodollar Loan to any other type of Revolving
Loan. The Borrower must select either a Eurodollar Rate or a Prime
Rate for the entire amount of any advance, but may simultaneously
have outstanding various types of Revolving Loans. The Borrower
shall have no right to select an Interest Period for a Eurodollar
Loan that would go beyond the Revolving Loan Maturity Date.
(B) Agent's Election of Rate. If the
Agent does not receive a timely Notice of Borrowing prior to the
expiration of any Interest Period for a Eurodollar Loan, the
Borrower shall be deemed to have elected to pay in full that
Eurodollar Loan at the end of the Interest Period out of the
proceeds of a new Prime Loan. That new Prime Loan will be in a
principal amount equal to the principal amount and, if Banks
determine in their absolute discretion, accrued interest of the
Eurodollar Loan that is being repaid and shall be deemed made
automatically and contemporaneously with the payment of that
Eurodollar Loan.
2.8 Use of Proceeds. The proceeds of any
advances under the Revolving Loan will be used by the Borrower to
fund general working capital and corporate purposes of the
Companies or for any other purpose (but not new store
construction). In addition, on the Date of Closing, the Borrower
shall draw a Prime Loan against this Revolving Loan facility to the
extent necessary to satisfy in full the balance of all indebtedness
due to NJNB on its existing $20,000,000 revolving credit facility
(after application of the proceeds described in Section 3.4 below)
and shall use such proceeds to satisfy all such indebtedness to
NJNB. The existing credit facility between NJNB and the Borrower
is hereby deemed cancelled and the Borrower shall have absolutely
no right to borrow thereunder.
2.9 Notes. The Revolving Loan shall be
evidenced by the Revolving Note, a copy of which is annexed as
Exhibits B-1 and B-2. The Agent will endeavor to record all
advances, interest and payments on the Agent's records relating to
the Revolving Note. The failure of the Agent to make any such
record, however, shall not alter or impair the rights and remedies
of the Banks if an advance has actually been made or the rights of
Borrower if a payment has actually been delivered.
2.10 Letters of Credit. The Banks, in their
discretion, may issue or process an application for, a letter of
credit or any other credit accommodation on behalf of the Borrower.
Any letters of credit hereunder may be issued by either Bank.
While there is no commitment to issue any letters of credit
hereunder, the Banks agree between themselves that they will not
permit the aggregate principal amount of letters of credit which
may be outstanding hereunder to exceed One Million Dollars
($1,000,000). The Banks will also agree from time to time between
themselves as to which Bank will issue any letter of credit. If
any letters of credit are issued, the following terms shall also
apply.
(a) Any letters of credit issued by the
Banks will be in each Bank's customary form (individually a "Letter
of Credit" and, collectively, the "Letters of Credit") for the
account of the Borrower. Letters of Credit may be issued at any
time and from time to time on or after the date hereof through the
date which is forty-five (45) days before the Revolving Loan
Maturity Date. The aggregate amount outstanding at any time of all
Letters of Credit shall not exceed $1,000,000.00. The term of any
Letter of Credit shall not exceed one year, and each such Letter of
Credit shall have an expiry date which is not later than the
Revolving Loan Maturity Date.
(b) The Borrower shall notify the Agent and
the Banks at least ten (10) Business Days advance written notice of
its request that either Bank issue a Letter of Credit. Each such
notice shall be irrevocable and confirmed immediately by delivery
to the Agent and the Banks of a Request for Letter of Credit in the
issuing Bank's customary form, but without any accompanying terms
and conditions which are inconsistent with this Agreement or the
other Loan Documents. Upon issuance of a Letter of Credit, the
issuing Bank shall promptly notify the other Bank of the issuance
and the terms thereof.
(c) Each request for a Letter of Credit
shall constitute a representation and warranty by the Borrower
that, except as contemplated by the Loan Documents: (A) the
representations and warranties set forth in Section VI hereof
remain accurate as of the date of such request and (B) no Default
or Event of Default exists under this Loan Agreement or any other
Loan Document.
(d) Each Letter of Credit outstanding shall
reduce the amount available under each Bank's Revolving Loan
Commitment in an amount equal to such Bank's pro rata share of such
Letter of Credit, and for the purposes of Section 2.1 each such
Letter of Credit shall be deemed to be a use of each Bank's
Revolving Loan Commitment to the extent of such Bank's pro rata
share thereof. In connection with any Letter of Credit, the Agent
may establish such other reserves against the Revolving Loan or any
other Obligations as it deems appropriate.
(e) Each payment by the issuing Bank under
a Letter of Credit shall be treated as a loan (a "Letter of Credit
Loan") and shall be payable one (1) Business Day after notice of
such payment is given to Borrower, or, if earlier, on the Revolving
Loan Maturity Date. Upon making any payment under a Letter of
Credit, the issuing Bank shall promptly give notice of the payment
(a "Drawing Notice") to the other Bank, and each Bank shall
reimburse the issuing Bank for its pro rata share of such Letter of
Credit Loan not later than 2:00 p.m. on the next Business Day after
the date of such Drawing Notice. The obligation of each Bank so to
reimburse the issuing Bank shall be absolute and unconditional.
Each Letter of Credit Loan outstanding also shall reduce the amount
available under each Bank's Revolving Loan Commitment as under
paragraph (d) above.
(f) Each Letter of Credit Loan shall bear
interest on the outstanding principal amount thereof, for each day
from the date such Letter of Credit Loan is made until the date
payment is made in full, at a rate per annum equal to the Prime
Rate in effect from time to time.
(g) The obligation to repay each Letter of
Credit Loan in full, together with accrued interest thereon in
accordance with this Agreement, shall be absolute, unconditional
and irrevocable, under all circumstances whatsoever, and (without
limiting the generality of the foregoing) shall not be affected by:
(i) the use which may be made of the Letter
of Credit Loan or any acts or omissions of
the drawer in connection therewith;
(ii) the validity or genuineness of
documents presented in connection with a
drawing, or of any endorsement thereon, even
if such documents should in fact prove to be
in any or all respects invalid, fraudulent
or forged, provided that such documents
appear on their face to comply with the
terms of the Letter of Credit;
(iii) any irregularity in the transaction
with respect to which the Letter of Credit
is issued; or
(iv) the existence of any claim, set-off,
defense or other right which the Borrower
might have against the issuing Bank, the
Agent or the Banks, or any of them, or any
other Person, whether in connection with the
Letter of Credit, the transaction
contemplated by the Letter of Credit, or any
unrelated transaction.
If all conditions to borrowing Revolving Loans are satisfied, the
Borrower shall have the right to repay any Letter of Credit Loan
with the proceeds of Revolving Loans made on or prior to the
maturity of the Letter of Credit Loan.
(h) The Borrower shall pay to the issuing
Bank a fee (the "Letter of Credit Fee") on the undrawn portion of
all Letters of Credit at a rate per annum equal to one and
one-quarter percent (1-1/4%) which shall be payable quarterly in
advance on the first Business Day of each January, April, July and
October to occur after the date hereof.
(i) The Borrower shall pay to the issuing
Bank with respect to each Letter of Credit issued, the usual and
customary administrative fees and other charges of the issuing Bank
in connection with any Letter of Credit, including without
limitation, all charges for the issuance of Letters of Credit, the
negotiation of any draft paid pursuant to any Letter of Credit and
any amendments or supplements thereto.
(j) The issuing Bank shall remit to the
other Bank Letter of Credit Fees at the rate of one and one-eighth
percent (1-1/8%) per annum [on such other Bank's pro rata share of
the Letter of Credit] as and when paid by the Borrower. The
balance of the Letter of Credit fees and the administrative fees
and other charges described in paragraph (i) above will be for the
account of the issuing Bank.
2.11 Termination. The provisions of this
Loan Agreement that provide for the making of advances under the
Revolving Loan shall expire automatically on 12:00 noon on the
Banking Day before the Revolving Loan Maturity Date and may be
terminated by the Banks at any time after the occurrence of any
Default or Event of Default (unless subsequently cured to the
satisfaction of the Banks prior to termination) and shall be
terminated automatically upon the occurrence of any Event of
Default described in Section 9.13.
2.12 Interest Rates For Revolving Loan.
The Borrower agrees to pay interest on the
unpaid portion of Revolving Loans as follows:
(A) for Prime Loans at a fluctuating
rate equal to the Prime Rate in effect from time to time; and
(B) for each Eurodollar Loan at a fixed
rate equal to the sum of the Eurodollar Rate for that Loan plus the
Eurodollar Margin.
2.13 Calculation of Interest. Interest shall
be calculated on a 360-day year based on the number of days
elapsed. After the last day of each Interest Period for any Loan
the Agent shall endeavor to mail to the Borrower a statement of
that Loan as of the last day of the Interest Period. That
statement will be deemed to be correct unless the Borrower has
delivered to the Agent specific written objections within thirty
(30) days of the Borrower's receipt.
2.14 Increased Cost. If at any time or from
time to time any change occurring after the date hereof in any
requirement of law, regulation, order, decree, treaty or directive
or in the interpretation or application thereof by governmental
authority or compliance by the Banks with any request or directive
(whether or not having the force of law) occurring after the date
hereof from any central bank or monetary authority or other
governmental authority:
(A) does or shall subject the Banks to
any tax of any kind whatsoever with respect to this Loan Agreement
or any Eurodollar Loan, or change the basis of taxation of payments
to the Banks of principal, interest or other amount payable
hereunder (except for changes in the rate or method of tax on the
overall net income of the Banks in any jurisdiction); or
(B) does or shall impose, modify or hold
applicable any reserve, special deposit, compulsory loan or similar
requirement against assets held by, or deposits or other
liabilities in or for the account of, advances or loans by, or
other credit extended by, or any other acquisition of funds by, any
office of the Banks which are not otherwise included in the
determination of the Eurodollar Rate hereunder; or
(C) does or shall impose on the Banks
any other condition regarding this Loan Agreement or the Loans; and
the result of any of the foregoing is to increase the cost to the
Banks of making, renewing, converting or maintaining advances or
extensions of credit as Eurodollar Loans, or to reduce any amount
receivable in respect of such Eurodollar Loans, then, in any such
case, the Banks will promptly notify the Borrower of the change and
of the estimated amount of such cost increase or reduction in
amount and Borrower shall promptly pay to the Banks upon their
demand, such additional amount which will compensate the Banks for
such additional cost or reduced amount receivable as the Banks deem
to be material as determined by the Banks. If the Borrower becomes
so obligated, at Borrower's option and upon two Eurodollar Business
Days, prior notice by telephone or telegraph (to be confirmed
promptly in writing) given by the Borrower to the Banks, the
Borrower may (in lieu of paying such additional amounts as
aforesaid): (i) terminate the obligation of the Banks to make or
maintain Eurodollar Loans and/or (ii) convert all Eurodollar Loans
then outstanding to any other type of Revolving Loan, as the case
may be, by prepayment and reborrowing in the manner specified in
this Loan Agreement. If any such conversion of a Eurodollar Loan
is made on a day which is not the last day of an applicable
Eurodollar Period, the Borrower shall pay to the Banks upon request
such amount or amounts as may be necessary to compensate the Banks
for any loss or expense sustained or incurred by the Banks in
respect of the prepayment of such Eurodollar Loan as a result of
such conversion. If the Bank becomes entitled to claim any
additional amounts pursuant to this Section, it shall promptly
notify Borrower thereof. A certificate as to any additional
amounts payable pursuant to the foregoing submitted by an officer
of the Banks to the Borrower shall be conclusive in the absence of
manifest error.
2.15 Indemnity Against Funding Losses or
Expenses. The Borrower shall indemnify the Banks against any loss
or expense that the Banks may, as a consequence of the Borrower's
failure to make a payment on the due date thereof, sustain or incur
in liquidating or employing deposits from third parties acquired to
effect, fund or maintain any Eurodollar Loan or any part thereof;
provided, however, that the Banks shall have a duty to mitigate any
such loss or expense. If the Banks become entitled to claim any
additional amounts pursuant to this Section, they shall promptly
notify the Borrower.
2.16 Basis for Determining InterBank Rate
Inadequate or Unfair. If with respect to any Eurodollar Period:
(A) the Agent determines that deposits
in dollars in the applicable amounts are not being offered to the
Agent in the InterBank market for such Eurodollar Period, or
(B) the Banks determine that the
applicable LIBOR will not adequately and fairly reflect the cost to
the Banks of maintaining or funding a Eurodollar Loan for such
Eurodollar Period, then, the Agent shall promptly notify Borrower
and, until the Banks determine that the circumstances giving rise
to such suspension no longer exist, the Banks' obligation to make
future Eurodollar Loans shall be suspended.
SECTION III - TERM LOAN
Subject to the full satisfaction of all
requirements in the Commitment Letter and of the Banks and their
counsel including the delivery of an Opinion Letter that is
reasonably acceptable to the Banks, and the absence of any Default
or Event of Default, the Banks severally agree to lend to the
Borrower the aggregate principal sum of TEN MILLION and 00/100
DOLLARS ($10,000,000) in proportion to their Commitments on the
following terms and conditions:
3.1 Term Note. The Term Loan will be
evidenced by the Term Note, a copy of which is annexed as "Exhibits
C-1 and C-2" and will be delivered to the Agent on the Date of
Closing.
3.2 Repayment. The principal balance of the
Term Loan shall be repaid as follows: (a) Interest only on the
first day of each month commencing April 1, 1994 through July 1,
1994. Thereafter, eighty (80) equal consecutive monthly
installments of FIFTY-FIVE THOUSAND FIVE HUNDRED FIFTY-FIVE and
56/100 DOLLARS ($55,555.56) each, commencing on the first day of
the month of August, 1994, and on the first day of each month
consecutively thereafter until the first day of the month of April,
2001, when the final principal installment of FIVE MILLION FIVE
HUNDRED FIFTY-FIVE THOUSAND FIVE HUNDRED FIFTY-FIVE and 20/100
DOLLARS ($5,555,555.20) together with all accrued interest and
other sums owing under the Term Loan, shall be due and payable.
Accrued interest shall be due and payable on the first day of each
month.
3.3 Interest Rate. Interest on the daily
unpaid principal balance of the NJNB Term Loan shall be calculated
at a rate of Eight and 15/100 Percent (8.15%) per annum. Interest
on the unpaid principal balance of the CBNJ Term Loan shall be
calculated at a rate of percent ( %) per annum [CBNJ COF plus
250 Basis Points]. Interest shall be calculated on a 360 day year
based on the number of days elapsed.
3.4 Use of Proceeds. All proceeds of the
Term Loan shall be used by the Borrower on the Date of Closing to
repay in part its indebtedness due to NJNB on its existing $20
million revolving credit facility.
SECTION IV - CONVERTIBLE REVOLVING LOAN
Subject to the full satisfaction of all
requirements in the Commitment Letter and of the Banks and their
counsel including the delivery of an Opinion Letter that is
acceptable to the Banks and the absence of any Default or Event of
Default, the Banks will, from time to time severally make, in
proportion to their Commitments, loans to the Borrower in such
amounts and under such terms as set forth below:
4.1 Amount of Loans. The aggregate amount
of all loans and extensions of credit outstanding at any time under
the Convertible Revolver will not exceed EIGHT MILLION and 00/100
DOLLARS ($8,000,000). The Borrower may request that Convertible
Revolver Loans be made in the form of a Prime Loan or a Eurodollar
Loan in accordance with the procedures, and subject to the
limitations set forth in this Loan Agreement. Until the Banking
Day before the First Conversion Date, in the absence of any Default
or Event of Default, the Borrower may borrow, reborrow and repay
the Convertible Revolver Loan so long as the aggregate outstanding
balance is never in excess of $8,000,000. Until the Second
Conversion Date, in the absence of any Default or Event of Default,
the Borrower may borrow, reborrow and repay the Convertible
Revolver Loan so long as the aggregate outstanding balance of the
net amounts borrowed on and after the First Conversion Date is
never in excess of $8,000,000 less the First Principal Balance.
4.2 Loans In Excess of Maximum. If, for any
reason, the outstanding balance of the Convertible Revolver Loan at
any time exceeds EIGHT MILLION and 00/100 DOLLARS ($8,000,000), all
sums advanced shall nonetheless constitute indebtedness under this
Loan Agreement and shall be due and payable upon demand.
4.3 Conversion of Loans. (a) At 12:00 noon
on the last Banking Day before the First Conversion Date, the
Banks' several responsibility and Commitments to make any loans
under the Convertible Revolver shall be reduced pro rata by an
amount equal to the principal balance of the Convertible Revolver
then outstanding (the "First Principal Balance"). Beginning on and
after the First Conversion Date, the First Principal Balance shall
be repayable by the Borrower in installments as set forth in
Section 4.4(a). On the First Conversion Date, the Borrower shall
execute separate notes in the form of Exhibit D-3 annexed hereto in
the principal amount of the First Principal Balance.
(b) At the earlier of (i) the date of
occurrence of a Default or Event of Default (unless subsequently
cured to the satisfaction of the Banks prior to termination) or
(ii) 12:00 noon on the last Banking Day before the Second
Conversion Date, the Banks' responsibility and Commitments to make
any loans under the Convertible Revolver shall automatically cease.
Beginning on and after the Conversion Date, all principal
outstanding under the Convertible Revolver on the Second Conversion
Date exclusive of the First Principal Balance being repaid pursuant
to Section 4.4(a) below) (the "Second Principal Balance") shall be
repayable in installments as set forth in Section 4.4(b). On the
Second Conversion Date, the Borrower shall execute a separate note
in the form of Exhibit D-4 annexed hereto in the principal amount
of the Second Principal Balance.
4.4 Principal Payments. (a) The Borrower
shall not be required to make principal payments prior to the First
Conversion Date except as required under Section 4.2 or if there
shall be an Event of Default. After the First Conversion Date, the
Borrower shall repay the First Principal Balance in Seventy One
(71) equal monthly principal installments based on a fifteen (15)
year term [First Principal Balance divided by 180] beginning on the
first (1st) day of the second month after the Conversion Date
[February 1, 1995] and on the first (1st) day of each month
consecutively thereafter until the first day of the Seventy Second
(72nd) month after the First Conversion Date when all principal,
interest and other sums then outstanding under the Convertible
Revolver shall be due and payable in full.
(b) After the Second Conversion Date, the
Borrower shall repay the Second Principal Balance in Fifty-Nine
(59) equal monthly principal installments based on a fifteen (15)
year term [Second Principal Balance divided by 180] beginning on
the first (1st) day of the second month after the Second Conversion
Date [February 1, 1996] and on the first (1st) day of each month
consecutively thereafter until the first day of the Sixtieth (60th)
month after the Second Conversion Date when all principal, interest
and other sums then outstanding under the Convertible Revolver
shall be due and payable in full.
4.5 Payment of Interest. Accrued interest
on the daily principal balance of the Convertible Revolver is due
and payable on each Interest Payment Date. Any interest not paid
when due, in the Banks' discretion and without limitation of any
other right or remedy in any Loan Document (including the right to
charge a late fee or to raise the interest rate after an Event of
Default), may be added to the principal amount outstanding under
the Convertible Revolver and accrue interest at the Prime Rate and
be payable upon demand.
4.6 Method of Borrowing.
(A) Notice of Borrowing. To borrow or
to select a type of loan under the Convertible Revolver, the
Borrower shall deliver to the Agent (or transmit by telecopier with
the original to be mailed or delivered to the Agent on the same
day) by 11:00 a.m. of any Banking Day an irrevocable Notice of
Borrowing signed by an executive officer of the Borrower
substantially in the form of the annexed Exhibit G specifying each
of the following:
(i) the proposed borrowing date
for a Convertible Revolver Loan which, (a)
in the case of a Prime Loan may be the same
Banking Day or, (b) in the case of a
Eurodollar Loan shall be a Eurodollar Day at
least two (2) Banking Days thereafter;
(ii) the type of loan requested;
(iii) the amount of the proposed
borrowing which, in the case of a Prime Loan
shall be at least $300,000 and in multiples
of $100,000 and in the case of any
EuroDollar Loans shall be in multiples of
$1,500,000;
(iv) in the case of a Eurodollar
Loan, the duration of the Interest Period
for each borrowing (which Interest Period
(a) shall be either 30, 60 90, 180 or 360
days and (b) shall not extend beyond any
Conversion Date); and
(v) instructions to the Agent as
to the deposit or transmittal of the
borrowed funds.
(B) Determination of Rate. For any
Eurodollar Loan, two Eurodollar Banking Days before the first day
of the applicable Eurodollar Period, the Agent shall determine the
applicable Eurodollar Rate and advise the Borrower of that rate by
telephone or telecopier. If by 11:30 a.m. New York City time of
the day in which the Agent quotes any rate the Borrower shall not
have advised the Agent (by telephone with immediate telecopier
confirmation) whether Borrower wishes to receive the quoted rate,
then the Agent may, in its discretion, conclude that the Borrower
has rejected the quoted rate and chosen instead to receive a Prime
Loan in an amount equal to the Loan requested in the applicable
Notice of Borrowing. For any Loan based on a Bank's COF, each Bank
shall advise the Borrower of its COF within two (2) days of any
request for such a rate by the Borrower after the First Conversion
Date. If by 11:30 a.m. of the day in which the Banks quote a rate
Borrower shall not have advised the Banks (by telephone with
immediate telecopier confirmation) whether Borrower wishes to
receive the quoted rate, then the Agent may, in its discretion,
conclude that the Borrower has rejected the quoted rates and chosen
instead to receive a Eurodollar Loan with a 30 day Interest Period,
which rate shall be fixed by the Agent at the Eurodollar Rate plus
250 Basis Points without any further opportunity for the Borrower
to accept or reject such Eurodollar Rate. The Borrower may only
accept a COF Loan from any Bank if it accepts a COF Loan from both
Banks at the rates so advised. The Banks' determination of any
rate shall be conclusive, absent manifest error.
(C) Deduction for Amounts Due. If any
Convertible Revolver Loan is to be made on a day on which Borrower
is to repay any outstanding Loan, the Agent is authorized to apply
proceeds from the new Loan to make that payment and advance to
Borrower only the net amount of the new Loan after deducting the
amount of the existing Loan payment including principal and accrued
interest that had been due.
4.7 Loan Selection.
(A) Revolving Loan. During the term of
the Convertible Revolver Loan prior to the First Conversion Date
(or, with respect the new borrowings in excess of the First
Principal Balance, prior to the Second Conversion Data), by
delivering a Notice of Borrowing pursuant to Section 4.6, the
Borrower may (1) convert any Prime Rate Borrowing to a Eurodollar
Loan by giving the Agent the Notice of Borrowing two Eurodollar
Banking Days before the first day of the applicable Eurodollar
Period and (2) at the end of any Interest Period convert any
Eurodollar Loan to any other type of Convertible Revolver Loan then
available to the Borrower hereunder by giving the notice required
under Section 4.6 for that type of Loan. The Borrower must select
either the Prime Rate or Eurodollar Rate for the entire amount of
any advance, but may simultaneously have outstanding various types
of Convertible Revolver Loans.
(B) Term Loan. The Borrower shall have
the same rights to select interest rates under the Convertible
Revolver Loans after the Conversion Dates with respect to interest
payable on the First Principal Balance and/or the Second Principal
Balance pursuant to a Notice of Borrowing except that (1) the
Borrower shall have no right to select an Interest Period that
would go beyond the Convertible Revolver Maturity Date and (2) the
Borrower may not select Prime Loans after the Conversion Dates with
respect to the First Principal Balance or the Second Principal
Balance, but (3) the Borrower may at any time after the First
Conversion Date (with respect to the First Principal Balance) or
the Second Conversion Date (with respect to the Second Principal
Balance) select an interest rate equal to the Banks' COF plus 250
Basis Points. If the Borrower elects to fix the entire interest
rate based on COF, such rate shall be so fixed for the entire
balance of the term of the Convertible Revolver Loan, and the
Borrower shall have no right thereafter to adjust or modify the
interest rate hereunder.
(C) Waiver of Right to Repay and
Reborrow. At any time before any Conversion Date in the absence of
any Default or Event of Default, the Borrower shall have the right
(exercisable not more often than once each month) exercisable two
Banking Days before the end of any Interest Period, to request
prior to 11:00 a.m. that the Banks quote their COF for a loan in a
principal amount which is a multiple of $1,000,000 (but less than
the total principal amount of the Convertible Revolver then
outstanding) (the "Requested Amount") for the balance of the period
to the Convertible Revolver Maturity Date, as set forth in Section
4.6(B) above. If by 11:30 a.m. of the day in which each Bank
quotes a COF rate the Borrower accepts both quoted rates (the
"Fixed Rate Date"), then: (1) the Borrower shall have no further
right to borrow, reborrow or repay that portion of the Convertible
Revolver Loan representing the Requested Amount; (2) the Borrower
shall have no further right to select an interest rate other than
such COF rate for the Requested Amount and (3) the portion of the
Convertible Revolver represented by the Requested Amount thereafter
shall be repaid as follows: (a) Interest only on the first day of
each month commencing on the first day of the first month after the
Fixed Rate Date until the first day of the first month after the
next Conversion Date and (b) thereafter, commencing on the first
day of the second month after the next Conversion Date, in
accordance with Sections 4.4(a) and 4.5 (if the next Conversion
Date is the First Conversion Date) or Sections 4.4(b) and 4.5 (if
the next Conversion Date is the Second Conversion Date). On the
Fixed Rate Date, the Borrower shall execute separate notes to each
Bank substantially in the form of Exhibit D-3 or D-4 annexed hereto
(as modified by the Agent to reflect the provisions of this
paragraph) in the aggregate principal amount of the Requested
Amount.
(D) Agent's Election of Rate. If the
Agent does not receive a timely Notice of Borrowing prior to the
expiration of any Interest Period for a Eurodollar Loan which is
part of the Convertible Revolver, the Borrower shall be deemed to
have elected to pay in full that Eurodollar Loan at the end of the
Interest Period out of the proceeds of a new Eurodollar Loan with
a 30 day Interest Period bearing interest at the Eurodollar Rate
plus 250 Basis Points, which rate shall be fixed by the Agent
without any further opportunity for the Borrower to accept or
reject such Eurodollar Rate. That new Eurodollar Loan will be in
a principal amount equal to the principal amount and if the Banks
determine in their absolute discretion, accrued interest of the
Eurodollar Loan that is being repaid and shall be deemed made
automatically and contemporaneously with the payment of that
Eurodollar Loan.
4.8 Use of Proceeds. The proceeds of any
advances prior to the Second Conversion Date under the Convertible
Revolver Loan will be used by the Borrower only to fund
construction or renovations of new stores or remodeling of existing
stores. For any project involving projected drawdowns of $5
million or more, a budget acceptable to the Banks must be delivered
to the Banks and approved before more than $1 million is spent on
such project. The Banks will monitor such budget against actual
costs of the project, and draws will be conditioned on the
Borrower's compliance with the budget and other terms for
monitoring construction acceptable to the Banks. Notwithstanding
the foregoing, if the Borrower has borrowed any funds pursuant to
the Convertible Revolver, used such funds for proper purposes set
forth in this Section and then repaid any such principal amount,
then, if there is no Default or Event of Default, the principal
amount so repaid thereafter may be reborrowed by the Borrower for
any purposes.
4.9 Notes. The Convertible Revolver Loan
shall be evidenced by the Convertible Revolver Note, a copy of
which is annexed as Exhibits D-1 and D-2 (as to the initial
Convertible Revolver Loans). The Agent will endeavor to record all
advances, interest and payments on the Agent's records relating to
the initial Convertible Revolver Note. The failure of the Agent to
make any such record, however, shall not alter or impair the rights
and remedies of the Banks if an advance has actually been made or
the rights of the Borrower if a payment has actually been
delivered.
4.10 Termination. The provisions of this
Loan Agreement that provide for the making of advances under the
Convertible Revolver Loan shall expire automatically on 12:00 noon
on the day before the Second Conversion Date, may be terminated by
the Banks at any time after the occurrence of any Default or Event
of Default (not subsequently cured to the satisfaction of the Banks
before such termination) and shall be terminated automatically upon
the occurrence of any Event of Default described in Section 9.13.
4.11 Interest Rates For Convertible Revolver
Loan.
The Borrower agrees to pay interest on the
unpaid portion of Convertible Revolver Loans as follows:
(A) for Prime Loans (prior to the
Second Conversion Date) at a fluctuating rate equal to the Prime
Rate in effect from time to time;
(B) for each Eurodollar Loan at a fixed
rate equal to the Eurodollar Rate for that Loan plus Two Hundred
Fifty (250) Basis Points.
(C) for each loan based on COF after
the First Conversion Date or, if earlier, the Fixed Rate Date, at
the applicable Banks' COF plus Two Hundred Fifty (250) Basis
Points.
4.12 Calculation of Interest. Interest shall
be calculated on a 360-day year based on the number of days
elapsed. After the last day of each Interest Period for any Loan
the Agent shall endeavor to mail to Borrower a statement of that
Loan as of the last day of the Interest Period. That statement
will be deemed to be correct unless the Borrower has delivered to
the Agent specific written objections within thirty (30) days of
the Borrower's receipt.
4.13 Increased Cost. If at any time or from
time to time any change occurring after the date hereof in any
requirement of law, regulation, order, decree, treaty or directive
or in the interpretation or application thereof by governmental
authority or compliance by the Banks with any request or directive
(whether or not having the force of law) occurring after the date
hereof from any central bank or monetary authority or other
governmental authority:
(A) does or shall subject the Banks to
any tax of any kind whatsoever with respect to this Loan Agreement
or any Eurodollar Loan, or change the basis of taxation of payments
to the Banks of principal, interest or other amount payable
hereunder (except for changes in the rate or method of tax on the
overall net income of the Banks in any jurisdiction); or
(B) does or shall impose, modify or hold
applicable any reserve, special deposit, compulsory loan or similar
requirement against assets held by, or deposits or other
liabilities in or for the account of, advances or loans by, or
other credit extended by, or any other acquisition of funds by, any
office of the Banks which are not otherwise included in the
determination of the Eurodollar Rate hereunder; or
(C) does or shall impose on the Banks
any other condition regarding this Loan Agreement or the Loans; and
the result of any of the foregoing is to increase the cost to the
Banks of making, renewing, converting or maintaining advances or
extensions of credit as Eurodollar Loans, or to reduce any amount
receivable in respect of such Eurodollar Loans, then, in any such
case, the Banks will promptly notify the Borrower of the change and
of the estimated amount of such cost increase or reduction in
amount and Borrower shall promptly pay to the Banks upon their
demand, such additional amount which will compensate the Banks for
such additional cost or reduced amount receivable as the Banks deem
to be material as determined by the Banks. If the Borrower becomes
so obligated, at Borrower's option and upon two Eurodollar Business
Days, prior notice by telephone or telegraph (to be confirmed
promptly in writing) given by the Borrower to the Banks, the
Borrower may (in lieu of paying such additional amounts as
aforesaid): (i) terminate the obligation of the Banks to make or
maintain Eurodollar Loans and/or (ii) convert all Eurodollar Loans
then outstanding to any other type of Convertible Revolver Loan, as
the case may be, by prepayment and reborrowing in the manner
specified in this Loan Agreement. If any such conversion of a
Eurodollar Loan is made on a day which is not the last day of an
applicable Eurodollar Period, the Borrower shall pay to the Banks
upon request such amount or amounts as may be necessary to
compensate the Banks for any loss or expense sustained or incurred
by the Banks in respect of the prepayment of such Eurodollar Loan
as a result of such conversion. If the Bank becomes entitled to
claim any additional amounts pursuant to this Section, it shall
promptly notify Borrower thereof. A certificate as to any
additional amounts payable pursuant to the foregoing submitted by
an officer of the Banks to the Borrower shall be conclusive in the
absence of manifest error.
4.14 Indemnity Against Funding Losses or
Expenses. The Borrower shall indemnify the Banks against any loss
or expense that the Banks may, as a consequence of the Borrower's
failure to make a payment on the due date thereof, sustain or incur
in liquidating or employing deposits from third parties acquired to
effect, fund or maintain any Eurodollar Loan or any part thereof;
provided, however, that the Banks shall have a duty to mitigate any
such loss or expense. If the Banks become entitled to claim any
additional amounts pursuant to this Section, they shall promptly
notify the Borrower.
4.15 Basis for Determining InterBank Rate
Inadequate or Unfair. If with respect to any Eurodollar Period:
(A) the Agent determines that deposits
in dollars in the applicable amounts are not being offered to the
Agent in the InterBank market for such Eurodollar Period, or
(B) the Banks determine that the
applicable LIBOR will not adequately and fairly reflect the cost to
the Banks of maintaining or funding a Eurodollar Loan for such
Eurodollar Period, then, the Banks shall promptly notify Borrower
and, until the Banks determine that the circumstances giving rise
to such suspension no longer exist, the Banks' obligation to make
future Eurodollar Loans shall be suspended.
SECTION V - PAYMENTS, PROCEEDS AND TERM
5.1 Manner of Payment. All payments shall
be delivered to the Agent in immediately available funds when due.
Any delay by the Agent in submitting a statement of any amount due
shall not relieve any duty to inquire as to the amount due and to
make timely payment.
5.2 Payment on Non-Banking Days. Any
payment that is due on a day other than a Banking Day may be made
on the next succeeding Banking Day together with interest for each
such additional day after the original due date.
5.3 Late Payments. If any payment is not
received within fifteen (15) days from the date that payment is
due, the Banks may charge a "late charge" equal to Five Cents
($.05) of each dollar of principal, interest, charges and expenses
overdue for the purpose of defraying the expense incident to
handling the delinquent payment. This late charge shall be in
addition to, and not in lieu of, any other right or remedy the
Banks may have as a result of a late payment.
5.4 Prepayments. At any time upon five (5)
calendar days written notice to the Agent, any loan being made
pursuant to this Loan Agreement may be prepaid, in whole, or in
part without penalty in multiples of ONE HUNDRED THOUSAND and
00/100 DOLLARS ($100,000), provided, however, that accrued interest
on the amount being prepaid plus the prepayment fee set forth in
Section 5.5 below shall simultaneously be paid. Prepayments shall
be applied first to any expenses outstanding under any Loan
Document, then to prepayment fees, then to interest and then to
principal and, when applied to principal, shall be applied to
installments in inverse order of their maturity.
5.5 Prepayment Fees. The Borrower may
prepay any Loan in whole or in part at any time, accompanied by
payment of accrued interest to and including the date of
prepayment, in multiples of $100,000.00, together with the
prepayment premium, if any. If for any Term Loan or (after the
First Conversion Date) any Convertible Revolver, the then current
Redeployment Rate (as defined below) is lower than the Banks' COF
to make the Loan, the prepayment premium shall be based upon the
difference between the Banks' COF to make the Loan and the
"Redeployment Rate" (which shall mean, at any time, the fixed per
annum rate (calculated on the basis of a single annual interest
payment), as determined by each Bank in its sole discretion on the
prepayment date that would be bid by a fixed rate payor under an
arm's-length interest rate swap transaction having (i) a term
approximately equal to the period commencing on the prepayment date
and ending on the applicable Maturity Date, (ii) a notational
amount equal to the amount of such prepayment, (iii) a floating
rate of LIBOR for the notational amount, and (iv) a counterparty of
a creditworthiness acceptable to the Bank), discounted to present
value. In the event a prepayment of any Loan is made after an
Event of Default has occurred hereunder, the prepayment premium
shall also be due and payable. All prepayments of principal shall
be applied to the inverse order of maturity.
5.6 Term. The Term of this Loan Agreement
shall commence as of the Date of Closing and, subject to the
provisions hereof, shall expire at midnight on the date that all
Obligations have been fully paid and all Commitments have expired
or been terminated.
5.7 Interest Limits. If the fulfillment of
any provision in any Loan Document relating to the rate of interest
is prohibited by, or in violation of, any applicable law in effect
at the time payment is due, the interest rate shall be
automatically reduced to the maximum rate then permitted by law.
If for any reason the Banks should receive as interest an amount
that would exceed the highest applicable lawful rate of interest,
that amount in excess of the lawful rate will be deemed to have
been credited against principal and not against interest. This
provision shall control every other provision in any Loan Document
that is applicable to the calculation of interest.
5.8 Borrowings. The Borrower shall give the
Agent notice of each borrowing of Loans to be made hereunder after
the Date of Closing by (i) 11:00 a.m. of the date of such
borrowing, if a Prime Rate Loan, or (ii) by 11:00 a.m. two
Eurodollar Banking Days before the date of such borrowing, if a
Eurodollar Loan, or (iii) by 11:00 a.m. two Banking Days before the
date of such borrowing if a COF Loan, all as further provided in
Sections 2.6 and 4.6. The Agent shall then give CBNJ notice of
Borrower's request by 12:00 noon of the date it receives such
notice from Borrower. Not later than 3:00 p.m. New York City time
on the date of such borrowing, CBNJ shall, through its Lending
Office and subject to the conditions of this Loan Agreement, make
the amount of the Loan to be made by it on such day available to
the Agent, at the Lending Office of the Agent and in immediately
available funds for the account of the Borrower. The amount so
received by the Agent shall, subject to the conditions of this Loan
Agreement, be made available to the Borrower, in immediately
available funds, by 3:00 p.m. New York City time on the date of
such borrowing, by the Agent crediting an account of the Borrower
designated by the Borrower and maintained with the Agent at its
Lending Office.
5.9 Certain Notices. Notices by the
Borrower to the Agent of each borrowing and each prepayment shall
be irrevocable and shall be effective only if received by the Agent
not later than 11:00 a.m. New York City time.
5.10 Commitment Fees. A commitment fee
shall accrue on the daily average unused amount of the Commitments
of each Bank for the Revolving Loan and the Convertible Revolver
for the period from and including the Closing Date to the earliest
of the date the Commitments are terminated by the Banks or the
Revolving Loan Maturity Date (for the Revolving Loan) or the Second
Conversion Date (for the Convertible Revolver Loan) at a rate per
annum equal to twenty-five (25) Basis Points calculated on the
basis of a 360 day year for the actual number of days elapsed. The
accrued commitment fee shall be due and payable in arrears on the
first day of each calendar quarter, commencing on the first day of
the first calendar quarter after the Closing Date and on the
Revolving Loan Maturity Date (for the Revolving Loan) and the
Second Conversion Date (for the Convertible Revolver, or the Fixed
Rate Date, if earlier).
5.11 Payment Generally. All payments under
this Agreement or the Notes or fees shall be made by the Borrower
in United States Dollars in immediately available funds not later
than 2:00 p.m. New York City time on the date on which such payment
shall become due (each such payment made after such time on such
due date to be deemed to have been made on the next succeeding
Banking Day) at the Lending Office of the Agent for the account of
the Lending Offices of each Bank provided, that, when a new Loan is
to be made by each Bank on a date the Borrower is to repay any
principal of an outstanding Loan, such Bank shall apply the
proceeds thereof to the payment of the principal to be repaid and
only an amount equal to the difference between the principal to be
borrowed and the principal to be repaid shall be made available by
such Bank to the Borrower as provided in Sections 2.6(C) or 4.6(C).
The Agent, or any Bank for whose account any such payment is to be
made, may (but shall not be obligated to) debit the amount of any
such payment which is not made by such time to any ordinary deposit
account of the Borrower with the Agent or such Bank, as the case
may be, and any Bank so doing shall promptly notify the Agent and
the Borrower thereof. The Borrower shall, at the time of making
each payment under this Loan Agreement or any Note, specify to the
Agent the principal or other amount payable by the Borrower under
this Agreement or the Note to which such payment is to be applied,
and in the event that it fails to so specify, or if a Default or
Event of Default has occurred and is continuing, the Agent may
apply such payment as it may elect in its sole discretion. If the
due date of any payment under this Agreement or any Note would
otherwise fall on a day which is not a Banking Day, such date shall
be extended to the next succeeding Banking Day and interest shall
by payable for any principal so extended for the period of such
extension. Each payment received by the Agent hereunder or under
any Note for the account of a Bank shall be paid promptly to such
Bank, in immediately available funds, for the account of such
Bank's Lending Office.
5.12 Payments by Banks. Each Bank shall
provide to the Agent its proportionate share of all advances or
Loans to be made to the Borrower hereunder by wire transfer in
immediately available funds no later than 3:00 p.m. New York City
time on the date on which any borrowing is to be made hereunder.
The Agent shall not be obligated to make any advances or Loans to
the Borrower until such time as its receives each Bank's
proportionate share in immediately available funds. Any failure
of a Bank to advance its proportionate share of any Loan or to
assume or indemnify the Agent for its proportionate share of any
liability hereunder shall be a breach of its obligations to the
Agent and the other Banks as well as to the Borrower. The Banks
and the Agent agree that all advances and Loans, as well as all
payments received by the Agent from the Borrower or the Guarantor
or any other party, shall be reconciled daily. In the event the
Agent does not receive any payment from the Borrower prior to 1:00
p.m. on any given Banking Date, the Agent shall not remit such
funds to the Banks until the next Banking Day. The Agent shall
have no obligation to pay to any Bank any amounts except out of
those immediately available funds actually received by the Agent
for application to the Obligations.
SECTION VI - REPRESENTATIONS AND WARRANTIES
As of the Date of Closing and as of the time
of each advance under the Convertible Revolver or Revolving Loan,
the Borrower represents, and warrants to each Bank and the Agent
and agrees as follows:
6.1 Organization and Authority. Each
Company is a duly organized and validly existing corporation that
is in good standing under the laws of the State of New Jersey and
is duly qualified and in good standing in each state in which its
property or business subjects it to qualification requirements as
a foreign corporation. Each Company (A) is duly qualified and
registered to transact business in each jurisdiction in which its
properties or business make qualification or registration
necessary, and (B) has full power, authority, franchises, licenses
and right to enter into and perform each of the Loan Documents to
which it is a party and to carry on its business as now being
conducted.
6.2 No Conflicting Agreements or Laws.
Neither the execution nor the delivery of any Loan Document, nor
the consummation of the transactions contemplated thereby, nor the
fulfillment of, compliance with or performance of the terms and
conditions therein, is prevented or limited by, conflicts with or
will result in the breach or violation of, or a default under the
terms or conditions of (A) any certificate of incorporation,
charter or other agreement to which any Obligor is bound, or (B)
any law, order of any court or administrative agency or any rule or
regulation applicable to any Obligor. No Obligor is, or by
Borrower's or Guarantor's execution, delivery or performance of any
Loan Document will be, in default under, or in violation of, any of
its obligations under any agreement or undertaking to which that
Obligor is a party or by which that Obligor is bound.
6.3 No Conflicting Litigation. There is no
action or proceeding pending or threatened against any Obligor or
involving any assets of, or ownership in, any Obligor before any
court, administrative agency or governmental authority that might
(A) adversely affect any Obligor's ability to authorize or perform
any Obligations, (B) involve the possibility of any judgment or
liability that would result in any material adverse change in any
Obligor's business, properties or assets or in the value of the
Banks' interest in any Collateral, (C) adversely affect the
enforceability of any Loan Document, or (D) involve possible or
threatened claims totalling in excess of $250,000, except for any
litigation that has been accurately and completely described on
Exhibit 2 annexed to the Principal's Certificate.
6.4 Ownership of Subsidiaries. The Borrower
is the legal and beneficial owner of, and holder of good record
title to, all issued and outstanding shares of all classes of stock
of the Guarantor, free and clear of all liens, pledges,
restrictions, potential margin calls and encumbrances, and does not
directly or indirectly own or control any Subsidiaries other than
the Guarantor.
6.5 Liens Against Property. All Property is
now free and clear of Liens, except for any Permitted Encumbrances,
and there are no judgments of record in any other state where any
Property may be located against any name used within the past 20
years by any Company or by any Company's predecessor in interest.
6.6 Location of Property and Offices. The
chief executive offices and primary business records of the
Borrower and the Guarantor are at all times maintained, and for the
past four months have at all times been maintained, at the
principal place of business of the Borrower set forth in the
caption of this Loan Agreement. All Property and other business
records of the Companies are, and will be, at the locations set
forth on Exhibit 1 annexed to the Principal's Certificate, except
for new stores and offices that may be opened only after notice to
the Banks of each such location.
6.7 Financial Information and Condition.
The consolidated financial statement of the Obligors dated October
23, 1993 and delivered to the Banks truly sets forth their
financial condition and the results of operations as of that date
and there has been no material adverse change since then. All
other statements, representations and warranties made by any
Obligor to the Banks have been, and as of the Date of Closing are,
accurate and complete and no information has been omitted that
would make any of them misleading or incomplete. Immediately prior
to, and after the making of each loan described in this Loan
Agreement, each Obligor was not, and will not be, (A) "insolvent"
as that term is defined in N.J.S.A. 25:2-23 (or any successor
statute governing fraudulent transfers) or in 11 U.S.C.A. 101(31)
or (B) left with "unreasonably small capital" or "debts beyond the
debtor's ability to pay as such debts become due", as those phrases
are construed under 11 U.S.C.A. 548 (a)(2)(B) or any other
applicable statute governing "fraudulent transfers".
6.8 Environmental Matters. Except as set
forth in Exhibit 3 to the Principal's Certificate, no Company has
generated, stored, treated, discharged, handled, refined, spilled,
released or disposed of any Hazardous Substances in violation of
any applicable law or regulation. No Company has received any
notice, or is on notice of, any claim, investigation, litigation or
administrative proceeding, actual or threatened, or any order, writ
or judgment that relates to any discharge, spill, handling,
refining, release, emission, leaching or disposal of pollutants of
any kind including any Hazardous Substances by, or on property
owned or leased by, any Company. The Standard Industrial
Classification code numbers relating to any activities any Company,
are also set forth on that Exhibit 3. In connection with any
acquisition, sale, closing, transfer, change in control or merger
of Borrower or any Company since December 31, 1983 or any Property
now or previously owned or leased by them that was subject to New
Jersey law, the New Jersey Industrial Site Recovery Act (N.J.S.A.
13:lK-6 et seq.) ("ISRA"), including any predecessor statute (such
as the Environmental Clean-Up Responsibility Act) was complied with
by submitting a "Negative Declaration" as that term is defined in
N.J.A.C. 7:1-3.3 or by completing a "Clean-up Plan" as that term is
defined in N.J.A.C. 7:1-3.3, which Negative Declaration or Clean-up
Plan has been approved, without condition or reservation, by the
New Jersey Department of Environmental Protection and Energy.
6.9 Taxes. Each Company has filed all tax
returns and reports required to be filed and has paid all taxes
that are due and owing (including penalties, deficiency assessments
and interest) other than those that are being diligently and in
good faith disputed and the asserted liability for which is shown
as a reserve on the financial statements delivered to the Banks in
accordance with GAAP. All such returns and reports are accurate
and complete in all respects.
6.10 Name and History. During the past
twenty (20) years, no Company has (A) had, used or operated under
any other name or trade name, (B) acquired any other organization
or entity or a substantial portion of the assets of any other
organization or entity, (C) merged, or been merged into, any other
organization or entity or (D) controlled, directly or indirectly,
any non-individual Person, except as set forth on Exhibit 4 annexed
to the Principal's Certificate.
6.11 Controlling Interests. The names and
respective interests and offices of all Persons who directly or
indirectly own or control Ten Percent (10%) or more of any class of
stock of the Borrower are set forth on Exhibit 5 annexed to the
Principal's Certificate. More than ninety percent (90%) of the
issued and outstanding shares of "Class B" stock of Borrower is
owned by members of the Sumas Family or held in a trust for the
benefit of members of the Sumas Family and the voting of such
shares held in trust is controlled by a member of the Sumas Family.
6.12 ERISA. There has not occurred, and
there are no circumstances that, with the lapse of time or giving
of notice, may lead to the occurrence of, a Termination Event under
any Plan. No Company, nor any Plan maintained by any Company (nor
any related trust) has incurred any accumulated funding deficiency.
Except as disclosed on Exhibit 2 to the Principal's Certificate, no
event or set of circumstances has occurred under which any Company
could be subject to any liability (including but not limited to
liability under Sections 4201 and 4242 of ERISA) with respect to a
"multi-employer plan" (as defined in Section 3(37) of ERISA) to
which it contributes other than for contributions made in the
ordinary course of business, none of which are overdue.
6.13 Margin Stock. No Company is involved,
as one of its important activities, in the business of extending
credit for the acquisition of any "margin stock" (within the
meaning of Regulation U issued by the Board of Governors of the
Federal Reserve System of the United States) and no proceeds of any
Loans under this Loan Agreement will be used to purchase, or to
extend credit to others so that they may purchase, any such margin
stock.
6.14 Compliance with Loan Documents. Each
Company is in full compliance with all terms and conditions of all
Loan Documents.
6.15 No Claims or Offsets. The aggregate
principal amount of indebtedness due to the Banks as of the date
hereof is as stated in the Notes and the Prior NJNB Loan. The
Borrower acknowledges and agrees that such indebtedness is
unconditionally due to the Banks, and that as of the date hereof
neither it nor any other Obligor has any claims against the Banks
nor any counterclaims, defenses or offsets to Obligors' obligations
under the Notes or the other Loan Documents of any nature
whatsoever.
6.16 Compliance with Laws. To the best of
its knowledge, each Company, in the conduct of its business, is in
compliance with all laws, regulations and orders, the failure to
comply with which would have a material adverse effect on the
business of such Company.
6.17 Wakefern. The Borrower is a member in
good standing of the Wakefern cooperative. The Borrower has duly
performed all of its duties and obligations as a member of the
Wakefern cooperative and has the right to use the "Shop-Rite" name
and trademark. No claim is pending or, to the best of the
Borrower's knowledge, threatened asserting any breach of any such
duties or obligations or seeking to limit or curtail the Borrower's
right to use such name or trademark.
6.18 Accuracy of Statements. All
statements, representations and warranties made by the Obligors in
this Loan Agreement and in the Loan Documents are correct and
complete and no information has been omitted therefrom which would
make any of them misleading or incomplete.
6.19 Survival. All representations and
warranties in any Loan Document shall survive both the closing of
any Loans and any independent investigation by the Banks.
SECTION VII - AFFIRMATIVE COVENANTS
The Borrower agrees to observe and perform
its duties and covenants under each Loan Document and Obligation
and, in addition, to do all of the following, and to cause the
Subsidiaries to remain in compliance with the following:
7.1 Protection of Property. Protect the
value of, and any Company's interest in, the Property including (A)
maintaining the Property in good condition and repair and
preserving it against loss, damage, contamination, pollution and
depreciation in value, other than by normal wear and tear; and (B)
defending against all claims and demands of any Person claiming
title to or a Lien against or security interest or any interest
adverse to the Banks in, any Property, except for Liens that are
Permitted Encumbrances.
7.2 Insurance. Maintain insurance as
follows:
(A) property insurance written in the
broadest "all risk" form available on a replacement cost basis and
covering all tangible Property. That insurance shall be in amounts
at all times at least equal to the full insurable value of such
Property, but in no event shall the insurance be less than the sum
of the Obligations and all indebtedness outstanding under the Note
Purchase Agreement nor shall it be less than $15 million per
location and $200,000,000 in the aggregate; and
(B) public liability insurance in the
name of Borrower and the Guarantor, with comprehensive general
liability coverage of not less than $175,000,000, and including a
contractual liability endorsement, in the amounts of $2,000,000 for
the death or bodily injury to one person, $5,000,000 for the death
or bodily injury in any one accident or occurrence and $500,000 for
loss or damage to the property of any person or persons; and
(C) if the Borrower shall be operating
or using a boiler, boiler explosion and casualty insurance
reasonably satisfactory to the Banks; and
(D) business interruption insurance in
amounts no less than the amounts maintained as of the Date of
Closing; and
(E) worker's compensation insurance, as
may be required by law; and
(F) all such insurance coverage may be
effected under overall blanket or excess coverage policies
provided, however, that all insurance shall be in amounts
sufficient to prevent the insured from being a co-insurer within
the terms of any insurance policy; and
(G) all policies or endorsements shall
(i) have no named loss payees other than (a) any Companies and (b)
any lessor of any Company or mortgagee of a lessor of any Company
with respect to a casualty on lessor's premises, and (ii) contain
a provision stating that such policy or policies "shall not be
cancelled or modified except after thirty (30) days prior written
notice delivered to the Agent (attn: Commercial Loan Department)"
at the Agent's addresses first listed above or as subsequently
directed in writing by the Agent (it being understood that, if
Wakefern is providing insurance for the Borrower or any Subsidiary,
it may change carriers without prior notice to the Banks so long as
the dollar amount of coverage is not reduced and the other terms
hereof are not breached); and
(H) all policies of insurance shall be
in a form reasonably acceptable to the Banks and shall be issued by
insurers duly licensed and authorized to conduct that type of
insurance business in New Jersey or Pennsylvania as the case may
be. The Banks shall have the right, at any time, to reject
insurance provided by an insurance company other than InsuRite that
does not at all times have a policy-holders rating of "A", or
better, and financial rating of "AAA", or better, in the then
current edition of Best's Insurance Guide; and
(I) all policies of insurance or
satisfactory endorsements thereof, together with a paid receipt,
shall be deposited with the Agent prior to the Date of Closing and,
at least thirty (30) days prior to the expiration of any such
policies, the Borrower shall furnish paid receipts and other
evidence, satisfactory to the Agent, that all such policies have
been renewed or replaced.
7.3 Financial Information. Deliver
financial information and documents directly to each Bank as
follows:
(A) within forty-five (45) days after
the end of each of the first three (3) Fiscal Quarters of each
Fiscal Year, (i) the 10-Q reports for such Fiscal Quarter submitted
to the Securities and Exchange Commission by any Company (or
equivalent financial statements if the Company is no longer a
reporting Company with the SEC) together with and (ii) quarterly
profit and loss reports prepared on a store by store basis; and
(B) within ninety (90) days after the
close of each Fiscal Year, (i) the 10-K report most recently
submitted to the Securities and Exchange Commission by any Company
and (ii) to the extent not included in the 10-K an audited
consolidated balance sheet of the Companies as of the close of each
such Fiscal Year together with the related consolidated statements
of operations, retained earnings and statements of cash flows for
such Fiscal Year, certified without qualification by independent
certified public accountants that are reasonably satisfactory to
the Banks including their certificate and accompanying comment and
a certificate stating that they have no knowledge of the existence
of any condition or event that constitutes a Default or Event of
Default under any Loan Document or any other Obligation; and
(C) simultaneously with the submission
of each financial report as stated above, a certificate of the
president and chief financial officer of each Company that the
signers (i) believe that the financial report is true and complete,
(ii) have no knowledge of the existence of any condition or event
that constitutes a Default or Event of Default under any Loan
Document or other Obligation, (iii) if any Default or Event of
Default existed or exists, specifying the nature and period of
existence and what, if any, remedial action is being taken and (iv)
calculating and demonstrating compliance with all financial
covenants herein; and
(D) within five (5) days of filing or
public release, true copies of all (i) filings that are made with
the Securities and Exchange Commission or other regulatory
authorities, and (ii) reports, statements, communications and
announcements that are sent by the Borrower to its shareholders;
(E) within one hundred twenty (120)
days after the close of each Fiscal Year, five year financial
projections in GAAP format with the first year on a
quarter-by-quarter basis; and
(F) such other information including
tax filings and reports respecting the business and properties or
the condition or operations, financial or otherwise, of any Company
as the Banks may, from time to time, reasonably request.
7.4 Notices to Banks. Notify each Bank
immediately in writing (A) of any default, or asserted default by
any Company, under any real property lease, or under any agreement
involving actual or threatened claims or liability in excess of Two
Hundred Fifty Thousand Dollars ($250,000); (B) if any Company
becomes involved in any litigation involving actual or threatened
claims or liability in excess of Two Hundred Fifty Thousand Dollars
($250,000) that is not fully covered by insurance; (C) the
occurrence of any theft, fire or other casualty, or any
governmental taking, involving any Property having a value in
excess of Two Hundred Fifty Thousand Dollars ($250,000); (D) on
receipt of any information, notice, claim or investigation as to
any alleged use, storage, treatment or handling, except as
expressly permitted in this Loan Agreement or any discharge, spill,
emission or disposal, of any Hazardous Substance by, or on any
property owned or leased by, any Company that may involve more than
Two Hundred Fifty Thousand Dollars ($250,000) in testing and
cleanup costs and (E) upon any settlement or other significant
action arising from the IRS audit of the Company's acquisition of
Starn's Markets, Inc.
7.5 Further Assurances. Furnish further
assurances of title and security as to any Property and estoppel
certificates when requested by the Banks and otherwise to do
anything that the Banks in their discretion determine to be
reasonably necessary or desirable to establish, perfect, assure and
maintain the Banks' interest in any Collateral and to confirm and
assure the Companies' interest in any Property and that all
Property remains free of Liens other than Permitted Encumbrances,
the reasonable cost of so doing to be paid by the Borrower. The
Borrower hereby authorizes and appoints the Agent as its attorney-
in-fact to execute and file on behalf of any Company any instrument
or agreement that the Banks may determine to be reasonably
necessary to establish, perfect or maintain its interests pursuant
to any Loan Document, provided, however, that the Agent shall give
to the Borrower at least 7 days notice prior to taking any such
action and the Agent shall not take any such action if the Borrower
is negotiating with the Agent in good faith with respect to the
matters involved. The Borrower shall also, within five (5) days of
request, deliver to the Banks a notarized statement of the
indebtedness owing under each Obligation.
7.6 Complete Records. Maintain accurate,
current and complete records of each Company's financial affairs
and transactions and of all Property reasonably satisfactory to the
Banks.
7.7 Location of Offices. Maintain the chief
executive offices and company-wide business records of the
Companies at the address for the Borrower set forth in the caption
of this Loan Agreement and maintain the other records and Property
at the locations set forth on Exhibit 1 annexed to the Principal's
Certificate provided, however, that any such address may be changed
after prior written notice to the Banks.
7.8 Inspection of Property and Records.
Arrange, within one (1) Banking Day of request, for either Bank's
agents, employees or representatives to inspect any Property and
any books and records and commercial premises of any Company.
7.9 Bank Accounts. Except for local
short-term cash deposit and payroll accounts for any stores of any
Company, all Companies shall keep and maintain all existing and
future demand deposit, operating, tax reserve and other deposit
accounts in Borrower's name with the Banks or, with Banks' specific
approval, any Affiliate of the Banks (including Corestates Bank of
Delaware, N.A. and its Affiliates), except as expressly permitted
in advance, in writing, by the Banks, in their discretion.
Permission to open any such accounts with any other bank or
financial institution shall be requested of the Banks, in writing,
at least fifteen (15) days in advance of the date when any such
proposed account is to be opened. All funds deposited in any
accounts of institutions other than the Banks as permitted above
shall be regularly transferred into, and maintained at all times
in, the Borrower's operating accounts at the Banks.
7.10 Debt to Tangible Net Worth. As to the
Companies on a consolidated basis, maintain a Debt to Tangible Net
Worth Ratio of not more than the following ratios in the following
years:
Fiscal Year End Ratio
(A) July 1994 Two and Fifty
Hundredths to One
(2.50:1);
(B) July 1995 Two and Fifty
Hundredths to One
(2.50:1);
(C) July 1996 Two and Forty-Five
Hundredths to One
(2.45:1); and
(D) July 1997 and Two and Thirty-Five
each Fiscal Hundredths to One
Year there- (2.35:1).
after
Such Ratio shall be measured and tested at the end of each Fiscal
Quarter during each Fiscal Year.
7.11 Decrease in Tangible Net Worth. Not
permit Tangible Net Worth of the Companies on a consolidated basis
to decrease by more than (a) $250,000 per Fiscal Quarter for any
two consecutive Fiscal Quarters or (b) $500,000 in the aggregate
for any four consecutive Fiscal Quarters.
7.12 Minimum Fixed Charge Coverage Ratio.
As to the Companies on a consolidated basis, maintain a Fixed
Charge Coverage Ratio measured as of the end of each Fiscal Quarter
(commencing with the Fiscal Quarter ended July 1994) of at least
the following ratio for each of the Fiscal Quarters listed below:
Fiscal Quarters Ended Ratio
(A) On or before One and Twenty
Hundredths to
April 1995 One (1.20:1);
(B) After April 1995 One and Twenty Two
and on or before Hundredths to
April 1996 One (1.22:1);
(C) July 1996 and One and Thirty Five
each Fiscal Hundredths to One
Quarter there- (1.35:1).
after
7.13 EBIT to Interest Ratio. As to the
Companies' on a consolidated basis, maintain an EBIT to Interest
Ratio measured as of the end of each Fiscal Quarter of at least the
following ratio for the Fiscal Quarters listed below:
Fiscal Quarter End Ratio
(A) On or before One and Twenty Five
April 1995 Hundredths to One
(1.25:1);
(B) After April 1995 One and Thirty Five
but on or before Hundredths to One
(1:35:1);
April 1996
(C) After April 1996 One and Fifty Hundredths
but on or before to One (1:50:1);
April 1997
(D) July 1997 and One and Seventy Five
each Fiscal Hundredths to One (1.75:1)
Quarter there-
after
7.14 Taxes and Laws. Pay all taxes,
assessments, government charges and levies when due and comply with
all federal, state and local laws and regulations that are
applicable to any Company or the business of any Company and
provide proof of such payment and compliance as Bank may request,
provided however that any Company may diligently and in good faith
dispute an asserted tax liability by an appeal in a forum of
appropriate jurisdiction so long as the asserted liability is shown
as a reserve on all financial statements and reports delivered to
the Banks in accordance with GAAP.
7.15 Banks' Expenses. Pay all reasonable
fees, costs and expenses incurred by the Banks or the Agent and
their counsel in connection with the preparation or later
modification of any Loan Document (whether or not any loan is
actually consummated or modification is made) and the making,
closing and administering of the loans contemplated thereby,
including lien and title searches, copying costs, delivery and
postage charges and all filing and recording costs.
7.16 Indemnification. Assume all liability
for, and agree to indemnify, protect and save harmless the Agent
and each Bank, their agents and employees from and against all
liability (including liability in tort, whether absolute or
otherwise), obligations, losses, penalties, claims, suits, costs
and disbursements, including reasonable legal fees and
disbursements, in any way relating to, or arising out of, any
relationship with any Company, or any Obligation or Collateral
except liabilities arising from the willful misconduct of the Agent
or the respective Bank. This provision shall survive the
termination or expiration of this Loan Agreement.
7.17 Cooperative Obligations. Perform all
its duties and obligations, and maintain its existence, as a member
of the Wakefern cooperative and maintain its right to use the
"Shop-Rite" name and trademark.
7.18 Simultaneous Liens. If any Lien arises
in violation of Section 8.1, Borrower shall immediately cause all
Obligations to be secured equally and ratably with the indebtedness
secured by any such Lien, and, in any case, the Obligations shall
have the benefit of an equitable Lien equally and ratably securing
the Obligations, provided, however, that this provision shall not
in any way limit Borrower's duty to remain in compliance with all
other provisions of this Loan Agreement and the Banks' acceptance
of any Lien in its favor shall not constitute a waiver of any
Default including any violation of Section 8.1.
7.19 Closing Requirements. Upon demand
comply with all closing requirements of the Banks and their
counsel, whether or not requested at the closing including the
delivery of the Opinion Letter, in form and substance reasonably
satisfactory to the Banks and their counsel.
SECTION VIII - NEGATIVE COVENANTS
The Borrower agrees not to do, or permit any other
Company to do, any of the following without the express prior
written consent of the Banks, which consent may be granted or
withheld by each Bank in its reasonable discretion:
8.1 No Liens. Suffer any Lien against any
Property (including any real property leases and subleases), except
for any Permitted Encumbrances.
8.2 Hazardous Substances. Generate, store,
treat, discharge, refine, handle, release or dispose of any
Hazardous Substances except (A) for consumer products sold in the
ordinary course of business in accordance with all applicable laws
and regulations and (B) standard maintenance uses of common
cleaning and maintenance products.
8.3 Other Liabilities. Incur, or permit any
Subsidiary to incur, Liabilities or any guarantee, endorsement or
other contingent obligation except (A) indebtedness to the Banks;
(B) trade payables in the ordinary course of business; (C) pursuant
to real property leases and equipment leases; (D) purchase money
financing from Wakefern for purchases of specified equipment and
inventory (other than purchases described in subsection (B) of this
Section 8.3) so long as those purchases are consistent with, and do
not violate, any provision in this Loan Agreement; and (E)
indebtedness secured by Permitted Encumbrances.
8.4 Ownership And Organizational Changes. Permit
or effect any of the following:
(A) Any shares of stock of any Subsidiaries
to be sold, transferred, conveyed, assigned, pledged, hypothecated,
or otherwise encumbered, except for transfers to another
Subsidiary; or
(B) Any change in the ownership of any stock
of Borrower that is owned by any member of the Sumas Family or that
is held in trust for the benefit of members of the Sumas Family if
as a result of that transfer the Sumas Family will no longer hold
a sufficient number of shares of all classes of stock of Borrower
to cast at least 51% of the votes that may be cast in any election.
(C) Any change in the capitalization or
capital structure of any Company (including the issuance of any
new, additional or different type or class of stock, the
modification, reduction or retirement of any existing class or type
of stock or the changing or modifying of the voting power of any
stock) if, as a result of that change, there would be a violation
of any provision of this Loan Agreement, including subsections (A)
or (B) of this Section 8.4.
(D) The Borrower or any Company to
enter into any merger or consolidation or participate in a joint
venture with any other company, except that any such transaction
may take place between Subsidiaries or as permitted pursuant to
Section 8.8(H).
(E) Any Company to acquire all, or a
substantial portion of, the assets of any commercial Person, or
acquire any assets or interest therein of any firm for an aggregate
purchase price of $500,000 or more except (i) those acquisitions
made by the Borrower in the ordinary course of business (such as
acquisitions of inventory; acquisitions of stores or selling space
are not acquisitions in the ordinary course) or as permitted
pursuant to Section 8.8(H) or (ii) until such time as the Revolving
Loan is repaid in full, acquisitions of up to an additional 100,000
square feet of selling space.
(F) Any subsidiary to be created or
acquired, except that a new Subsidiary may be formed if it is
wholly-owned by the Borrower and guarantees payment of the
Obligations in form acceptable to the Banks.
8.5 Dividend Limitations and Stock
Repurchases. As to the Borrower, pay or incur any liability to pay
any cash dividends or distribution of any kind to any of Borrower's
shareholders or repurchase any of the outstanding shares of the
capital stock of the Borrower if in the aggregate amount of any
such dividends distributions or repurchases would (A) in any Fiscal
Year exceed, in the aggregate, twenty percent (20%) of the excess
of Borrower's net income for the prior Fiscal Year less One Million
Dollars ($1,000,000) or (B) would result in a violation of any
provision of this Loan Agreement including Sections 7.10, 7.11,
7.12 and 7.13. Notwithstanding the foregoing, if no dividends or
other distributions have been made, the Borrower may repurchase
shares of its capital stock each Fiscal Year in an amount not more
than the greater of (a) $100,000 or (b) the amount permitted under
the preceding sentence. Prior to payment of any dividend or any
intended stock repurchase the Borrower shall provide the Banks
with proof satisfactory to the Banks that, on a pro forma basis,
the Borrower will be in full compliance with all covenants set
forth in the Loan Agreement, including but not limited to the
financial covenants set forth in Sections 7.10 to 7.13, after such
dividend or stock repurchased is completed.
8.6 Other Names. Use or adopt any name
other than its formal corporate name set forth in this Loan
Agreement, or the name "Shop-Rite" or "Village Market" (for Florham
Park and South Orange only) unless, at least fifteen (15) days in
advance of using any other name, the Banks have been provided with
appropriate trade name certificates and current judgment, tax,
UCC-11 and other search reports for that new name, to the
reasonable satisfaction of the Banks.
8.7 Change in Fiscal Year Change the Fiscal
Year of any Company without the consent of the Banks.
8.8 Restricted Investments. Directly or
indirectly purchase or acquire any obligations, securities, stock
or other assets to be held for investment (as distinguished from
assets held for direct and immediate use or consumption by any
Company), or to make any loans, advances or extensions of credit,
except for any of the following:
(A) readily marketable direct
obligations of the United States of America;
(B) commercial paper maturing within
180 days from the date of issuance that has been issued by a
corporation conducting the majority of its business in the United
States and has a rating of "A-1" or better from Moody's Investor
Services or "P-1" or better from Standard & Poors;
(C) readily marketable direct
obligations of any state, county or municipality in the United
States that has a rating of at least "A-1" from Moody's Investor
Service or "P-1" from Standard & Poors;
(D) notes, checks and chattel paper
from customers that are accepted by any Company as payment for the
sale of inventory in the ordinary course of business;
(E) certificates of deposit and "repo"
obligations of (i) the Banks and their Affiliates or (ii) any other
United States domiciled bank or trust company that has unrestricted
capital funds of at least $500,000,000 and whose long term
certificates of deposit have a rating of at least "A-1" from
Moody's Investor Service or "P-1" from Standard & Poors;
(F) obligations of Wakefern having 30
day maturity for a single week's purchases from Wakefern;
(G) investments in Wakefern stock
and/or InsuRite stock in aggregate amounts of not more than $1.1
million in any Fiscal Year;
(H) equity contributions or investments
of less than $750,000 in the aggregate during the Term hereof; or
(J) repurchases of common stock of the
Borrower to the extent permitted by Section 8.5 above;
provided, however, that no more than Fifty Percent (50%) of the
aggregate principal amount of the above-mentioned debt instruments
(including bonds, obligations, commercial paper, bills or notes)
shall have maturity dates in excess of one year from the date of
original issuance.
8.9 Different Business. Engage in any
business other than the operation of supermarkets and related
retail activities as conducted in the normal course of business.
8.10 Prohibited Dispositions. Sell or
otherwise dispose of (A) all, or a substantial portion of, the
Property of any Company, or (B) any Property, other than in arm's
length transactions that are made in the ordinary course of
business, provided, however, that the Companies may engage in any
Permitted Dispositions. Notwithstanding the prior sentence, this
provision shall not be deemed to have authorized any sale or
disposition that will result in a violation of any other provision
of this Loan Agreement.
8.11 Management Changes. Permit or suffer
a change in management that would result in less than three of the
following individuals being in active, full time and direct control
of the business of each of the Companies: Perry Sumas, James
Sumas, Robert Sumas, William Sumas, John Sumas and Kevin Begley.
8.12 Assignment of Leases. Sell, assign,
convey any interest in, or permit any Lien against, any leases,
subleases, licenses or rights of use or occupancy of any kind with
respect to any real property whatsoever, except for (a) the
assignment of any lease for an existing store where a new store in
the same locale is being opened and (b) assignments of leases for
the existing Florham Park, Morristown, Kingston (PA), South Orange
and Bernardsville Annex locations.
8.13 Capital Expenditures. Permit the
aggregate sum of the consolidated Capital Expenditures of the
Companies made in any Fiscal Year listed below to exceed the
following amounts:
Maximum Amount of
Aggregate Capital
Expenditures for
Fiscal Year Ending for Fiscal Year
July 1994 $12,500,000
July 1995 19,700,000
July 1996 10,000,000
July 1997 6,000,000
July 1998 or 6,000,000
thereafter
provided, however, that for Fiscal Year 1998 and thereafter, the
Borrower may submit a Capital Expenditure budget for more than $6
million to the Banks, which may become the Capital Expenditure
Budget for such Fiscal Year after approval by the Banks in their
reasonable discretion. Furthermore, to the extent that the
Companies' Capital Expenditures in any Fiscal year are less than
the amounts set forth above, the "unused amounts" (the excess of
the permitted amount of Capital Expenditures for such Fiscal Year
above the Companies' actual Capital Expenditures for such Fiscal
Year) may be rolled over into either of the next two (2) Fiscal
Years only, thereby increasing the Capital Expenditures permitted
for either of those two (2) Fiscal Years (but not for any other
subsequent Fiscal Year).
8.14 Prepayments. Prepay any indebtedness
for borrowed money or Capital Lease obligations.
SECTION IX - EVENTS OF DEFAULT
Any of the following events or conditions
shall, at the option of the Banks, constitute an "Event of Default"
under this Loan Agreement and any other Loan Documents or
obligations (except that the event or conditions described in
Section 9.13 automatically shall be an Event of Default, shall
terminate all Commitments hereunder and shall cause all amounts
hereunder to be immediately due and payable, without any action by
the Agent or the Banks):
9.1 Payments. Any failure to pay all
principal under the Term Loan, Revolving Term Loan or Convertible
Revolver within two (2) days after each due date, or any failure to
pay all interest or other monies within five (5) days after each
due date under the Term Loan, Revolving Term Loan, the Convertible
Revolver or any other Obligation; or
9.2 Other Obligations. Any failure to perform
or observe any term or condition under this Loan Agreement, the
Guaranty, any other Loan Document or any Obligation in a timely
fashion, other than any payments referred to in Section 9.1;
provided, however, that the Borrower may effect a complete cure of
any default of any non-monetary covenant in this Loan Agreement,
except for any Event of Default under any other subsection of this
Section IX, within fifteen (15) days of the occurrence of the Event
of Default so long as (A) in the reasonable judgment of the Banks
the default is curable in its entirety during that fifteen (15) day
cure period and (B) this right to cure is not exercised more than
one (1) time in any consecutive six (6) month period; or
9.3 Representations. Any representation,
statement, information or warranty that is at any time made or
delivered to the Banks by or on behalf of any Company shall be
materially incorrect, incomplete or misleading when made; or
9.4 Consents. Any Company shall do, or
permit to be done, any act for which the Banks' written consent is
required under any Loan Document, without first obtaining such
written consent.
9.5 Financial Information and Inspections.
Any Company shall fail, promptly after demand, to furnish financial
information or to permit inspection of any books, records or
Property as required under any Loan Document; or
9.6 Insurance. Any failure to maintain, or
provide evidence of, any insurance coverage required under any Loan
Document; or
9.7 Organizational Status. Any Company
shall dissolve or fail to remain in good standing in its state of
incorporation or duly qualified in each state where its properties
or business make qualification necessary (except with respect to
any Subsidiary that is merged into another Company); or
9.8 Warrants and Tax Liens. Any warrant of
attachment or for distraint, or notice of tax lien with respect to
an amount of Two Hundred Fifty Thousand Dollars ($250,000) or more
shall be issued relating to, or encumbering, any Property, or any
that is not, within fifteen (15) days of entry, discharged, or
stayed and bonded, to the satisfaction of the Banks;
9.9 Tax Audit. Any Company shall have any
liability to the IRS (whether of tax, interest, penalty, addition
to tax, or any combination thereof, and whether arising by reason
of (i) a settlement of the pending tax audit with the IRS or (ii)
a judgment or decision entered in favor of the IRS or a warrant of
attachment or distraint, or notice of tax lien, or an assessment of
a deficiency, or otherwise) arising from or relating to such
Company's acquisition of Starn's Markets, Inc., which either (a) is
in an amount in excess of One Million Dollars ($1,000,000) or (b)
if the aggregate amount is One Million Dollars ($1,000,000) or
less, will require payments in any one fiscal year by the Company
in excess of Two Hundred Fifty Thousand Dollars ($250,000);
provided however that if the judgment, decision, warrant, notice or
assessment described in clause (ii) above (collectively "Decision")
is appealable and is being contested in good faith by such Company,
with any action by the IRS duly stayed, then such Decision shall
not cause an Event of Default hereunder until such time as the
Decision becomes final and non-appealable or the IRS commences
collection efforts or the Company voluntarily pays such liability;
or
9.10 Judgments. Any judgment shall be
entered against any Company in excess of Two Hundred Fifty Thousand
Dollars ($250,000), that is not, within fifteen (15) days of entry,
discharged, or stayed and bonded, to the satisfaction of the Banks
or fully covered by insurance and the insurance company has, in
writing, unconditionally accepted liability for that judgment; or
9.11 Lien on Property. Any Lien shall
encumber any Property other than (i) a Permitted Encumbrance or
(ii) an involuntary Lien that is specially covered under Sections
9.8 or 9.9.
9.12 Loss or Destruction. Any loss or
destruction of any Property that, in the Banks' reasonable judg-
ment, has a market value of Five Hundred Thousand Dollars
($500,000) or more, unless, that loss or destruction is adequately
covered by insurance and, within ninety (90) days of that loss or
destruction, either an insurance company has admitted its liability
for such loss or destruction, or such loss or destruction is fully
compensated by insurance to the satisfaction of the Banks; or
9.13 Insolvency. Any filing of a petition
by or against any Company under any bankruptcy or insolvency law or
an assignment by any Company of any property or assets for the
benefit of creditors, or the failure of any Company to pay its
debts in the ordinary course as those debts become due, or the
calling of a meeting of creditors of any Company to obtain any
general financial accommodation; provided, however, that as to any
such action that is involuntarily commenced against and is being
contested by the subject Company, that Company shall have until the
earlier of thirty (30) days or an adjudication of insolvency to
contest and obtain a dismissal of that action; or
9.14 Seizure of Property. Any seizure by
governmental authorities of, or the imposition of legal restraints
against, any property of any Company that has an aggregate value in
excess of Five Hundred Thousand and 00/100 Dollars ($500,000),
which is not, within fifteen (15) days of that seizure or
imposition, fully bonded to the reasonable satisfaction of the
Banks; or
9.15 Note Purchase Agreement. The Borrower
shall be in default under any term or condition under the Note
Purchase Agreement or any other indebtedness for borrowed money; or
9.16 Leases. Any Company shall be in
default under any term or condition under any Capital Lease
obligation or under any material operating leases (other than those
which are being contested in good faith and have not resulted in
the loss of any Property by any Company); or
9.17 Enforceability. Any action or
proceeding is instituted to obtain a ruling or judgment that any
term or condition of any Loan Document, or any restriction against,
or interest in, any Property that any Loan Document purports to
give to the Banks, is unenforceable in any respect; or
9.18 Termination of Plan. Any Termination
Event occurs under any Plan, a trustee shall be appointed by a
court of appropriate authority to administer any Plan, the Pension
Benefit Guaranty Corporation shall institute proceedings to
terminate any Plan or to appoint a trustee or administer any Plan
or any Plan shall be formally terminated; or
9.19 Other Liabilities. Any Company shall
fail to make any payment when due or fail to perform any obligation
under its Liabilities in excess of Five Hundred Thousand and 00/100
Dollars ($500,000) (other than as referred to in any other
subsection of this Section 9) when due (whether by scheduled
maturity, required prepayment, acceleration, demand or otherwise)
and such failure shall continue after the applicable grace period,
if any, specified in the agreement relating to any such
Liabilities; or
9.20 Material Adverse Change. There shall
be a material adverse change in the business or financial condition
of the Borrower and its Subsidiaries taken as a whole.
SECTION X - REMEDIES
Whenever an Event of Default occurs (and any
applicable cure period has expired), the Banks may, in addition to
any right or remedy they may have at law or in equity, at their
option, do any one or more of the following in any order, in any
combination and at any time:
10.1 Acceleration. Declare any Obligations,
including the Term Loan, the Revolving Loan, the Convertible
Revolver or indebtedness under the Prior NJNB Loan, to be
immediately due and payable; or
10.2 Other Remedies. Exercise any other
rights or remedies it may have under any Loan Document or
Obligation; or
10.3 Terminate Financing. Immediately
terminate or reduce the lending Commitments under the Revolving
Loan or Convertible Revolver; or
10.4 Direct Recourse. Institute suit
directly against the Borrower or the Guarantor; or
10.5 Other Creditor Remedies. Exercise any
right or remedy available to the Banks under any applicable law of
any jurisdiction; or
10.6 Collection Expenses. Collect from any
Obligor (A) all reasonable fees and disbursements of the Banks'
attorneys incurred in obtaining advice or representation relating
to the collection or enforcement of any Obligation and (B) all
expenses of, or in anticipation of, litigation including fees and
expenses of witnesses, experts and stenographers and the cost to
obtain or produce appraisals. All such collection fees and
expenses shall be due and payable upon demand, and shall accrue
interest at the highest rate in effect from time to time under any
Obligation; or
10.7 Other Expenses. At any time and from
time to time, perform any duty or obligation of any Company under
any Loan Document or Obligation and to take any other actions
deemed by the Banks to be reasonably necessary to protect the
Banks' interest in any Property or to avoid any risk of damage or
loss to the Banks including steps to comply with applicable
environmental laws. All expenses of any nature incurred by the
Banks under this subsection shall be due and payable upon demand,
and shall accrue interest at the highest rate in effect from time
to time under any Obligation. The exercise by the Banks of their
rights under this subsection shall not constitute a waiver of any
Event of Default or of any right or remedy under this any Loan
Document; or
10.8 Increase in Interest. Increase the
rate of interest under any Obligations to a floating interest rate
determined by the Banks up to and including Three Percent (3%)
above the Prime Rate. This increase in interest rate shall be
computed on the basis of a 360-day year and shall survive the entry
of any judgment relating to any Obligation.
10.9 Additional Rights of Banks. The Banks
may exercise any of the rights and remedies in Sections 10.6 or
10.7 upon the occurrence of any Default, whether or not Bank has
formally declared an Event of Default or accelerated any
Obligations, provided, however, that the Banks shall not exercise
any rights or remedies pursuant to this Section 10.9 until after
the Borrower is on notice of the circumstance or condition that
would give rise to the Default.
10.10 Pari Passu. The Banks and the
Borrower agree that following an Event of Default the Notes and the
Prior NJNB Loan shall be treated on a pari passu basis.
SECTION XI THE AGENT; RELATIONS AMONG BANKS, ETC.
11.1. Appointment, Powers and Immunities of
Agent. Each Bank hereby irrevocably (but subject to removal by the
Banks pursuant to Section 11.9) appoints and authorizes the Agent
to act as its agent hereunder and under any other Loan Document
with such powers as are specifically delegated to the Agent by the
terms of this Agreement and any other Loan Document, together with
such other powers as are reasonably incidental thereto. The Agent
shall have no duties or responsibilities except those expressly set
forth in this Agreement and any other Loan Document, and shall not
by reason of this Agreement be a trustee for any Bank. The Agent
shall not be responsible to the Banks for any recitals, statements,
representations or warranties made by the Borrower or any officer
of the Borrower or any other Person contained in this Agreement or
any other Loan Document, or in any certificate or other document or
instrument referred to or provided for in, or received by any of
them under, this Loan Agreement or any other Loan Document, or for
the value, legality, validity, effectiveness, genuineness,
enforceability or sufficiency of this Loan Agreement or any other
Loan Document or any other document or instrument referred to or
provided for herein or therein, or for any failure by the Borrower
to perform any of its obligations hereunder or thereunder. The
Agent may employ agents and attorneys-in-fact and shall not be
responsible, except as to money or securities received by it or its
authorized agents, for the negligence or misconduct of any such
agents or attorneys-in-fact selected by it with reasonable care.
Neither the Agent nor any of its directors, officers, employees or
agents shall be liable or responsible for any action taken or
omitted to be taken by it or them hereunder or under any other Loan
Document or in connection herewith or therewith, except for its or
their own gross negligence or willful misconduct.
11.2. Reliance by Agent. The Agent shall be
entitled to rely upon any certification, notice or other
communication (including any thereof by telephone, telex,
telecopier, telegram or cable) believed by it to be genuine and
correct and to have been signed or sent by or on behalf of the
proper Person or Persons, and upon advice and statements of legal
counsel, independent accountants and other experts selected by the
Agent. The Agent may deem and treat each Bank as the holder of the
Loans made by it for all purposes hereof unless and until a notice
of the assignment or transfer thereof satisfactory to the Agent
signed by such Bank and approved in advance by both Banks shall
have been furnished to the Agent. The Agent shall not be required
to deal with any Person who has acquired a participation in any
Loan from a Bank. As to any matters not expressly provided for by
this Agreement or any other Loan Document, the Agent shall in all
cases be fully protected in acting, or in refraining from acting,
hereunder in accordance with instructions signed by both Banks, and
such instructions of both Banks and any action taken or failure to
act pursuant thereto shall be binding on all of the Banks and any
other holder of all or any portion of any Loan.
11.3. Defaults. The Agent shall not be
deemed to have knowledge of the occurrence of a Default or Event of
Default (other than the non-payment of principal of or interest on
the Loans to the extent the same is required to be paid to the
Agent for the account of the Banks) unless the Agent has received
notice from a Bank or the Borrower specifying such Default or Event
of Default and stating that such notice is a "Notice of Default."
In the event that the Agent receives such a notice of the
occurrence of a Default or Event of Default, the Agent shall give
prompt notice thereof to the Banks (and shall give each Bank prompt
notice of each such non-payment). The Agent shall (subject to
Section 11.8) take such action with respect to such Default or
Event of Default which is continuing as shall be directed by both
Banks; provided that, unless and until the Agent shall have
received such directions, the Agent may take such action, or
refrain from taking such action, with respect to such Default or
Event of Default as it shall deem advisable in the best interest of
the Banks; and provided further that the Agent shall not be
required to take any such action which it determines to be contrary
to law.
11.4. Rights of Agent as a Bank. With
respect to its Commitment and the Loans made by it, the Agent in
its capacity as a Bank hereunder shall have the same rights and
powers hereunder as any other Bank and may exercise the same as
though it were not acting as the Agent, and the term "Bank" or
"Banks" shall, unless the context otherwise indicates, include the
Agent in its capacity as a Bank. The Agent and its Affiliates may
(without having to account therefor to any Bank) accept deposits
from, lend money to (on a secured or unsecured basis) and generally
engage in any kind of banking, trust or other business with the
Borrower (and any of its Affiliates) as if it were not acting as
the Agent, and the Agent may accept fees and other consideration
from the Borrower for services in connection with this Agreement or
otherwise without having to account for the same to the Banks.
11.5. Indemnification of Agent. The Banks
agree to indemnify the Agent (to the extent not reimbursed under
Section 10.6 or under the applicable provisions of any other Loan
Document, but without limiting the obligations of the Borrower
under Section 10.6 or such provisions), ratably in accordance with
the aggregate unpaid principal amount of the Loans made by the
Banks (without giving effect to any participation, in all or any
portion of such Loans, sold by them to any other Person) (or, if no
Loans are at the time outstanding, ratably in accordance with their
respective Commitments), for any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind and nature whatsoever which
may be imposed on, incurred by or asserted against the Agent as
agent hereunder in any way relating to or arising out of this
Agreement, any other Loan Document or any other documents
contemplated by or referred to herein or the transactions
contemplated hereby or thereby (including, without limitation, the
costs and expenses which the Borrower is obligated to pay under
Section 10.6 or under the applicable provisions of any other Loan
Document but excluding, unless a Default or Event of Default has
occurred, normal administrative costs and expenses incident to the
performance of its agency duties hereunder) or the enforcement of
any of the terms hereof or thereof or of any such other documents
or instruments; provided that no Bank shall be liable for any of
the foregoing to the extent they arise from the gross negligence or
willful misconduct of the party to be indemnified.
11.6. Documents; Notices. The Agent will
forward to each Bank, promptly after the Agent's receipt thereof,
a copy of each report, notice or other document required by this
Agreement or any other Loan Document to be delivered to the Agent
for such Bank. The Agent also shall provide each Bank with a copy
of any notice that it sends as Agent to the Borrower. Each Bank
shall provide the other Bank with a copy of any notice that it
sends to the Borrower.
11.7. Non-Reliance on Agent and Other Banks.
Each Bank agrees that it has, independently and without reliance on
the Agent or any other Bank, and based on such documents and
information as it has deemed appropriate, made its own credit
analysis of the Borrower and its Subsidiaries and its own decision
to enter into this Loan Agreement and that it will, independently
and without reliance upon the Agent or any other Bank, and based on
such documents and information as it shall deem appropriate at the
time, continue to make its own analysis and decisions in taking or
not taking action under this Loan Agreement or any other Loan
Document. The Agent shall not be required to keep itself informed
as to the performance or observance by the Borrower of this Loan
Agreement or any other Loan Document or any other document referred
to or provided for herein or therein or to inspect the properties
or books of the Borrower or any Subsidiary except as otherwise
expressly stated herein. Except for notices, reports and other
documents and information expressly required to be furnished to the
Banks by the Agent hereunder, the Agent shall not have any duty or
responsibility to provide any Bank with any credit or other
information concerning the affairs, financial condition or business
of the Borrower or any Subsidiary which may come into the
possession of the Agent or any of its Affiliates. The Agent shall
not be required to file this Loan Agreement, any other Loan
Document or any document or instrument referred to herein or
therein, for record or give notice of this Loan Agreement, any
other Loan Document or any document or instrument referred to
herein or therein, to anyone.
11.8. Failure of Agent to Act. Except for
action expressly required of the Agent hereunder, the Agent shall
in all cases be fully justified in failing or refusing to act
hereunder unless it shall have received further assurances (which
may include cash collateral) of the indemnification obligations of
the Banks under Section 11.5 in respect of any and all liability
and expense which may be incurred by it by reason of taking or
continuing to take any such action.
11.9. Resignation or Removal of Agent.
Subject to the appointment and acceptance of a successor Agent as
provided below, the Agent may resign at any time by giving written
notice thereof to the Banks and the Borrower, and the Agent may be
removed at any time with or without cause by both Banks; provided
that the Borrower shall be promptly notified thereof. Upon any
such resignation or removal, the Banks shall have the right jointly
to appoint a successor Agent. If no successor Agent shall have
been so appointed by both Banks and shall have accepted such
appointment within 30 days after the retiring Agent's giving of
notice of resignation or the Banks' removal of the retiring Agent,
then the retiring Agent may, on behalf of the Banks, appoint a
successor Agent, which shall be a bank which has an office in New
Jersey or New York. The Banks or the retiring Agent, as the case
may be, shall upon the appointment of a successor Agent promptly so
notify the Borrower. Upon the acceptance of any appointment as
agent hereunder by a successor Agent, such successor Agent shall
thereupon succeed to and become vested with all the rights, powers,
privileges and duties of the retiring Agent, and the retiring Agent
shall be discharged from its duties and obligations hereunder.
After any retiring Agent's resignation or removal hereunder as
Agent, the provisions of this Article 11 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 the Agent.
11.10. Amendments Concerning Agency Function.
The Agent shall not be bound by any waiver, amendment, supplement
or modification of this Loan Agreement or any other Loan Document
which affects its duties hereunder or thereunder unless it shall
have given its prior consent thereto.
11.11. Liability of Agent. The Agent shall
not have any liabilities or responsibilities to the Borrower on
account of the failure of any Bank to perform its obligations
hereunder or to any Bank on account of the failure of the Borrower
to perform its obligations hereunder or under any other Loan
Document.
11.12. Transfer of Agency_Function. Without
the consent of the Borrower or any Bank, the Agent may at any time
or from time to time transfer its functions as Agent hereunder to
any of its offices in the United States of America wherever
located, provided that the Agent shall promptly notify the Borrower
and the Banks thereof.
11.13. Non-Receipt of Funds the Agent.
Unless the Agent shall have been notified by a Bank or the Borrower
(either one as appropriate being the "Payor") prior to the date on
which such Bank is to make payment hereunder to the Agent of the
proceeds of a Loan or the Borrower is to make payment to the Agent,
as the case may be (either such payment being a "Required
Payment"), which notice shall be effective upon receipt, that the
Payor does not intend to make the Required Payment to the Agent,
the Agent may assume that the Required Payment has been made and
may, in reliance upon such assumption (but shall not be required
to), make the amount thereof available to the intended recipient on
such date and, if the Payor has not in fact made the Required
Payment to the Agent, the recipient of such payment (and, if such
recipient is the Borrower and the Payor Bank fails to pay the
amount thereof to the Agent forthwith upon demand, the Borrower)
shall, on demand, repay to the Agent the amount made available to
it together with interest thereon for the period from the date such
amount was so made available by the Agent until the date the Agent
recovers such amount at a rate per annum equal to the average daily
Prime Rate for such period.
11.14. Several Obligations of Banks. The
failure of any Bank to make any Loan to be made by it on the date
specified therefor shall not relieve any other Bank of its
obligation to make its Loan on such date, but no Bank shall be
responsible for the failure of any other Bank to make a Loan to be
made by such other Bank.
11.15. Pro Rata Treatment of Loans, Etc.
Except to the extent otherwise provided herein: (a) each borrowing
under Sections 2.6, 2.10 and 4.6 shall be made from the Banks,
each reduction or termination of the amount of the Commitments
shall be applied proportionately to the Commitments of the Banks,
and each payment of commitment fee accruing under Section 5.10
shall be made for the account of the Banks, pro rata according to
the amounts of their respective unused Commitments; and (b) each
prepayment and payment of principal of or interest on Loans or any
letter of credit or any late fees, prepayment fees or commitment
fees or any other amounts due with respect to the Loans (other than
expense reimbursements) shall be made to the Agent for the account
of the Banks holding Loans pro rata in accordance with the
respective unpaid principal amounts of such Loans held by such
Banks.
11.16. Sharing of Payments Among Banks. If
a Bank shall obtain payment of any principal of or interest on any
Loan or any late fees, prepayment fees or commitment fees, made by
it through the exercise of any right of set-off, banker's lien,
counterclaim, or by any other means, it shall promptly purchase
from the other Banks participation in (or, if and to the extent
specified by such Bank, direct interests in) the Loans made by the
other Banks in such amounts, and make such other adjustments from
time to time as shall be equitable to the end that all the Banks
shall share the benefit of such payment (net of any expenses which
may be incurred by such Bank in obtaining or preserving such
benefit) pro rata in accordance with the unpaid principal and
interest on the Loans held by each of them. To such end the Banks
shall make appropriate adjustments among themselves (by the resale
of participation sold or otherwise) if such payment is rescinded or
must otherwise be restored. The Borrower agrees that any Bank so
purchasing a participation (or direct interest) in the Loans made
by other Banks may exercise all rights of set-off, banker's lien,
counterclaim or similar rights with respect to such participation
(or direct interest). Nothing contained herein shall require any
Bank to exercise any such right or shall affect the right of any
Bank to exercise, and retain the benefits of exercising, any such
right with respect to any other indebtedness of the Borrower.
SECTION XII - MISCELLANEOUS PROVISIONS
12.1 Waiver. The Banks shall not be deemed
to have waived any rights or remedies under any Loan Document or
Obligation by:
(A) forebearing or failing to exercise,
or delaying in exercising, any rights and remedies; or
(B) forebearing or failing to insist
upon, or any delay in insisting upon, the strict performance of any
term or condition of any Loan Document or other Obligation; or
(C) granting any extension, modification
or waiver of any term or condition of any Loan Document or other
Obligation, except, and only to the extent, that the extension,
modification, or waiver shall expressly provide; or
(D) any other act, omission,
forebearance or delay by any Bank, its officers, agents, servants
or employees; or
(E) any waiver of any rights or
remedies on any one occasion.
12.2 Written Modifications. No extension,
modification, amendment or waiver of any term or condition of any
Loan Document shall be valid or binding upon either Bank, unless it
is in writing and signed by a duly authorized officer of such Bank.
12.3 Demands and Notices. All demands and
notices under any Loan Document shall be in writing and shall be
served either personally or by certified mail, return receipt
requested, on the party to whom that notice or demand is to be
given or made at the address first set forth in the caption to this
Loan Agreement. All notices and demands directed to NJNB or the
Agent shall be sent to the Commercial Lending Department (Attn:
Stephen Rooney), with a copy of any such notice or demand to be
sent to NJNB's counsel, Lowenstein, Sandler, Kohl, Fisher & Boylan,
P.A. 65 Livingston Avenue, Roseland, New Jersey 07068 (Attn: Alan
Wovsaniker, Esq.). All notices to CBNJ shall be sent to the Large
Corporate Region Department (Attn: James H. Ramage), with a copy of
any such notice or demand to be sent to CBNJ's counsel, Friedman,
Siegelbaum, 5 Becker Farm Road, Roseland, New Jersey 07068 (Attn:
Joseph Siegelbaum, Esq.). All notices to Borrower shall be sent to
Borrower (Attn: Robert Sumas). (The Agent shall endeavor, but
shall have no obligation whatsoever and no responsibility
whatsoever for any failure, to send copies of notices of conditions
of default to the attention of the in-house counsel and controller
of Borrower.) Any party desiring to change the address to which
notices or demands shall be sent shall notify the other parties of
the new address by certified mail, return receipt requested. Any
notice or demand properly sent by Bank via certified mail, return
receipt requested, shall be deemed to have been served on the
third business day after mailing, regardless of when it is actually
received.
12.4 Governing Law. All terms of each Loan
Document and the duties, rights and remedies of the parties
thereunder shall be governed by, and construed according to, the
laws of the State of New Jersey.
12.5 Jurisdiction. In any litigation
relating to any Loan Document, Borrower hereby consents to the
exclusive personal jurisdiction of the state and federal courts of
the State of New Jersey.
12.6 Partial Invalidity. If any term or
provision of any Loan Document is held to be invalid by any court
of competent jurisdiction, such invalidity shall not affect the
remaining terms and provisions, which shall continue in full force
and effect.
12.7 Successors and Assigns. Each Loan
Document shall be binding upon, and inure to the benefit of, the
parties thereto and their respective successors or heirs, and
assigns, provided, however, that the Borrower shall not be
permitted to assign or transfer any rights or duties under any Loan
Document without the express prior consent of the Banks, which
consent the Banks may grant or withhold in their sole discretion.
Each Bank shall have the absolute right to assign, or sell a
participation interest in any or all of Bank's interest in, any
Loan Document or any Loans made pursuant to any Loan Document,
provided, however, that (1) neither Bank shall assign or sell a
participation interest in any or all of its interest in the Loans
or any Loan Document without the prior written consent of the other
Bank and (2) both Banks shall jointly retain all decision making
authority with respect to the declaration of Defaults and otherwise
hereunder.
12.8 Additional Rights and Remedies. All
rights and remedies given to the Banks under any Loan Document
shall be in addition to, and not in limitation of, any right or
remedy that the Banks may have, whether under any other provisions
of any Loan Document or other agreement, or at law or in equity.
12.9 Further Assurances. The Borrower
agrees to execute and deliver all documents and instruments
reasonably requested by either Bank or the Agent to further the
purposes of this Loan Agreement or any other Loan Document.
SECTION XIII - NO JURY TRIAL
IN ANY LITIGATION RELATING TO ANY LOAN
DOCUMENT, THE BANKS AND BORROWER HEREBY WAIVE THEIR RIGHT TO TRIAL
BY JURY. BANK AND BORROWER ACKNOWLEDGE THAT THEY HAVE CONSULTED
WITH THEIR RESPECTIVE COUNSEL SPECIFICALLY ON THE RAMIFICATIONS OF
WAIVING THE RIGHT TO REQUEST TRIAL BY JURY PRIOR TO AGREEING TO
THIS PROVISION.
The Banks, the Agent and the Borrower have
caused this Loan Agreement to be executed as of the day and year
first above written.
AGENT: BANKS:
NEW JERSEY NATIONAL BANK NEW JERSEY NATIONAL BANK
a National Banking a National Banking Corporation
Corporation
By: By:
Stephen Rooney, Assistant Stephen Rooney, Assistant
Vice President Vice President
LENDING OFFICE:
CHEMICAL BANK NEW JERSEY
NATIONAL ASSOCIATION
By:
James H. Ramage,
Vice President
LENDING OFFICE:
BORROWER:
ATTEST: VILLAGE SUPER MARKET, INC.
a New Jersey Corporation
By:
Robert Sumas, Executive
Vice President
<PAGE>
EXHIBIT A
CLOSING MEMORANDUM
The closing contemplated by the Loan Agreement dated
March , 1994 ("Loan Agreement") between New Jersey National
Bank ("NJNB", Chemical Bank New Jersey, National Association
("CBNJ") (collectively the "Banks"), Village Super Market,
Inc. ("Borrower") and Village Liquor Shop, Inc. ("Guarantor")
took place in Roseland, New Jersey on March , 1994.
Present at the closing were those persons whose
names appear on the annexed Exhibit 1.
All steps were deemed taken and documents delivered
simultaneously and none of the instruments, documents or
agreements referred to was deemed delivered until the closing
was completed. At the closing, the following documents were
delivered:
I. Loan Agreements
1.1 Loan Agreement
1.2 Term Notes
1.3 Revolving Notes
1.4 Convertible Revolver Notes
1.5 Guaranty
II. Corporate Documents-Borrower
2.1 Certified corporate resolutions
2.2 Certificate of corporate status and rundown
(NJ)
2.3 Certified copy of certificate of incorporation
2.4 Fictitious trade name certificate (for the
trade name Shop-Rite)
III. Corporate Documents-Village Liquor
3.1 Certified corporate resolutions
3.2 Certificate of corporate status and rundown
(NJ)
3.3 Certified copy of certificate of incorporation
IV. Lien Searches and Releases
4.1 Judgment searches on Borrower and Guarantor
and all trade names (NJ and Pa., depending on
locations)
4.2 UCC search reports on Borrower, the Guarantor
and all trade names (county and state)
4.3 Federal tax lien searches on Borrower and the
Guarantor
4.4 Franchise tax report on Borrower (in state of
operation) and the Guarantor
4.5 Title searches on owned real estate
4.6 Payoff letter from NJNB
V. Miscellaneous
5.1 Principal's Certificate
5.2 Insurance certificate and endorsements
(30-day notice of termination or modification
to Agent)
5.3 Opinion letter from Companies' counsel
5.4 Closing Statement
5.5 Invoice from NJNB's counsel and Chemical's
counsel
5.6 Commitment Letter
5.7 Certificate re: Note Purchase Agreement with
Travelers
<PAGE>
EXHIBIT 1
The following persons attended the closing:
For NJNB:
Stephen Rooney Assistant Vice President
For NJNB's Counsel: Lowenstein, Sandler, Kohl,
Fisher & Boylan, P.A.
Alan Wovsaniker, Esq.
For CBNJ:
James H. Ramage Vice President
Carey Purcell Assistant Vice President
For CBNJ's Counsel: Friedman & Siegelbaum
Steven Dressler, Esq.
For the Companies:
Perry Sumas, President
Robert Sumas, Executive Vice President
, Secretary
Companies' Counsel:
Frank Sauro, Esq.
<PAGE>
EXHIBIT B-1
NEW JERSEY NATIONAL BANK
REVOLVING NOTE
$8,000,000.00 March , 1994
FOR VALUE RECEIVED, VILLAGE SUPER MARKET INC. (the
"Borrower") hereby promises to pay to the order of NEW JERSEY
NATIONAL BANK, c/o New Jersey National Bank, as agent (the
"Agent") at its offices at 51 John F. Kennedy Parkway, Short
Hills, New Jersey, 07078 the principal sum of EIGHT MILLION
and 00/100 DOLLARS ($8,000,000.00), or such amount as is
indicated from time to time on the records of the Agent for
this Revolving Note, in United States currency in immediately
available funds and to pay interest thereon at a floating
interest rate as determined pursuant to the Loan Agreement
("Loan Agreement") of this date between New Jersey National
Bank, Chemical Bank New Jersey, National Association
(individually each a "Bank" and collectively the "Banks"),
the Agent and the Borrower.
This note is one of the "Revolving Note" referred to
in the Loan Agreement and is subject to all its terms and
conditions. The Loan Agreement contains provisions for the
acceleration of the maturity and optional prepayment of this
Note and an increase in the interest rate upon an Event of
Default. Capitalized terms used in this Revolving Note and
defined in the Loan Agreement shall have the meanings and be
construed as provided in the Loan Agreement.
Interest shall be payable in arrears on each
Interest Payment Date as provided in the Loan Agreement.
Interest shall be calculated as provided in the Loan
Agreement on a 360 day year based on the number of days
elapsed.
The Borrower shall pay interest on the unpaid
principal amount of each advance that the Banks make from the
date of each advance until the entire principal amount and
accrued interest shall be paid in full. To the extent
permitted by law, and in Banks' discretion, the Borrower
shall pay interest on any overdue interest payments from
their due date.
Except for special circumstances set forth in the
Loan Agreement or upon the occurrence of an Event of Default,
there shall be no mandatory principal payments prior to the
Revolving Note Maturity Date. On the Revolving Note Maturity
Date, the entire principal sum outstanding, plus all accrued
and unpaid interest shall be due and payable and paid in
full.
The Agent shall endeavor to record in its records
for this Revolving Note the amount of all advances and
extensions of credit and payments of principal and interest.
The failure of the Agent to make such notation upon the
making of any advance or the payment of any principal or
interest, however, shall not alter or impair the rights and
remedies of the Banks if an advance has actually been made
or the rights and remedies of the Borrower if a payment has
been delivered.
Upon the occurrence of an Event of Default the
principal and interest under this Revolving Note may become,
or may be declared to be, immediately due and payable in the
manner, upon the conditions and with the effect provided in
the Loan Agreement. The interest rate may also be increased
upon the occurrence of an Event of Default as provided in the
Loan Agreement.
The Borrower acknowledges that the Banks do not
presently intend for the aggregate principal amount of the
borrowings and extensions of credit under the Revolving Loan
to exceed the original principal amount of this Revolving
Note. Notwithstanding the foregoing, if, for any reason, the
Banks shall make advances and extensions of credit in excess
of that amount, the Borrower hereby agrees to repay those
excess sums upon demand at the interest rate provided under
the Loan Agreement with respect to the Revolving Loan.
All payments shall be applied first to costs of
collection, then to accrued interest with the balance applied
to the reduction of principal.
This Revolving Note shall be governed by, and
construed in accordance with, the laws of the State of New
Jersey.
The Borrower and each guarantor and endorser hereby
waive presentment, demand, protest, notice of protest,
diligence and all other demands and notices in connection
with the payment and enforcement of this Revolving Note.
IN WITNESS WHEREOF, the Borrower has caused this
Revolving Note to be duly executed on the date first above
written.
ATTEST: VILLAGE SUPER MARKET, INC.
a New Jersey Corporation
By:
, Secretary Robert Sumas, Executive
Vice President
<PAGE>
EXHIBIT B-2
REVOLVING NOTE
$4,000,000.00 March , 1994
FOR VALUE RECEIVED, VILLAGE SUPER MARKET INC. (the
"Borrower") hereby promises to pay to the order of CHEMICAL
BANK, NEW JERSEY, NATIONAL ASSOCIATION, c/o NEW JERSEY
NATIONAL BANK, as agent (the "Agent"), at the Agent's offices
at 51 John F. Kennedy Parkway, Short Hills, New Jersey, 07078
the principal sum of FOUR MILLION and 00/100 DOLLARS
($4,000,000.00), or such amount as is indicated from time to
time on the Agent's records for this Revolving Note, in
United States currency in immediately available funds and to
pay interest thereon at a floating interest rate as
determined pursuant to the Loan Agreement ("Loan Agreement")
of this date between New Jersey National Bank, Chemical Bank
New Jersey, National Association (individually each a "Bank"
and collectively the "Banks"), the Agent and the Borrower.
This note is one of the "Revolving Note" referred to
in the Loan Agreement and is subject to all its terms and
conditions. The Loan Agreement contains provisions for the
acceleration of the maturity and optional prepayment of this
Note and an increase in the interest rate upon an Event of
Default. Capitalized terms used in this Revolving Note and
defined in the Loan Agreement shall have the meanings and be
construed as provided in the Loan Agreement.
Interest shall be payable in arrears on each
Interest Payment Date as provided in the Loan Agreement.
Interest shall be calculated as provided in the Loan
Agreement on a 360 day year based on the number of days
elapsed.
The Borrower shall pay interest on the unpaid
principal amount of each advance that the Banks make from the
date of each advance until the entire principal amount and
accrued interest shall be paid in full. To the extent
permitted by law, and in Banks' discretion, the Borrower
shall pay interest on any overdue interest payments from
their due date.
Except for special circumstances set forth in the
Loan Agreement or upon the occurrence of an Event of Default,
there shall be no mandatory principal payments prior to the
Revolving Note Maturity Date. On the Revolving Note Maturity
Date, the entire principal sum outstanding, plus all accrued
and unpaid interest shall be due and payable and paid in
full.
The Agent shall endeavor to record in its records
for this Revolving Note the amount of all advances and
extensions of credit and payments of principal and interest.
The failure of the Agent to make such notation upon the
making of any advance or the payment of any principal or
interest, however, shall not alter or impair the rights and
remedies of the Banks if an advance has actually been made
or the rights and remedies of the Borrower if a payment has
been delivered.
Upon the occurrence of an Event of Default the
principal and interest under this Revolving Note may become,
or may be declared to be, immediately due and payable in the
manner, upon the conditions and with the effect provided in
the Loan Agreement. The interest rate may also be increased
upon the occurrence of an Event of Default as provided in the
Loan Agreement.
The Borrower acknowledges that the Banks do not
presently intend for the aggregate principal amount of the
borrowings and extensions of credit under the Revolving Loan
to exceed the original principal amount of this Revolving
Note. Notwithstanding the foregoing, if, for any reason, the
Banks shall make advances and extensions of credit in excess
of that amount, the Borrower hereby agrees to repay those
excess sums upon demand at the interest rate provided under
the Loan Agreement with respect to the Revolving Loan.
All payments shall be applied first to costs of
collection, then to accrued interest with the balance applied
to the reduction of principal.
This Revolving Note shall be governed by, and
construed in accordance with, the laws of the State of New
Jersey.
The Borrower and each guarantor and endorser hereby
waive presentment, demand, protest, notice of protest,
diligence and all other demands and notices in connection
with the payment and enforcement of this Revolving Note.
IN WITNESS WHEREOF, the Borrower has caused this
Revolving Note to be duly executed on the date first above
written.
ATTEST: VILLAGE SUPER MARKET, INC.
a New Jersey Corporation
By:
, Secretary Robert Sumas, Executive
Vice President
<PAGE>
EXHIBIT C-1
NEW JERSEY NATIONAL BANK
TERM NOTE
$6,666,666.67 March , 1994
FOR VALUE RECEIVED, VILLAGE SUPER MARKET, INC., a
New Jersey corporation (the "Borrower") hereby promises to
pay to the order of NEW JERSEY NATIONAL BANK, c/o New Jersey
National Bank, as agent (the "Agent") at its offices at 51
John F. Kennedy Parkway, Short Hills, New Jersey, 07078 the
principal sum of SIX MILLION SIX HUNDRED SIXTY SIX THOUSAND
SIX HUNDRED SIXTY SIX and 67/100 DOLLARS ($6,666,666.67) in
United States currency in immediately available funds, and
to pay interest thereon, at a rate equal to Eight and 15/100
Percent (8.15%) per annum, all pursuant to the terms of a
Loan Agreement ("Loan Agreement") of this date among, New
Jersey National Bank, Chemical Bank New Jersey, National
Association (individually each a "Bank" and collectively the
"Banks"), the Agent and the Borrower.
Interest only shall be paid on this Note on April 1,
1994 or on the first day of each and every month through July
1, 1994. The principal sum shall be paid in Eighty (80)
consecutive monthly installments of THIRTY SEVEN THOUSAND
THIRTY SEVEN and 04/100 DOLLARS ($37,037.04) each, commencing
on the first day of the month of August, 1994, and on the
first day of each month consecutively thereafter until the
first day of the month of April, 2001, when the final
principal installment of THREE MILLION SEVEN HUNDRED THREE
THOUSAND SEVEN HUNDRED THREE and 50/100 DOLLARS
($3,703,703.50) together with all other sums owing under this
Term Note shall be due and payable. Accrued interest shall
be due and payable on the first day of each calendar month
when any sums remain outstanding under this Note.
This Term Note is one of the "Term Note" referred to
in the Loan Agreement and is subject to all its terms and
conditions. The Loan Agreement contains provisions for the
acceleration of the maturity and optional prepayment and
prepayment fees of this Term Note and an increase in the
interest rate upon an Event of Default. Capitalized terms
used in this Term Note and defined in the Loan Agreement
shall have the meanings and be construed as provided in the
Loan Agreement.
Interest shall accrue from the date hereof until the
principal amount is paid in full. To the extent permitted
by law, and in the Banks' discretion, interest shall be paid
on any overdue interest payments from their due date at the
rate in effect under this Term Note. Interest shall be
calculated on a 360 day year based on the number of days
elapsed.
All payments shall be applied first to costs of
collection, if any, then to prepayment premium, and then to
accrued interest, with the balance applied to the reduction
of installments of principal in inverse order of their
maturities.
Upon the occurrence of an Event of Default, all sums
outstanding under this Term Note may become, or may be
declared to be, immediately due and payable in the manner,
upon the conditions, and with the effect provided in the Loan
Agreement.
This Term Note shall be governed by, and construed
in accordance with, the laws of the State of New Jersey.
The Borrower and any guarantors and endorsers hereby
waive presentment, demand, protest, notice of protest,
diligence and all other demands and notices in connection
with the payment and enforcement of this Term Note.
IN WITNESS WHEREOF, the Borrower has caused this
Term Note to be duly executed on the date first above
written.
ATTEST: VILLAGE SUPER MARKET, INC.
a New Jersey Corporation
By:
Secretary Robert Sumas, Executive Vice
President
<PAGE>
EXHIBIT C-2
TERM NOTE
$3,333,333.33 March , 1994
FOR VALUE RECEIVED, VILLAGE SUPER MARKET, INC., a
New Jersey corporation (the "Borrower") hereby promises to
pay to the order of CHEMICAL BANK NEW JERSEY, NATIONAL
ASSOCIATION, c/o New Jersey National Bank, as agent (the
"Agent"), at the Agent's offices at 51 John F. Kennedy
Parkway, Short Hills, New Jersey, 07078 the principal sum of
THREE MILLION THREE HUNDRED THIRTY THREE THOUSAND THREE
HUNDRED THIRTY THREE and 33/100 DOLLARS ($3,333,333.33) in
United States currency in immediately available funds, and
to pay interest thereon, at a rate equal to
Percent ( %) per annum, all pursuant to the terms of a
Loan Agreement ("Loan Agreement") of this date among, New
Jersey National Bank, Chemical Bank New Jersey, National
Association (individually each a "Bank" and collectively the
"Banks"), the Agent and the Borrower.
Interest only shall be paid on this Note on April 1,
1994 or on the first day of each and every month through July
1, 1994. The principal sum shall be paid in Eighty (80)
consecutive monthly installments of EIGHTEEN THOUSAND FIVE
HUNDRED EIGHTEEN and 52/100 DOLLARS ($18,518.52) each,
commencing on the first day of the month of August, 1994, and
on the first day of each month consecutively thereafter until
the first day of the month of April, 2001, when the final
principal installment of ONE MILLION EIGHT HUNDRED FIFTY ONE
THOUSAND EIGHT HUNDRED FIFTY ONE and 70/100 DOLLARS
($1,851,851.70) together with all other sums owing under this
Term Note shall be due and payable. Accrued interest shall
be due and payable on the first day of each calendar month
when any sums remain outstanding under this Note.
This Term Note is one of the "Term Note" referred to
in the Loan Agreement and is subject to all its terms and
conditions. The Loan Agreement contains provisions for the
acceleration of the maturity and optional prepayment and
prepayment fees of this Term Note and an increase in the
interest rate upon an Event of Default. Capitalized terms
used in this Term Note and defined in the Loan Agreement
shall have the meanings and be construed as provided in the
Loan Agreement.
Interest shall accrue from the date hereof until the
principal amount is paid in full. To the extent permitted
by law, and in the Banks' discretion, interest shall be paid
on any overdue interest payments from their due date at the
rate in effect under this Term Note. Interest shall be
calculated on a 360 day year based on the number of days
elapsed.
All payments shall be applied first to costs of
collection, if any, then to prepayment premium, and then to
accrued interest, with the balance applied to the reduction
of installments of principal in inverse order of their
maturities.
Upon the occurrence of an Event of Default, all sums
outstanding under this Term Note may become, or may be
declared to be, immediately due and payable in the manner,
upon the conditions, and with the effect provided in the Loan
Agreement.
This Term Note shall be governed by, and construed
in accordance with, the laws of the State of New Jersey.
The Borrower and any guarantors and endorsers hereby
waive presentment, demand, protest, notice of protest,
diligence and all other demands and notices in connection
with the payment and enforcement of this Term Note.
IN WITNESS WHEREOF, the Borrower has caused this
Term Note to be duly executed on the date first above
written.
ATTEST: VILLAGE SUPER MARKET, INC.
a New Jersey Corporation
By:
Secretary Robert Sumas, Executive Vice
President
<PAGE>
EXHIBIT D-1
NEW JERSEY NATIONAL BANK
CONVERTIBLE REVOLVER NOTE
$5,333,333.33 March , 1994
FOR VALUE RECEIVED, VILLAGE SUPER MARKET, INC., a
New Jersey corporation (the "Borrower"), hereby promises to
pay to the order of NEW JERSEY NATIONAL BANK c/o New Jersey
National Bank as agent (the "Agent"), at its offices at 51
John F. Kennedy Parkway, Short Hills, New Jersey, 07078 the
principal sum of FIVE MILLION THREE HUNDRED THIRTY-THREE
THOUSAND THREE HUNDRED THIRTY-THREE and 33/100 DOLLARS
($5,333,333.33), or such amount as is indicated from time to
time on the records of the Agent as being the amount actually
outstanding for this Note, in United States currency in
immediately available funds and to pay interest thereon at
the interest rate applicable to each Convertible Revolver
Loan as determined pursuant to the Loan Agreement of this
date ("Loan Agreement") among New Jersey National Bank,
Chemical Bank New Jersey, National Association (individually
each a "Bank" and collectively, the "Banks"), the Agent and
the Borrower.
This Note is one of the "Convertible Revolver Note"
referred to in the Loan Agreement and is subject to all its
terms and conditions. The Loan Agreement contains provisions
for the acceleration of the maturity and optional prepayment
and prepayment fees of this Note and an increase in the
interest rate upon an Event of Default. Capitalized terms
used in this Convertible Revolver Note and defined in the
Loan Agreement shall have the meanings and be construed as
provided in the Loan Agreement.
Interest shall be payable in arrears on each
Interest Payment Date as provided in the Loan Agreement.
Interest shall be calculated as provided in the Loan
Agreement on a 360 day year based on the number of days
elapsed.
The Borrower shall pay interest on the unpaid
principal amount of each advance that the Banks make from the
date of each advance until the entire principal amount and
accrued interest shall be paid in full. To the extent
permitted by law, and in the Banks' discretion, the Borrower
shall pay interest on any overdue interest payments from
their due date.
Except for special circumstances set forth in the
Loan Agreement or the occurrence of an Event of Default,
there shall be no mandatory principal payments prior to the
First Conversion Date except as required under Section 4.2
of the Loan Agreement. After the First Conversion Date, the
principal sum outstanding as of the First Conversion Date
shall be due and payable in Seventy One (71) equal monthly
principal installments based on a fifteen (15) year term
[First Principal Balance divided by 180] beginning on the
first (1st) day of the second month after the First
Conversion Date [February 1, 1995] and on the first (1st) day
of each month consecutively thereafter until the first day
of the Seventy Second (72nd) month after the First Conversion
Date when all principal, interest and other sums then
outstanding under the Convertible Revolver shall be due and
payable in full.
After the Second Conversion Date, the Borrower shall
repay the Second Principal Balance in Fifty-Nine (59) equal
monthly principal installments based on a fifteen (15) year
term [Second Principal Balance divided by 180] beginning on
the first (1st) day of the second month after the Second
Conversion Date [February 1, 1996] and on the first (1st) day
of each month consecutively thereafter until the first day
of the Sixtieth (60th) month after the Second Conversion Date
when all principal, interest and other sums then outstanding
under the Convertible Revolver shall be due and payable in
full.
Upon each Conversion Date or the Fixed Rate Date,
the Borrower shall execute such substitute notes
substantially in the form of Exhibits D-3 and D-4 of the Loan
Agreement as may be requested by the Agent or the Banks.
The Agent shall endeavor to record in its records
for this Convertible Revolver Note the amount of all advances
and extensions of credit and payments of principal and
interest. The failure of the Agent to make such notation
upon the making of any advance or the payment of any
principal or interest, however, shall not alter or impair the
rights and remedies of the Banks if an advance has actually
been made or the rights and remedies of the Borrower if a
payment has been delivered.
Upon the occurrence of an Event of Default the
principal and interest under this Convertible Revolver Note
may become, or may be declared to be, immediately due and
payable in the manner, upon the conditions and with the
effect provided in the Loan Agreement. The interest rate may
also be increased upon the occurrence of an Event of Default
as provided in the Loan Agreement.
The Borrower acknowledges that Banks do not
presently intend for the aggregate principal amount of the
borrowings and extensions of credit under the Convertible
Revolver Loan to exceed the original principal amount of this
Convertible Revolver Note. Notwithstanding the foregoing,
if, for any reason, the Banks shall make advances and
extensions of credit in excess of that amount, the Borrower
hereby agrees to repay those excess sums upon demand at the
interest rate provided under the Loan Agreement with respect
to the Convertible Revolver Loan.
All payments shall be applied first to costs of
collection, then to prepayment fees, if any, and then to
accrued interest with the balance applied to the reduction
of principal.
This Convertible Revolver Note shall be governed by,
and construed in accordance with, the laws of the State of
New Jersey.
The Borrower and each guarantor and endorser hereby
waive presentment, demand, protest, notice of protest,
diligence and all other demands and notices in connection
with the payment and enforcement of this Convertible Revolver
Note.
IN WITNESS WHEREOF, the Borrower has caused this
Convertible Revolver Note to be duly executed on the date
first above written.
ATTEST: VILLAGE SUPER MARKET, INC.
a New Jersey Corporation
By:
, Secretary Robert Sumas, Executive
Vice President
<PAGE>
EXHIBIT D-2
CONVERTIBLE REVOLVER NOTE
$2,666,666.67 March , 1994
FOR VALUE RECEIVED, VILLAGE SUPER MARKET, INC., a
New Jersey corporation (the "Borrower"), hereby promises to
pay to the order of CHEMICAL BANK NEW JERSEY, NATIONAL
ASSOCIATION, c/o New Jersey National Bank, as agent (the
"Agent"), at the Agent's offices at 51 John F. Kennedy
Parkway, Short Hills, New Jersey, 07078 the principal sum
of TWO MILLION SIX HUNDRED SIXTY-SIX THOUSAND SIX HUNDRED
SIXTY-SIX and 67/100 DOLLARS ($2,666,666.67), or such amount
as is indicated from time to time on the Agent's records as
being the amount actually outstanding for this Note, in
United States currency in immediately available funds and to
pay interest thereon at the interest rate applicable to each
Convertible Revolver Loan as determined pursuant to the Loan
Agreement of this date ("Loan Agreement") among New Jersey
National Bank, Chemical Bank New Jersey, National Association
(individually each a "Bank" and collectively, the "Banks"),
the Agent and the Borrower.
This Note is one of the "Convertible Revolver Note"
referred to in the Loan Agreement and is subject to all its
terms and conditions. The Loan Agreement contains provisions
for the acceleration of the maturity and optional prepayment
and prepayment fees of this Note and an increase in the
interest rate upon an Event of Default. Capitalized terms
used in this Convertible Revolver Note and defined in the
Loan Agreement shall have the meanings and be construed as
provided in the Loan Agreement.
Interest shall be payable in arrears on each
Interest Payment Date as provided in the Loan Agreement.
Interest shall be calculated as provided in the Loan
Agreement on a 360 day year based on the number of days
elapsed.
The Borrower shall pay interest on the unpaid
principal amount of each advance that the Banks make from the
date of each advance until the entire principal amount and
accrued interest shall be paid in full. To the extent
permitted by law, and in the Banks' discretion, the Borrower
shall pay interest on any overdue interest payments from
their due date.
Except for special circumstances set forth in the
Loan Agreement or the occurrence of an Event of Default,
there shall be no mandatory principal payments prior to the
First Conversion Date except as required under Section 4.2
of the Loan Agreement. After the First Conversion Date, the
principal sum outstanding as of the First Conversion Date
shall be due and payable in Seventy One (71) equal monthly
principal installments based on a fifteen (15) year term
[First Principal Balance divided by 180] beginning on the
first (1st) day of the second month after the First
Conversion Date [February 1, 1995] and on the first (1st) day
of each month consecutively thereafter until the first day
of the Seventy Second (72nd) month after the First Conversion
Date when all principal, interest and other sums then
outstanding under the Convertible Revolver shall be due and
payable in full.
After the Second Conversion Date, the Borrower shall
repay the Second Principal Balance in Fifty-Nine (59) equal
monthly principal installments based on a fifteen (15) year
term [Second Principal Balance divided by 180] beginning on
the first (1st) day of the second month after the Second
Conversion Date [February 1, 1996] and on the first (1st) day
of each month consecutively thereafter until the first day
of the Sixtieth (60th) month after the Second Conversion Date
when all principal, interest and other sums then outstanding
under the Convertible Revolver shall be due and payable in
full.
Upon each Conversion Date or the Fixed Rate Date,
the Borrower shall execute such substitute notes
substantially in the form of Exhibits D-3 and D-4 of the Loan
Agreement as may be requested by the Agent or the Banks.
The Agent shall endeavor to record in its records
for this Convertible Revolver Note the amount of all advances
and extensions of credit and payments of principal and
interest. The failure of the Agent to make such notation
upon the making of any advance or the payment of any
principal or interest, however, shall not alter or impair the
rights and remedies of the Banks if an advance has actually
been made or the rights and remedies of the Borrower if a
payment has been delivered.
Upon the occurrence of an Event of Default the
principal and interest under this Convertible Revolver Note
may become, or may be declared to be, immediately due and
payable in the manner, upon the conditions and with the
effect provided in the Loan Agreement. The interest rate may
also be increased upon the occurrence of an Event of Default
as provided in the Loan Agreement.
The Borrower acknowledges that Banks do not
presently intend for the aggregate principal amount of the
borrowings and extensions of credit under the Convertible
Revolver Loan to exceed the original principal amount of this
Convertible Revolver Note. Notwithstanding the foregoing,
if, for any reason, the Banks shall make advances and
extensions of credit in excess of that amount, the Borrower
hereby agrees to repay those excess sums upon demand at the
interest rate provided under the Loan Agreement with respect
to the Convertible Revolver Loan.
All payments shall be applied first to costs of
collection, then to prepayment fees, if any, and then to
accrued interest with the balance applied to the reduction
of principal.
This Convertible Revolver Note shall be governed by,
and construed in accordance with, the laws of the State of
New Jersey.
The Borrower and each guarantor and endorser hereby
waive presentment, demand, protest, notice of protest,
diligence and all other demands and notices in connection
with the payment and enforcement of this Convertible Revolver
Note.
IN WITNESS WHEREOF, the Borrower has caused this
Convertible Revolver Note to be duly executed on the date
first above written.
ATTEST: VILLAGE SUPER MARKET, INC.
a New Jersey Corporation
By:
, Secretary Robert Sumas, Executive
Vice President
<PAGE>
EXHIBIT D-3
NEW JERSEY NATIONAL BANK
CONVERTIBLE REVOLVER NOTE
$ December 31, 1994
FOR VALUE RECEIVED, VILLAGE SUPER MARKET, INC., a
New Jersey corporation (the "Borrower") hereby promises to
pay to the order of BANK at the offices
of New Jersey National Bank, as agent (the "Agent"), at the
Agent's offices at 51 John F. Kennedy Parkway, Short Hills,
New Jersey, 07078 the principal sum of and
00/100 DOLLARS ($ ) in United States currency in
immediately available funds, and to pay interest thereon. [at
a rate equal to [ /100] Percent ( %)
per annum [at the interest rate applicable to such
Convertible Revolver Loan as determined pursuant to Loan
Agreement], all pursuant to the terms of a Loan Agreement
("Loan Agreement") dated March , 1994 among, New Jersey
National Bank, Chemical Bank New Jersey, National Association
(individually each a "Bank" and collectively the "Banks"),
the Agent and the Borrower.
The principal sum of this Note shall be paid in
Seventy-one (71) consecutive equal monthly installments of
and /100 DOLLARS ($
) each, commencing on the first day of the month of
February, 1995, and on the first day of each month
consecutively thereafter until the first day of the month of
January, 2001, when the final principal installment of
and /100 DOLLARS ($ ) together with accrued
interest and all other sums owing under this Convertible
Revolver Note shall be due and payable in full. Accrued
interest shall be due and payable on each Interest Payment
Date when any sums remain outstanding under this Note.
This Convertible Revolver Note is one of the
"Convertible Revolver Notes" referred to in the Loan
Agreement and is subject to all its terms and conditions.
The Loan Agreement contains provisions for the acceleration
of the maturity and optional prepayment and prepayment fees
of this Convertible Revolver Note and an increase in the
interest rate upon an Event of Default. Capitalized terms
used in this Convertible Revolver Note and defined in the
Loan Agreement shall have the meanings and be construed as
provided in the Loan Agreement.
Interest shall accrue from the date hereof until the
principal amount is paid in full. To the extent permitted
by law, and in the Banks' discretion, interest shall be paid
on any overdue interest payments from their due date at the
rate in effect under this Convertible Revolver Note.
Interest shall be calculated on a 360 day year based on the
number of days elapsed.
All payments shall be applied first to costs of
collection, if any, then to prepayment premium, and then to
accrued interest, with the balance applied to the reduction
of installments of principal in inverse order of their
maturities.
Upon the occurrence of an Event of Default, all sums
outstanding under this Convertible Revolver Note may become,
or may be declared to be, immediately due and payable in the
manner, upon the conditions, and with the effect provided in
the Loan Agreement. The interest rate may also be increased
upon the occurrence of an Event of Default.
This Convertible Revolver Note shall be governed by,
and construed in accordance with, the laws of the State of
New Jersey.
The Borrower and any guarantors and endorsers hereby
waive presentment, demand, protest, notice of protest,
diligence and all other demands and notices in connection
with the payment and enforcement of this Term Note.
IN WITNESS WHEREOF, the Borrower has caused this
Convertible Revolver Note to be duly executed on the date
first above written.
ATTEST: VILLAGE SUPER MARKET, INC.
a New Jersey Corporation
By:
Secretary Robert Sumas, Executive Vice
President
<PAGE>
EXHIBIT D-4
NEW JERSEY NATIONAL BANK
CONVERTIBLE REVOLVER NOTE
$ December 31, 1995
FOR VALUE RECEIVED, VILLAGE SUPER MARKET, INC., a
New Jersey corporation (the "Borrower") hereby promises to
pay to the order of BANK at the offices
of New Jersey National Bank, as agent (the "Agent") at the
Agent's offices at 51 John F. Kennedy Parkway, Short Hills,
New Jersey, 07078 the principal sum of and
00/100 DOLLARS ($ ) in United States currency in
immediately available funds, and to pay interest thereon, at
a rate equal to [ /100] Percent ( %)
per annum [at the interest rate applicable to such
Convertible Revolver Loan as determined pursuant to the Loan
Agreement], all pursuant to the terms of a Loan Agreement
("Loan Agreement") dated March , 1994 among, New Jersey
National Bank, Chemical Bank New Jersey, National Association
(individually each a "Bank" and collectively the "Banks"),
the Agent and the Borrower.
The principal sum of this Note shall be paid in
Fifty-Nine (59) consecutive equal monthly installments of
and /100 DOLLARS ($
) each, commencing on the first day of the month of
February, 1996, and on the first day of each month
consecutively thereafter until the first day of the month of
January, 2001, when the final principal installment of
and /100 DOLLARS ($ ) together with accrued
interest and all other sums owing under this Convertible
Revolver Note shall be due and payable in full. Accrued
interest shall be due and payable on each Interest Payment
Date when any sums remain outstanding under this Note.
This Convertible Revolver Note is one of the
"Convertible Revolver Notes" referred to in the Loan
Agreement and is subject to all its terms and conditions.
The Loan Agreement contains provisions for the acceleration
of the maturity and optional prepayment and prepayment fees
of this Convertible Revolver Note and an increase in the
interest rate upon an Event of Default. Capitalized terms
used in this Convertible Revolver Note and defined in the
Loan Agreement shall have the meanings and be construed as
provided in the Loan Agreement.
Interest shall accrue from the date hereof until the
principal amount is paid in full. To the extent permitted
by law, and in the Banks' discretion, interest shall be paid
on any overdue interest payments from their due date at the
rate in effect under this Convertible Revolver Note.
Interest shall be calculated on a 360 day year based on the
number of days elapsed.
All payments shall be applied first to costs of
collection, if any, then to prepayment premium, and then to
accrued interest, with the balance applied to the reduction
of installments of principal in inverse order of their
maturities.
Upon the occurrence of an Event of Default, all sums
outstanding under this Convertible Revolver Note may become,
or may be declared to be, immediately due and payable in the
manner, upon the conditions, and with the effect provided in
the Loan Agreement. The interest rate may also be increased
upon the occurrence of an Event of Default.
This Convertible Revolver Note shall be governed by,
and construed in accordance with, the laws of the State of
New Jersey.
The Borrower and any guarantors and endorsers hereby
waive presentment, demand, protest, notice of protest,
diligence and all other demands and notices in connection
with the payment and enforcement of this Term Note.
IN WITNESS WHEREOF, the Borrower has caused this
Convertible Revolver Note to be duly executed on the date
first above written.
ATTEST: VILLAGE SUPER MARKET, INC.
a New Jersey Corporation
By:
Secretary Robert Sumas, Executive Vice
President
<PAGE>
EXHIBIT E
[Letterhead of the Companies' Counsel]
, 1994
New Jersey National Bank
51 John F. Kennedy Parkway
Short Hills, New Jersey 07078
Attn: Commercial Lending Department
Chemical Bank New Jersey, National Association
c/o New Jersey National Bank, as Agent
51 John F. Kennedy Parkway
Short Hills, New Jersey 07078
Ladies and Gentlemen:
This opinion relates to loans and other financial
arrangements involving New Jersey National Bank, as agent
(the "Agent"), New Jersey National Bank and Chemical Bank New
Jersey, National Association (the "Banks") and Village Super
Market, Inc., a New Jersey corporation (the "Borrower") and
Village Liquor, Inc., a New Jersey corporation (the
"Guarantor," collectively, with the Borrower, the "Companies"
or the "Obligors").
The documents for those loans include all "Loan
Documents" as that term is defined in the Loan Agreement
("Loan Agreement") of this same date involving, the Agent,
the Banks and the Borrower. Capitalized terms in this letter
that have been defined in the Loan Agreement shall be
construed as provided in the Loan Agreement unless otherwise
defined in this letter.
I have acted as counsel to the Borrower and the
Guarantor in connection with the negotiation and execution
of the Loan Documents and the consummation of the related
transactions. In that capacity, I am generally familiar with
the affairs, and have examined and am familiar with the
charter and organizational documents and records, of all
Companies.
I have examined and relied upon originals or copies,
authenticated or certified to our satisfaction, of all
records, of communications or certificates of public
officials, of certificates of the officers of the Companies,
and upon such other documents as I have deemed relevant and
necessary as the basis for the opinions hereinafter set
forth. In making my examination, I have assumed the
genuineness of all signatures, the authenticity of all
documents tendered to me as originals, and the conformity to
original documents of all documents submitted to me as
certified or photostatic copies.
Based upon the foregoing, I am of the opinion that:
(A) Each of the Borrower and the Guarantor is a
corporation duly organized, validly existing and in good
standing under the laws of the state of New Jersey and is
duly qualified to do business and is in good standing in each
other jurisdiction where its properties or the nature of its
business require qualification as a foreign corporation.
(B) Each Company has the power, authority,
franchises and licenses (1) to own its respective properties
and assets and to carry on and conduct business as it is now
being conducted and (2) to execute and deliver the Loan
Documents to which such Company is a party and to perform
each and every one of such Company's respective obligations
thereunder. The execution, delivery and performance of the
Loan Documents have been duly authorized by all requisite
action on behalf of each Company.
(C) Neither the execution nor the delivery of any
Loan Documents, nor the consummation of the transactions
contemplated thereby, nor the fulfillment of, compliance with
or performance of the terms and conditions therein, is
prevented, limited by, conflicts with or will result in the
breach or violation of, or a default under, the terms of (1)
any charter or certificate of incorporation or amendment
thereof, to which any Company is bound, or (2) any law, rule
or regulation, or any order of any court or administrative
agency applicable to any of the Companies or (3) any
provision of any agreement constituting, or giving rise to,
a Permitted Encumbrance. To the best of my knowledge after
due inquiry, no Company is, or by the Borrower's or
Guarantor's execution, delivery or performance of any Loan
Documents will be, in default under, or in violation of, any
of its obligations under any agreement or undertaking to
which it is a party or by which it is bound.
(D) There is no action or proceeding pending or
threatened against any Company before any court or
administrative agency that might (1) adversely affect the
ability of any Company to perform any obligations under any
Loan Documents, (2) involve the possibility of any judgment
or liability that would result in any material adverse change
in the business, properties or assets of any Company, or (3)
adversely affect the enforceability of any of the Loan
Documents.
(E) Each of the Loan Documents constitutes the
legal, valid and binding obligations of the Borrower and the
Guarantor (to the extent each is a party thereto) enforceable
in accordance with their respective terms, except, as to the
enforcement of remedies only, to any applicable bankruptcy,
insolvency and similar laws affecting creditors rights
generally, and general principles of equity.
(F) The Borrower is the legal and beneficial owner
of, and holds good and valid record title to, all outstanding
shares of all classes of stock of the Guarantor and does not,
directly or indirectly, own any Subsidiaries other than the
Guarantor.
(G) There exist no Liens with respect to any
Property other than Permitted Encumbrances. This opinion is
to the best of my knowledge after due inquiry.
The Agent, the Banks, their successors and assigns,
and their respective counsel, may rely on this letter as if
it were addressed specifically to them.
Very truly yours,
Frank Sauro, Esq.
cc: Alan Wovsaniker, Esq.
<PAGE>
EXHIBIT F
GUARANTY
This Guaranty ("Guaranty") is made this day of
March, 1994,
BY VILLAGE LIQUOR SHOP, INC., a New
Jersey corporation having its
principal place of business at
733 Mountain Avenue,
Springfield, New Jersey 07081
("Guarantor");
OF THE OBLI-
GATIONS OF VILLAGE SUPER MARKET, INC., a
New Jersey corporation having
its principal place of business
at 733 Mountain Avenue,
Springfield, New Jersey
("Borrower")
IN FAVOR OF NEW JERSEY NATIONAL BANK
("NJNB"), a New Jersey banking
corporation having an office at
51 John F. Kennedy Parkway,
Short Hills, New Jersey 07078
and CHEMICAL BANK NEW JERSEY,
NATIONAL ASSOCIATION, a national
banking association having an
office at East 36 Midland
Avenue, Paramus, New Jersey
07652 ("CBNJ", individually each
a "Bank" and collectively the
"Banks").
Background. This Guaranty is made by Guarantor to induce
the Banks to make certain loans and financial accommodations
to the Borrower, including certain loans in the aggregate
principal amount of up to $30,000,000 pursuant to the Loan
Agreement and the Notes (as referenced below).
COVENANTS
In consideration of the above-referenced loan and other
good and valuable consideration, receipt of which is hereby
acknowledged, the Guarantor hereby agrees to the following:
SECTION 1 - DEFINITIONS
1.1 Defined Terms. The following capitalized terms in
this Guaranty shall have the following meanings:
"Agent" means New Jersey National Bank and its successors
and assigns.
"Banks" means the banks named in the caption of this
Guaranty and their successors and assigns.
"Borrower" means the Borrower named in the above caption
of this Guaranty and its successors and assigns.
"Collateral" means any property of the Guarantor in which
the Banks have been, or may be, granted an interest to
provide security for this Guaranty, including all of the
Guarantor's present and future deposit accounts of all kinds.
"Event of Default" has the meaning set forth in Section
6 of this Guaranty.
"Guarantor" means the Guarantor named in the caption of
this Guaranty and its successors and assigns.
"Guaranty" means this Guaranty and all modifications,
renewals, extensions of, and amendments to, this Guaranty.
"Loan Documents" means this Guaranty, the Loan Agreement,
the Notes and all other agreements, documents, notes,
assignments, affidavits and certificates executed in
connection with this Guaranty or the Loan Agreement.
"Loan Agreement" means the loan agreement dated this date
among the Banks, the Agent and the Borrower whereby the Banks
are providing the Borrower with credit facilities in the
aggregate principal amount of $30,000,000 and all
modifications, renewals, extensions and amendments to that
loan agreement.
"Notes" means collectively the following notes of this
same date from Borrower to the order of the Agent issued
pursuant to the Loan Agreement; the Revolving Note in the
original maximum principal amount of Twelve Million Dollars
($12,000,000); the Term Note in the original aggregate
principal amount of Ten Million Dollars ($10,000,000); and
the Convertible Revolver Note in the original maximum
principal amount of Eight Million Dollars ($8,000,000).
"Obligations" means all existing and future indebtedness,
obligations, liabilities and duties of all kinds including
principal, interest and collection expenses owing from any
Obligor to the Banks or the Agent, whether direct or
indirect, contingent or non-contingent, liquidated or
unliquidated, matured or unmatured, or due or to become due,
including those arising under the Notes, this Guaranty, the
Loan Agreement or any other Loan Documents.
"Obligor" means the Borrower and the Guarantor.
1.2 Interpretations. Unless otherwise specified, the
following rules of construction shall apply to this Guaranty:
(A) The term "any" shall be
construed as if followed by the phrase "one or more";
(B) The term "including" shall
be construed as if followed by the phrase "without
limitation";
(C) Singular words include the
plural and plural words include the singular;
(D) Words suggesting any gender
include the other gender; and
(E) Titles, headings and
subheadings are for organizational purposes only and neither
add to, nor limit, the meaning of any provision.
SECTION 2 - GUARANTY CLAUSE
The Guarantor hereby unconditionally guarantees full and
prompt payment when due (and not just the collectibility) and
the full, prompt and unconditional performance, of each and
every term and condition of all Obligations. This Guaranty
is a primary obligation of the Guarantor and shall continue
without limitation of amount or duration until all
Obligations have been paid in full. The absolute,
unconditional and continuing nature of this Guaranty shall
be construed without regard to the invalidity or
unenforceability of any of the Loan Documents or any of the
Obligations or the Collateral therefore. This Guaranty shall
continue to be effective or shall be deemed reinstated, as
the case may be, if at any time any payment of the
Obligations is rescinded or must otherwise be returned by the
Banks upon the insolvency, bankruptcy or reorganization of
the Borrower or otherwise, as though such payment had not
been made. Without limiting the generality, scope or effect
of the foregoing, the Guarantor expressly acknowledges and
agrees that this Guaranty includes the payment of interest,
both before and after maturity and whether by acceleration
or otherwise, until all principal is paid in full.
SECTION 3 - LENDER'S RIGHTS
Without incurring responsibility to the Guarantor and
without impairing or releasing this Guaranty, the Banks may,
from time to time, without the consent of, or notice to, the
Guarantor, do any of the following:
(i) change the terms of any Obligation including the principal amount,
interest rate or the manner, place, time or terms of
payment of any Obligation;
(ii) extend, renew, recast, redocument or postpone any Obligation;
(iii) sell, release, or realize upon or otherwise deal with, in any
manner and in any order, any Collateral;
(iv) exercise or refrain from exercising any rights or remedies
against any Guarantor or other Obligor or any Collateral;
(v) settle or compromise any Obligations; or
(vi) apply any proceeds of any Collateral received from any Obligor to
reduce any Obligations in any order.
SECTION 4 - WAIVER; RELEASE
The Guarantor waives and
releases:
(i) every claim or defense relating to the Banks' delay or
forebearance from exercising any right or remedy,
including any delay or forebearance from the liquidation
of any Collateral;
(ii) every claim relating to any failure to properly document any
Obligations or obtain or perfect any interest in any
Collateral; and
(iii) notice of default, nonpayment, payment, presentment, demand,
protest or dishonor relating to this Guaranty or any
other Obligations.
SECTION 5 - SECURITY
The Guarantor hereby grants to
the Banks a security interest in, and a right of setoff
against, all of Guarantor's property (tangible or intangible)
that is at any time in the possession of, deposited with, or
in the custody of, the Banks, including all present and
future deposit accounts of all kinds.
SECTION 6 - COVENANTS
The Guarantor hereby covenants
to the Banks and the Agent that it will not (a) sell or
pledge any of its assets, including but not limited to its
liquor licenses, nor fail to renew such licenses or
otherwise allow such liquor licenses to terminate nor (b)
otherwise cause a breach of any covenant made by Borrower in
the Loan Agreement.
SECTION 7 - EVENTS OF DEFAULT
Any of the following events or
conditions shall, at the option of the Banks, constitute an
Event of Default under this Guaranty and the other Loan
Documents:
7.1 Any failure to perform or
observe when due any term or condition in this Guaranty; or
7.2 Any other Event of Default
under the Loan Agreement; or
7.3 The Guarantor shall fail to
remain in good standing in its state of incorporation and
duly qualified in each jurisdiction in which it is required
to qualify as a foreign corporation or dissolves; or
7.4 Any change in the identity
or interests of the Guarantor's shareholders.
SECTION 8 - REMEDIES
Upon the occurrence of an Event
of Default, the Banks may, at its option, and without notice
to the Guarantor, do any of the following in any order, at
any time and in any combination:
8.1 Declare any Obligations to
be immediately due and payable as to the Guarantor.
8.2 Institute a collection
action directly against the Guarantor.
8.3 Exercise any right or remedy
available under the Loan Agreement or any other Loan Document
including, without limitation, the collection of post-default
interest at the rate stated in the Loan Agreement.
8.4 Execute on any Collateral.
8.5 Hold, apply, freeze or
set-off on account of the Notes, this Guaranty and any other
Obligation, funds of the Guarantor on deposit with the Banks
in any account, fund or certificate, any indebtedness that
the Banks may owe to the Guarantor or any other tangible or
intangible property owned by the Guarantor that may be in the
possession or under the control of the Banks.
8.6 Collect from the Guarantor
all the Banks' reasonable collection expenses (whether or not
suit is actually instituted) including reasonable attorneys
fees and disbursements and all other expenses and fees
relating to collection that are permitted under the Loan
Agreement. All those collection fees and expenses shall be
due and payable upon demand, shall bear interest at the
default rate in effect under the Notes and shall become
Obligations that are secured by all security for any
Obligations.
8.7 Exercise any other rights
and remedies available under this Guaranty or any other
document or agreement of any kind or at law or in equity.
Any amount received by either of the Banks pursuant to
this Guaranty shall be divided between the Banks as provided
in the Loan Agreement.
SECTION 9 - SETTLEMENT; RELEASE
The settlement or release of any
claims by the Banks in favor of any other Obligor shall not
reduce the amount due from the Guarantor under the terms of
this Guaranty. In addition, if a claim is made upon the
Banks for repayment or recovery of any funds or property
received by the Banks in payment, or on account of, any
Obligation for any reason including any claim that such funds
or property constituted a preferential or fraudulent
transfer, and the Banks repays or returns all or part of
those funds or that property by reason of any court order or
settlement of any such claim, then Guarantor agrees that any
such order or settlement shall be binding upon it
notwithstanding any revocation, cancellation, release or
apparent satisfaction of any Obligation or this Guaranty, and
the Guarantor shall be and remain liable to the Banks for the
funds or property returned as if the funds or property had
never been received by the Banks.
SECTION 10 - SUBROGATION
The Guarantor hereby irrevocably
waives all rights that the Guarantor may have at law or in
equity (including any law subrogating the rights of the
Guarantor to the rights of any other person) to allege,
assert as a defense or seek contribution, indemnification or
any other form of reimbursement from the Borrower, or any
other person now or hereafter primarily or secondarily liable
for any Obligation, for any disbursement made by the
Guarantor under or in connection with this Guaranty or any
other Loan Document or otherwise.
SECTION 11 - SUBORDINATION
The Guarantor hereby agrees that
all indebtedness owing from the Borrower to the Guarantor,
whether now existing or in the future created, shall be
subordinate and inferior in priority to the Obligations and
agrees further that should there be an Event of Default no
such indebtedness owing from the Borrower to the Guarantor
shall be paid, and no security therefore received, until all
Obligations have been paid in full. Any instrument
evidencing any such indebtedness, and any payment, security
or other property received by the Guarantor in violation of
this provision, shall be held in trust for the benefit of the
Banks and shall be delivered immediately upon receipt by the
Guarantor to the Banks to reduce the Obligations.
SECTION 12 - ACCESS TO LOAN DOCUMENTS
The Guarantor hereby expressly
represents and acknowledges that it has been given ample
opportunity to examine and consult with counsel, and has
examined and consulted with counsel concerning all Loan
Documents and that it has carefully examined the terms and
conditions of all Loan Documents. The Guarantor acknowledges
receipt of a true copy of each of the Loan Documents
including this Guaranty.
SECTION 13 - FURTHER ASSURANCES
The Guarantor and all other
Obligors shall, within five days of the Banks' request,
execute any documents, provide any lien or other searches and
do anything that the Banks determines to be reasonably
necessary to establish, perfect, assure or maintain the
existence and priority of, this Guaranty and the Banks' liens
against any Collateral, the reasonable cost of so doing to
be paid by the Guarantor and the other Obligors.
SECTION 14 - NOTICES
All notices, demands, requests,
consents and other communications shall be in writing and
served by hand delivery, by certified mail with return
receipt requested, or by a recognized overnight delivery
service, to the addresses for the other parties set forth on
the caption of this Guaranty, unless proper written notice
has been given to all of the parties of any change in
address. Notices and other written communications shall be
deemed to have been properly served upon delivery to the
designated address; provided, however, that any notice or
other communication properly sent by certified mail, return
receipt requested, shall be deemed to have been properly
served on the third business day after mailing, regardless
of when or whether it is actually received.
SECTION 15 - PARTIAL INVALIDITY
If any term or provision of this
Guaranty is at any time held to be invalid by any court of
competent jurisdiction, that invalidity shall not affect the
remaining terms and provisions of this Guaranty, which shall
continue to be in full force and effect.
SECTION 16 - NEW JERSEY LAW AND JURISDICTION
All terms of this Guaranty shall
be governed by and construed according to the laws of the
State of New Jersey. The Guarantor hereby consents to
personal jurisdiction in the State of New Jersey with respect
to any and all matters arising under or relating to this
Guaranty and all other Loan Documents.
SECTION 17 - NO JURY TRIAL
THE GUARANTOR HEREBY WAIVES ANY
RIGHT TO REQUEST A TRIAL BY JURY IN ANY LITIGATION WITH
RESPECT TO ANY ASPECT OF THIS GUARANTY OR ANY OTHER LOAN
DOCUMENT AND REPRESENTS THAT THE GUARANTOR HAS CONSULTED WITH
COUNSEL SPECIFICALLY AS TO THIS WAIVER. BY ACCEPTING THIS
GUARANTY, THE BANKS ALSO WAIVE THEIR RIGHT TO REQUEST A TRIAL
BY JURY.
SECTION 18 - BIND AND INURE
This Guaranty shall be binding
upon the Guarantor and its successors and assigns and shall
inure to the benefit of the Banks and their successors and
assigns.
The Guarantor has executed this
Guaranty as of the date first written above.
ATTEST: VILLAGE LIQUOR SHOP, INC.,
A New Jersey Corporation
By:
, Secretary , President
NEW JERSEY NATIONAL BANK
PRINCIPAL'S CERTIFICATE
March , 1994
I, Robert Sumas, hereby personally certify to New
Jersey National Bank ("Bank") that:
1. I am the Executive Vice President of Village
Super Market, Inc. ("Borrower") and President
of Village Liquor Shop, Inc. (the "Guarantor") and in that
capacity am familiar with all their activities.
2. I am making this certificate to induce the Banks
to make certain loans and financial accommodations to the
Borrower as set forth more fully in the Loan Agreement ("Loan
Agreement") of this same date between the Banks, the Agent
and the Borrower. Capitalized terms in this certificate that
are defined in the Loan Agreement shall have the meanings set
forth in the Loan Agreement.
3. I have carefully read all provisions of all Loan
Documents and all related documents submitted to the Banks
and have had the opportunity to consult with counsel prior
to executing this certificate.
4. As of the Date of Closing, all representations,
information and warranties contained in, or otherwise made
or given to the Agent or the Banks in connection with, any
Loan Document are true, correct and complete in all respects.
5. The following exhibits have been attached to
this certificate in accordance with the Loan Agreement and
are true and complete in all respects:
Exhibit 1 - Locations of property, records and
offices;
Exhibit 2 - Litigation;
Exhibit 3 - Environmental matters;
Exhibit 4 - Name and History of Obligors;
Exhibit 5 - Controlling Interests; and
Exhibit 6 - Liens.
6. As of the Date of Closing, there exists no Event
of Default and no condition, event or act that, with notice
or lapse of time, would constitute an Event of Default.
7. I am aware of no liens, encumbrances or claims
against any Property that will remain in effect after today,
except as set forth on Exhibit 6 and other Permitted
Encumbrances.
I have signed this Principal's Certificate as of the
date first written above.
WITNESS:
Frank Sauro, Esq. Robert Sumas
Exhibit 1 to
Principal's Certificate
Property and Store Locations
The following are the locations of all presently
existing stores of the Companies as required under Section 6.6
of the Loan Agreement.
Name of
Company Store Address
1. Borrower 9 So. Orange Ave., So. Orange, NJ
2. Borrower 483 So. Livingston Ave., Livingston, NJ
3. Borrower Rts. 10 & 202, Morris Plains, NJ
4. Borrower Prospect Ave. W. Orange, NJ
5. Borrower Rt. 202, Bernardsville, NJ
6. Borrower* 1153 Valley Rd., Stirling, NJ
7. Borrower* 184 Columbia Turnpike, Florham Park, NJ
8. Borrower* 2 Lackawana Plaza, Morristown, NJ
9. Borrower Shunpike Rd. & Southern Blvd., Chatham, NJ
11. Borrower 1701-20 US Hwy. 22 W., Watchung, NJ
12. Borrower Rt. 57, Washington, NJ
13. Borrower* 3143 William Penn Hwy., Easton, PA
14. Borrower* 719 Irvington Ave., Maplewood, NJ
15. Borrower Rt. 206, Chester, NJ
16. Borrower 3rd. & McConnell St., Stroudsburg, PA
17. Borrower* Pierce St., Kingston, PA
18. Borrower 2661 Morris Ave., Union, NJ
19. Borrower* 220 Main St., Millburn, NJ
20. Borrower 727 Morris Turnpike, Springfield, NJ
21. Borrower Rt. 206 & Amwell Rd., Hillsborough, NJ
22. Borrower* Rt. 9 and Bethel Rd., Somers Point, NJ
23. Borrower 5100 Wellington Ave., Ventnor, NJ
24. Borrower* Whitehorse Pike, Absecon, NJ
25. Borrower* 540 Hurst Ave., Rio Grande, NJ
26. Borrower* 865 West Grand St., Elizabeth, NJ
27. Borrower Bernardsville Annex, Bernardsville, NJ
28. Borrower* Egg Harbor, NJ
29. Borrower 533 Main Street, East Orange, NJ
All properties are leased from non-Affiliates except as
follows:
Store 6 - Stirling - owned by Stirling Center
Associates, a limited partnership in which
Borrower is a limited partner
Store 7 - Florham Park - owned by Crescent Center
Associates, a limited partnership in which
Borrower is a limited partner.
Store 8 - Lease assigned to third party, Village
secondarily liable
Store 13 - owned by Borrower
Store 14 - real estate owned by Borrower but leased to
independent operator
Store 17 - lease has been assigned to a third party,
Village in secondarily liable
Store 19 - real estate held pursuant to 99 year lease
by Millburn 74 Associates of which Borrower
is a general partner
Store 22 - owned by Borrower
Store 24 - owned by Borrower
Store 25 - owned by Borrower
Store 26 - owned by Borrower
Store 27 - owned by Borrower
Store 28 - owned by Borrower
Exhibit 2 to
Principal's Certificate
Litigation
The following is a detailed description of
all claims in all litigation that is an exception
to the representation in Section 6.3 of the Loan
Agreement:
1. Various personal injury litigation that
is fully covered by insurance.
2. Hoy v. Village - Luis Hoy, a meat clerk
in the Easton Shop Rite filed a "hostile
environment" sexual harassment claim in
Pennsylvania State Court against the Easton Meat
Manager. Based upon the information Village
received in conducting an internal investigation,
in the event an unfavorable decision is rendered,
Village believes that damages should not exceed
$150,000.00. Village has retained the firm of
Daune, Morris and Hecher to represent Village in
this matter.
3. UFCW, Local No. 72, Health and Welfare
Fund, et al. v. Village - Health and Welfare Fund
for the union that represents the workers in the
Village Stroudsburg store and its former Kingston
store conducted an audit of the Health and Welfare
contributions made by Village from 1988 to 1990.
The Fund subsequently filed a suit in Federal
District Court in Pennsylvania alleging that many
part time employees should have been reclassified
as full time employees. Village is required to
make higher payments for full time employees than
for part time employees. The Fund's claim has
changed several times during the course of this
lawsuit but the most recent claim is for
approximately $120,000.00. If an unfavorable
result is rendered, Village does not believe the
damages will exceed that amount. Village has
retained the firm of Manning, Griffith to represent
Village in this matter.
Exhibit 3 to
Principal's
Certificate
Environmental Matters
The following list sets forth all matters
required under Section 6.8 of the Loan Agreement:
A. Hazardous Substances:
None
B. Permits:
None
C. Standard Industrial Classification Codes:
5411
Exhibit 4 to
Principal's Certificate
Name and History
The following describes all matters required under
Section 6.10 of the Loan Agreement:
A. Other names and trade names:
1. "Shop-Rite"
2. Village Market (South Orange and Florham Park)
3. The Shop-Rite Annex (Bernardsville)
B. Acquisitions:
In July 1986, Borrower acquired all
outstanding stock of Starn's Markets, Inc.
C. Mergers:
In July 1992, Supermarket Management Services Co.,
Inc. (NJ); Starn's Markets, Inc. (NJ); Washington Associates,
Inc. (PA); and Easton Shop-Rite, Inc. (PA) were merged into
Village. All four had been wholly-owned subsidiaries of
Village.
D. Persons directly or indirectly controlled (other
than the Guarantor):
None
Exhibit 5 to
Principal's Certificate
Controlling Interests
The following describes all matters required under
Section 6.11 of the Loan Agreement:
Class of Stock
and Offices
Owner % Interest Held
Nicholas Sumas Class A - 11.9% Chairman and
Class B - 24.3% Director
Perry Sumas Class A - 6.4% President, Chief
Class B - 33.8% Executive Offi-
cer and Director
James Sumas Class A - 1.5% Vice President,
Class B - 16.1% Chief Operating
Officer and
Director
Robert Sumas Class A - 1.5% Executive Vice
President,
Class B - 9.2% Secretary and
Director
Exhibit 6 to
Principal's
Certificate
Liens
The following describes all matters
required under Section 6.5 of the Loan Agreement:
Property
Nature of Amounts Subject
Lienholder Lien Secured To Lien
See Footnote 5 to Financial Statement annexed hereto.
EXHIBIT G
NOTICE OF BORROWING
New Jersey National Bank
51 John F. Kennedy Parkway
Short Hills, New Jersey 07078
(Attn: Commercial Lending Department)
1. This notice of borrowing is being given
pursuant to the Loan Agreement dated February , 1994 among
Chemical Bank New Jersey, National Association, you and
Village Super Market, Inc. ("Borrower").
2. The Borrower hereby requests a loan pursuant to
the following lending facility (check one):
Revolving Loan
Convertible Revolver
3. The date and amount of the requested borrowing
and balances of the relevant facility before and after the
loan are as follows:
Date of Amount of Principal Balance Principal Balance
Proposed Proposed Before Proposed After Proposed
Borrowing Borrowing Borrowing Borrowing
/ / $ $ $
4. The proceeds of this borrowing should be
disbursed as follows (check one):
deposited into Borrower's operating account
[ deposited into the operating account of
Supermarket Management Services Co.,
Inc.]
other:
5. The proceeds of this borrowing shall be used for
the following purposes:
.
6. The undersigned personally certifies that (A)
the Companies are in compliance with all terms and conditions
of the Loan Agreement, (B) no Event of Default or
circumstances that with notice or lapse of time would be an
Event of Default under the Loan Agreement have occurred and
is continuing, (C) all representations and warranties
contained in the Loan Agreement remain true as if made as of
the date of this Notice and (D) the undersigned is duly
authorized to make this borrowing request and deliver this
notice.
I have executed this Notice on behalf of the
Borrower this day of , 19 .
VILLAGE SUPER MARKET, INC.
By:
Name:
Title:
