SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15 (d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): February 15, 1995
FOODARAMA SUPERMARKETS, INC.
(Exact name of registrant as specified in charter)
New Jersey 1-5745 21-0717108
(State or other jurisdiction (Commission (IRS Employer
of incorporation) file number) Identification No.)
Building 6, Suite 1, 922 Highway 33, Freehold, New Jersey 07728
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code: (908) 462-4700
<PAGE>
Item 5. Other Events
Revolving Credit And Term Loan Agreement, dated as of February 15,
1995, among New Linden Price Rite, Inc., Shop Rite Of Reading, Inc.,
Foodarama Supermarkets, Inc., The Guarantors Named Therein, The
Lenders Named Therein, and NatWest Bank N.A., As Agent.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned hereunto duly authorized.
FOODARAMA SUPERMARKETS, INC.
By:/S/ Michael Shapiro
Michael Shapiro
Senior Vice President
Date: July 10, 1995
<PAGE>
Execution Copy
REVOLVING CREDIT AND TERM LOAN AGREEMENT
Dated as of February 15, 1995
Among
NEW LINDEN PRICE RITE, INC.,
SHOP RITE OF READING, INC.,
FOODARAMA SUPERMARKETS, INC.,
THE GUARANTORS NAMED HEREIN,
TABLE OF CONTENTS
Page
I. DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
II. THE LOANS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 2.01. Commitments. . . . . . . . . . . . . . . . . . . . . . 16
SECTION 2.02. Loans. . . . . . . . . . . . . . . . . . . . . . . . . 17
SECTION 2.03. Notice of Loans. . . . . . . . . . . . . . . . . . . . 18
SECTION 2.04. Notes; Repayment of Loans. . . . . . . . . . . . . . . 18
SECTION 2.05. Interest on Loans. . . . . . . . . . . . . . . . . . . 19
SECTION 2.06. Fees . . . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 2.07. Termination of Revolving Commitments . . . . . . . . . 21
SECTION 2.08. Interest on Overdue Amounts. . . . . . . . . . . . . . 21
SECTION 2.09. Prepayment of Loans. . . . . . . . . . . . . . . . . . 21
SECTION 2.10. Reserve Requirements; Change in
Circumstances. . . . . . . . . . . . . . . . . . . . . 25
SECTION 2.11. Pro Rata Treatment . . . . . . . . . . . . . . . . . . 26
SECTION 2.12. Sharing of Setoffs . . . . . . . . . . . . . . . . . . 26
SECTION 2.13. Taxes. . . . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 2.14. Payments and Computations. . . . . . . . . . . . . . . 30
SECTION 2.15. Settlement Among Lenders . . . . . . . . . . . . . . . 30
SECTION 2.16. Making of Revolving Loans. . . . . . . . . . . . . . . 34
SECTION 2.17. Joint and Several Borrowers. . . . . . . . . . . . . . 34
SECTION 2.18. Individual Borrowing and Letter of
Credit Limit . . . . . . . . . . . . . . . . . . . . . 35
IIA. LETTERS OF CREDIT . . . . . . . . . . . . . . . . . . . . . . . . . . 35
SECTION 2A.01. Issuance of Letters of Credit . . . . . . . . . . . . 35
SECTION 2A.02. Payment; Reimbursement. . . . . . . . . . . . . . . . 36
SECTION 2A.03. NatWest's Actions . . . . . . . . . . . . . . . . . . 38
SECTION 2A.04. Payments in Respect of Increased Costs. . . . . . . . 38
SECTION 2A.05. Indemnity as to Letters of Credit . . . . . . . . . . 40
SECTION 2A.06. Letter of Credit Fees . . . . . . . . . . . . . . . . 40
III. COLLATERAL SECURITY. . . . . . . . . . . . . . . . . . . . . . . . . 41
SECTION 3.01. Security Documents . . . . . . . . . . . . . . . . . . 41
SECTION 3.02. Filing and Recording . . . . . . . . . . . . . . . . . 41
SECTION 3.03. Real Property; Mortgages; Title
Insurance. . . . . . . . . . . . . . . . . . . . . . . 42
SECTION 3.04. Additional Collateral. . . . . . . . . . . . . . . . . 44
IV. REPRESENTATIONS AND WARRANTIES. . . . . . . . . . . . . . . . . . . . 44
SECTION 4.01. Organization, Legal Existence. . . . . . . . . . . . . 44
SECTION 4.02. Authorization. . . . . . . . . . . . . . . . . . . . . 45
SECTION 4.03. Governmental Approvals . . . . . . . . . . . . . . . . 45
SECTION 4.04. Binding Effect . . . . . . . . . . . . . . . . . . . . 45
SECTION 4.05. Material Adverse Change. . . . . . . . . . . . . . . . 46
SECTION 4.06. Litigation; Compliance with Laws; etc. . . . . . . . . 46
SECTION 4.07. Financial Statements . . . . . . . . . . . . . . . . . 46
SECTION 4.08. Federal Reserve Regulations. . . . . . . . . . . . . . 47
SECTION 4.09. Taxes. . . . . . . . . . . . . . . . . . . . . . . . . 47
SECTION 4.10. Employee Benefit Plans . . . . . . . . . . . . . . . . 48
SECTION 4.11. No Material Misstatements. . . . . . . . . . . . . . . 50
SECTION 4.12. Investment Company Act; Public Utility
Holding Company Act . . . . . . . . . . . . . . . . . . . . . . 50
SECTION 4.13. Security Interest. . . . . . . . . . . . . . . . . . . 51
SECTION 4.14. Bank Accounts. . . . . . . . . . . . . . . . . . . . . 51
SECTION 4.15. Subsidiaries . . . . . . . . . . . . . . . . . . . . . 51
SECTION 4.16. Title to Properties; Possession Under
Leases; Trademarks . . . . . . . . . . . . . . . . . . 51
SECTION 4.17. Solvency . . . . . . . . . . . . . . . . . . . . . . . 53
SECTION 4.18. Permits, etc . . . . . . . . . . . . . . . . . . . . . 54
SECTION 4.19. Compliance with Environmental Laws . . . . . . . . . . 54
SECTION 4.20. Material Agreements. . . . . . . . . . . . . . . . . . 55
V. CONDITIONS OF CREDIT EVENTS. . . . . . . . . . . . . . . . . . . . . . 55
SECTION 5.01. All Credit Events. . . . . . . . . . . . . . . . . . . 55
SECTION 5.02. First Borrowing. . . . . . . . . . . . . . . . . . . . 56
VI. AFFIRMATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . 61
SECTION 6.01. Legal Existence. . . . . . . . . . . . . . . . . . . . 61
SECTION 6.02. Businesses and Properties. . . . . . . . . . . . . . . 61
SECTION 6.03. Insurance. . . . . . . . . . . . . . . . . . . . . . . 61
SECTION 6.04. Taxes. . . . . . . . . . . . . . . . . . . . . . . . . 62
SECTION 6.05. Financial Statements, Reports, etc.. . . . . . . . . . 62
SECTION 6.06. Litigation and Other Notices . . . . . . . . . . . . . 65
SECTION 6.07. ERISA. . . . . . . . . . . . . . . . . . . . . . . . . 66
SECTION 6.08. Maintaining Records; Access to
Properties and Inspections; Right
to Audit . . . . . . . . . . . . . . . . . . . . . . . 67
SECTION 6.09. Fiscal Year-End. . . . . . . . . . . . . . . . . . . . 67
SECTION 6.10. Further Assurances . . . . . . . . . . . . . . . . . . 67
SECTION 6.11. Additional Grantors and Guarantors . . . . . . . . . . 67
SECTION 6.12. Environmental Laws . . . . . . . . . . . . . . . . . . 68
SECTION 6.13. Pay Obligations to Lenders and Perform
Other Covenants. . . . . . . . . . . . . . . . . . . . 70
SECTION 6.14. Maintain Operating Accounts. . . . . . . . . . . . . . 70
SECTION 6.15. Amendments . . . . . . . . . . . . . . . . . . . . . . 70
SECTION 6.16. Use of Proceeds. . . . . . . . . . . . . . . . . . . . 70
VII. NEGATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . 70
SECTION 7.01. Liens. . . . . . . . . . . . . . . . . . . . . . . . . 71
SECTION 7.02. Sale and Lease-Back Transactions . . . . . . . . . . . 72
SECTION 7.03. Indebtedness . . . . . . . . . . . . . . . . . . . . . 73
SECTION 7.04. Dividends, Distributions and Payments. . . . . . . . . 73
SECTION 7.05. Consolidations, Mergers and Sales of
Assets . . . . . . . . . . . . . . . . . . . . . . . . 74
SECTION 7.06. Investments. . . . . . . . . . . . . . . . . . . . . . 74
SECTION 7.07. Capital Expenditures and Other
Expenditures . . . . . . . . . . . . . . . . . . . . . 75
SECTION 7.08. Net Worth. . . . . . . . . . . . . . . . . . . . . . . 76
SECTION 7.09. Fixed Charge Coverage Ratio. . . . . . . . . . . . . . 77
SECTION 7.10. Total Liabilities to Net Worth . . . . . . . . . . . . 78
SECTION 7.11. EBITDA . . . . . . . . . . . . . . . . . . . . . . . . 79
SECTION 7.12. Business . . . . . . . . . . . . . . . . . . . . . . . 80
SECTION 7.13. Sales of Receivables . . . . . . . . . . . . . . . . . 80
SECTION 7.14. Use of Proceeds. . . . . . . . . . . . . . . . . . . . 80
SECTION 7.15. ERISA. . . . . . . . . . . . . . . . . . . . . . . . . 80
SECTION 7.16. Accounting Changes . . . . . . . . . . . . . . . . . . 80
SECTION 7.17. Prepayment or Modification of
Indebtedness; Modification of Charter
Documents. . . . . . . . . . . . . . . . . . . . . . . 81
SECTION 7.18. [Intentionally Omitted]. . . . . . . . . . . . . . . . 81
SECTION 7.19. Transactions with Affiliates . . . . . . . . . . . . . 81
SECTION 7.20. Consulting Fees. . . . . . . . . . . . . . . . . . . . 81
SECTION 7.21. Limitations on Dividends and Other
Payments . . . . . . . . . . . . . . . . . . . . . . . 81
VIII. EVENTS OF DEFAULT . . . . . . . . . . . . . . . . . . . . . . . . . 82
IX. AGENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89
X. CASH RECEIPTS COLLECTION . . . . . . . . . . . . . . . . . . . . . . . 92
SECTION 10.01. Collection of Cash. . . . . . . . . . . . . . . . . . 92
SECTION 10.02. Monthly Statement of Account. . . . . . . . . . . . . 95
SECTION 10.03. Collateral Custodian. . . . . . . . . . . . . . . . . 95
XI. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95
SECTION 11.01. Notices . . . . . . . . . . . . . . . . . . . . . . . 95
SECTION 11.02. Survival of Agreement . . . . . . . . . . . . . . . . 96
SECTION 11.03. Successors and Assigns; Participations. . . . . . . . 96
SECTION 11.04. Expenses; Indemnity . . . . . . . . . . . . . . . . . 99
SECTION 11.05. Applicable Law. . . . . . . . . . . . . . . . . . . . 101
SECTION 11.06. Right of Setoff . . . . . . . . . . . . . . . . . . . 101
SECTION 11.07. Payments on Business Days . . . . . . . . . . . . . . 102
SECTION 11.08. Waivers; Amendments; Final Maturity
Date. . . . . . . . . . . . . . . . . . . . . . . . . 102
SECTION 11.09. Severability. . . . . . . . . . . . . . . . . . . . . 103
SECTION 11.10. Entire Agreement; Waiver of Jury Trial,
etc . . . . . . . . . . . . . . . . . . . . . . . . . 103
SECTION 11.11. Confidentiality . . . . . . . . . . . . . . . . . . . 104
SECTION 11.12. Submission to Jurisdiction. . . . . . . . . . . . . . 105
SECTION 11.13. Counterparts; Facsimile Signature . . . . . . . . . . 105
SECTION 11.14. Headings. . . . . . . . . . . . . . . . . . . . . . . 105
SECTION 11.15. Defaulting Lender . . . . . . . . . . . . . . . . . . 106
XII. GUARANTEES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 107
EXHIBITS
EXHIBIT A Form of Revolving Note
EXHIBIT B-1 Form of Term Note A
EXHIBIT B-2 Form of Term Note B
EXHIBIT B-3 Form of Term Note C
EXHIBIT C Form of Opinion of Counsel
EXHIBIT D Form of Pledge Agreement
EXHIBIT E Form of Security Agreement
EXHIBIT F Form of Assignment and Acceptance
EXHIBIT G Intentionally Omitted
EXHIBIT H Form of Security Agreement (Partnership Interests)
EXHIBIT I Form of Landlord Waiver
EXHIBIT J Form of Settlement Report
SCHEDULES
SCHEDULE 2.01 Commitments
SCHEDULE 2.02 Domestic Lending Offices
SCHEDULE 3.03 Post-Closing Mortgages
SCHEDULE 4.01 Qualified Jurisdictions
SCHEDULE 4.05 UpDate Letter
SCHEDULE 4.06(a) Litigation
SCHEDULE 4.06(b) Compliance with Laws
SCHEDULE 4.10 ERISA Representation Qualifications
SCHEDULE 4.14 List of Bank Accounts
SCHEDULE 4.15 Subsidiaries
SCHEDULE 4.16(a-1) Owned Real Property
SCHEDULE 4.16(a-2) Leased Real Property
SCHEDULE 4.19 Environmental Law Compliance
SCHEDULE 4.20 Material Agreements
SCHEDULE 6.07(a) ERISA Covenant Qualifications
SCHEDULE 7.01 Existing Liens
SCHEDULE 7.03 Existing Indebtedness
SCHEDULE 7.05 Assets Held for Sale
SCHEDULE 7.06 Permitted Investments
SCHEDULE A Asset Redeployment Program
SCHEDULE B Certain Subsidiaries
SCHEDULE C Certain Intellectual Property
<PAGE>
REVOLVING CREDIT AND TERM LOAN AGREEMENT, dated as of
February 15, 1995, among NEW LINDEN PRICE RITE, INC., a
New Jersey corporation ("New Linden"), SHOP RITE OF
READING, INC., a Pennsylvania corporation ("Reading,"
and together with New Linden, each a "Borrower" and
collectively, the "Borrowers"), FOODARAMA SUPERMARKETS,
INC., a New Jersey corporation (the "Parent"), the
Guarantors signatory hereto, the lenders named in
Schedule 2.01 annexed hereto (collectively with their
respective permitted successors and assigns, the
"Lenders"), and NATWEST BANK N.A. (formerly National
Westminster Bank USA), as agent for the Lenders (in
such capacity together with any successor thereto in
such capacity, the "Agent").
The Borrowers have jointly and severally applied to the Lenders
for Loans (such term and all other capitalized terms used in this paragraph
having the respective meanings ascribed to such terms above or hereinafter)
on a revolving basis up to an aggregate principal amount of $15,000,000 to
be made at any time and from time to time prior to the Termination Date and
on a term loan basis in an aggregate original principal amount of
$23,000,000 to be made on the Closing Date. The proceeds of the Loans
shall be used by the Borrowers to repay the Existing Credit Agreement, to
pay fees and expenses in connection with the financing contemplated hereby
and for the working capital and general corporate purposes of the Borrowers
to the extent that such purposes are permitted hereunder. The Lenders are
severally, and not jointly, willing to extend such Loans to the Borrowers
subject to the terms and conditions hereinafter set forth. Accordingly,
Parent, the Borrowers, the Guarantors, the Lenders and the Agent hereby
agree as follows:
I. DEFINITIONS
For purposes hereof, the following terms shall have the meanings
specified below:
"Affiliate" of any person shall mean any other person which,
directly or indirectly, controls or is controlled by or is under common
control with such person and, without limiting the generality of the
foregoing, includes (i) any other person which beneficially owns or holds
5% or more of any class of voting securities of such person or 5% or more
of the equity interest in such person, (ii) any person of which such person
beneficially owns or holds 5% or more of any class of voting securities or
in which such person beneficially owns or holds 5% or more of the equity
interest in such person and (iii) any person who is known by the Parent or
any of its subsidiaries to be a director, officer or partner of such
person. For the purposes of this definition, the term "control"
(including, with correlative meanings, the terms "controlled by" and "under
common control with"), as used with respect to any person, means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such person, whether through
the ownership of voting securities or by contract or otherwise.
"Agent" shall have the meaning assigned to such term in the
preamble to this Agreement.
"Asset Redeployment Proceeds" shall mean the cash proceeds
received by the Parent and/or the Borrowers with respect to the Asset
Redeployment Program.
"Asset Redeployment Program" shall mean the program described in
Schedule A to this Agreement.
"Assignment and Acceptance" shall mean an assignment and
acceptance entered into by a Lender and an assignee and accepted by the
Agent, in substantially the form of Exhibit F annexed hereto.
"Board" shall mean the Board of Governors of the Federal Reserve
System of the United States.
"Borrower" shall have the meaning assigned to such term in the
preamble to this Agreement.
"Borrowers" shall have the meaning assigned to such term in the
preamble to this Agreement.
"Borrowing Base" shall have the meaning assigned to such term in
Section 2.01(a)(i) hereof.
"Business Day" shall mean any day, other than a Saturday, Sunday
or legal holiday in the State of New York, on which banks are open for
substantially all their banking business in New York City.
"Capital Expenditures" shall mean the amount of all purchases
made by the Parent or any of its subsidiaries directly or indirectly for
the purpose of acquiring, constructing or maintaining fixed assets, real
property or equipment which, in accordance with generally accepted
accounting principles, would be added as a debit to the fixed asset account
of the Parent or any such subsidiary (excluding fixed assets acquired
relating to Capitalized Lease Obligations and fixed assets acquired
pursuant to a financing permitted under Section 7.01(e) of this Agreement
(other than with respect to the down payment for such fixed assets))
including the acquisition cost of assets of any kind (but not the
acquisition cost paid for inventory) which are acquired in connection with
an acquisition or purchase permitted by this Agreement. For purposes of
this definition, the purchase price paid with respect to equipment, fixed
assets, or real property which is purchased simultaneously with the trade-
in or sale of existing equipment, fixed assets, or real property owned by
Parent or any of its subsidiaries or with insurance proceeds (regardless of
whether such proceeds are first applied to prepay the Loans) or cash
landlord/vendor allowances shall be included in Capital Expenditures only
to the extent of the gross amount of such purchase price paid less the
credit granted by the seller of such equipment for the equipment being
traded in at such time, the purchase price of such existing equipment or
the amount of such proceeds or allowances, as the case may be.
"Capitalized Lease Obligation" shall mean an obligation to pay
rent or other amounts under any lease of (or other arrangement conveying
the right to use) real and/or personal property which obligation is
required to be classified and accounted for as a capital lease on a balance
sheet prepared in accordance with generally accepted accounting principles,
and for purposes hereof the amount of such obligation shall be the
capitalized amount thereof determined in accordance with such principles.
"Change of Control" shall mean Joseph Saker and Richard Saker
shall together fail to own, beneficially and all voting rights with respect
to, at least 35% of all of the issued and outstanding capital common stock
of the Parent.
"Closing Date" shall mean the date of the first Loan.
"Code" shall mean the Internal Revenue Code of 1986, as amended
from time to time.
"Collateral" shall mean all collateral and security as described
in the Security Documents.
"Commitment" shall mean, with respect to each Lender, the sum of
the Revolving Commitment and the Term Commitment of such Lender as set
forth in Schedule 2.01, as it may be adjusted from time to time pursuant to
Section 2.07.
"Commitment Fee" shall have the meaning set forth in Section
2.06(a) hereof.
"Consolidated" shall mean, in respect of any person, as applied
to any financial or accounting term, such term determined on a consolidated
basis in accordance with generally accepted accounting principles (except
as otherwise required herein) for the person and all consolidated
subsidiaries thereof.
"Credit Event" shall mean each borrowing of a Loan and each
issuance of a Letter of Credit hereunder.
"Default" shall mean any condition, act or event which, with
notice or lapse of time or both, would constitute an Event of Default.
"dollars" or the symbol "$" shall mean dollars in lawful currency
of the United States of America.
"Domestic Lending Office" shall mean, with respect to any Lender,
the office of such Lender specified as its "Domestic Lending Office"
opposite its name in Schedule 2.02 annexed hereto, or such other office of
such Lender as such Lender may from time to time specify to the Borrowers
and the Agent.
"EBITDA" shall mean, for any period, the sum of (i) Net Income
(before any (A) extraordinary gains, (B) extraordinary losses, (C) reserves
taken and occasioned by the closing of store locations, (D) assets written
down as a result of store remodels and/or closedowns and (E) gain or loss
from assets held for sale set forth in Schedule 7.05 hereto), (ii) Interest
Expense, (iii) depreciation and amortization, (iv) federal, state and local
income taxes and (v) increases in LIFO reserves, in each case of the Parent
and its subsidiaries for such period determined on a Consolidated basis,
computed and calculated in accordance with generally accepted accounting
principles.
"Eligible Inventory" shall mean inventory owned by a Borrower
which is not, in the commercially reasonable judgment of the Agent,
obsolete or unmerchantable and is and at all times shall continue to be
acceptable to the Agent in its commercially reasonable judgment in all
respects but shall in any event include only finished goods and shall not
in any event include delicatessen, bakery, floral, meat, fish, produce
goods and/or milk and certain other subcategories of dairy to be determined
by the Agent, provided, however, that the Agent may, in its sole
discretion, deem certain raw material bakery and commissary goods, certain
supplies and certain non-perishable goods included by the Borrowers under
the perishable category to be acceptable. Standards of eligibility may be
fixed and revised from time to time solely by the Agent in the Agent's
exclusive commercially reasonable judgment. In determining eligibility,
the Agent may, but need not, rely on reports and schedules furnished by the
Borrowers, but reliance by the Agent thereon from time to time shall not be
deemed to limit the right of the Agent to revise standards of eligibility
at any time as to both present and future inventory of the Borrowers.
"Environmental Claim" shall mean any written notice of violation,
claim, demand, abatement or other order by any governmental authority or
any person for personal injury (including sickness, disease or death),
tangible or intangible property damage, damage to the environment,
nuisance, pollution, contamination or other adverse effects on the
environment, or for fines, penalties or deed or use restrictions, resulting
from or based upon (i) the existence, or the continuation of the existence,
of a Release (including, without limitation, sudden or non-sudden,
accidental or nonaccidental Releases), of, or exposure to, any Hazardous
Material in, into or onto the environment (including, without limitation,
the air, ground, water or any surface) at, in, by or from any of the
properties of the Parent or its subsidiaries, (ii) the environmental
aspects of the transportation, storage, treatment or disposal of Hazardous
Materials in connection with the operation of any of the properties of the
Parent or its subsidiaries or (iii) the violation, or alleged violation by
the Parent or any of its subsidiaries, of any Environmental Laws relating
to any of the properties of the Parent or its subsidiaries.
"Environmental Laws" shall mean the Comprehensive Environmental
Response, Compensation, and Liability Act (42 U.S.C. & 9601 et seq.), the
Hazardous Material Transportation Act (49 U.S.C. & 1801 et seq.), the
Resource Conservation and Recovery Act (42 U.S.C. & 6901 et seq.), the
Federal Water Pollution Control Act (33 U.S.C. & 1251 et seq.), the Oil
Pollution Act of 1990 (P.L. 101-380), the Safe Drinking Water Act (42
U.S.C. & 300(f), et seq.), the Clear Air Act (42 U.S.C. & 7401 et seq.),
the Toxic Substances Control Act, as amended (15 U.S.C. & 2601 et seq.),
the Federal Insecticide, Fungicide, and Rodenticide Act (7 U.S.C. & 136 et
seq.), and the Occupational Safety and Health Act (29 U.S.C. & 651 et
seq.), as such laws have been and hereafter may be amended or supplemented,
and any related or analogous present or future Federal, state or local,
statutes, rules, regulations, ordinances, licenses, permits and
interpretations and orders of regulatory and administrative bodies.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended, and the rules and regulations promulgated thereunder, as
in effect from time to time.
"ERISA Affiliate" shall mean any trade or business (whether or
not incorporated) which together with the Parent or any of its subsidiaries
would be treated as a single employer under the provisions of Title I or
Title IV of ERISA.
"Event of Default" shall have the meaning assigned to such term
in Article VIII hereof.
"Excess Cash Flow" shall mean, for any period, an amount equal to
the Parent's and its subsidiaries' Consolidated (i) EBITDA (to the extent
not already excluded from the calculation of EBITDA, calculated, for this
purpose only, excluding the gains or losses from sales of assets (and any
related tax effects)) minus (ii) income taxes actually paid during such
period, minus (iii) Capital Expenditures actually paid in cash during such
period, minus (iv) Consolidated cash Interest Expense of the Parent and its
subsidiaries for such period, minus (v) the aggregate principal amount of
all principal payments of Indebtedness of the Parent and its subsidiaries
made or required to be made in such period (excluding payments made with
respect to the Revolving Loans), minus (vi) cash payments made by the
Parent and its subsidiaries with respect to capitalized store opening
expenses, for such period, in an amount not to exceed $400,000 per store
opening, minus (vii) the amount of any Wakefern Distribution during such
period, minus (viii) any payments made with respect to the Noteholders Note
during such period, plus (ix) non-cash extraordinary items which had the
effect of reducing reported EBITDA.
"Existing Credit Agreement" shall mean the Credit Agreement dated
as of March 16, 1989 among the Parent, certain banks and The Chase
Manhattan Bank (National Association), as agent, as amended.
"Federal Funds Effective Rate" shall mean, for any day, the
weighted average of the rates on overnight Federal funds transactions with
members of the Federal Reserve System arranged by Federal funds brokers, as
published on the next succeeding Business Day by the Federal Reserve Bank
of New York, or, if such rate is not so published for any day which is a
Business Day, the average for the quotations for the day of such
transactions received by the Agent from three Federal funds brokers of
recognized standing selected by it.
"Fee Letter" shall mean that certain Fee Letter, dated November 30,
1994, by NatWest to the Parent and accepted by the Parent, as amended,
modified or supplemented from time to time in writing by NatWest and the
Parent.
"Final Maturity Date" shall mean the fourth anniversary of the Closing
Date, subject to extension pursuant to Section 11.08(c) hereof.
"Financial Officer" shall mean, with respect to any person, the chief
financial officer or chief accounting officer of such person.
"FIRREA" shall mean the Financial Institutions Reform, Recovery and
Enforcement Act of 1989, as amended and supplemented from time to time.
"Fiscal Year" shall mean the fiscal year of the Parent for accounting
purposes which ends on the Saturday nearest to October 31 of each year.
"Fixed Charge Coverage Ratio" shall mean, for any period, the
ratio of (i) EBITDA to (ii) the sum of (A) Interest Expense, (B) Capital
Expenditures, (C) dividends or other distributions, redemptions or
retirements of the Parent's capital stock, (D) taxes actually paid by the
Parent and its subsidiaries in cash and (E) without duplication of clause
(B) above, the aggregate of regularly scheduled principal payments of all
long-term Indebtedness (including, without limitation, Subordinated
Indebtedness) made or scheduled to have been made by the Parent and its
subsidiaries during such period, determined on a Consolidated basis in
accordance with generally accepted accounting principles.
"Grantor" shall mean any Assignor, Grantor, Pledgor, Mortgagor or
Debtor, as such terms are defined in any of the Security Documents.
"Guarantee" shall mean any obligation, contingent or otherwise,
of any person guaranteeing or having the economic effect of guaranteeing
any Indebtedness or obligation of any other person in any manner, whether
directly or indirectly, and shall in any event include any guarantee under
Article XII hereof, and shall include, without limitation, any obligation
of such person, direct or indirect, to (i) purchase or pay (or advance or
supply funds for the purchase or payment of) such Indebtedness or
obligation or to purchase (or to advance or supply funds for the purchase
of) any security for the payment of such Indebtedness or obligation, (ii)
purchase property, securities or services for the purpose of assuring the
owner of such Indebtedness or obligation of the payment of such
Indebtedness or obligation, or (iii) maintain working capital, equity
capital, available cash or other financial condition of the primary obligor
so as to enable the primary obligor to pay such Indebtedness or obligation;
provided, however, that the term Guarantee shall not include endorsements
for collection or collections for deposit, in either case in the ordinary
course of business.
"Guarantor" shall mean, collectively, the Parent, each Borrower
and each subsidiary thereof or any subsidiary of the Parent which becomes a
guarantor of the Obligations after the date hereof.
"Hazardous Material" shall mean any pollutant, contaminant,
chemical, or industrial or hazardous, toxic or dangerous waste, substance
or material, defined or regulated as such in (or for purposes of) any
Environmental Law and any other toxic, reactive, or flammable chemicals,
including (without limitation) any asbestos, any petroleum (including crude
oil or any fraction), any radioactive substance and any polychlorinated
biphenyls; provided, in the event that any Environmental Law is amended so
as to broaden the meaning of any term defined thereby, such broader meaning
shall apply subsequent to the effective date of such amendment; and
provided, further, to the extent that the applicable laws of any state
establish a meaning for "hazardous material," "hazardous substance,"
"hazardous waste," "solid waste" or "toxic substance" which is broader than
that specified in any federal Environmental Law, such broader meaning shall
apply.
"Indebtedness" shall mean, with respect to any person, without
duplication, (a) all obligations of such person for borrowed money or with
respect to deposits or advances of any kind, (b) all obligations of such
person evidenced by bonds, debentures, notes or other similar instruments,
(c) all obligations of such person for the deferred purchase price of
property or services, except current accounts payable arising in the
ordinary course of business and not overdue, (d) all obligations of such
person under conditional sale or other title retention agreements relating
to property purchased by such person, (e) all payment obligations of such
person with respect to interest rate or currency protection agreements, (f)
all obligations of such person as an account party under any letter of
credit or in respect of bankers' acceptances, (g) all obligations of any
third party secured by property or assets owned by such person (regardless
of whether or not such person is liable for repayment of such obligations),
(h) all Guarantees of such person and (i) all obligations of such person as
lessee under leases the expenditures under which are Capitalized Lease
Obligations.
"Indemnitees" shall have the meaning assigned to such term in
Section 11.04(c) hereof.
"Information" shall have the meaning assigned to such term in
Section 11.11 hereof.
"Interest Expense" shall mean, for any period, the interest
expense of the Parent and its subsidiaries during such period determined on
a Consolidated basis in accordance with generally accepted accounting
principles, and shall in any event include, without limitation, (i) the
amortization of debt discounts, (ii) the amortization of all fees payable
in connection with the incurrence of Indebtedness to the extent included in
interest expense, (iii) interest on Capitalized Lease Obligations, and
(iv) all fixed and all calculable dividend payments on preferred stock.
"Interest Payment Date" shall mean the last Business Day of each
December, March, June and September, commencing March 31, 1995.
"Landlord Waiver" shall mean a landlord's or bailee's agreement
with respect to each property of the Parent or a Borrower subject to a
lease substantially in the form of Exhibit I hereto or as agreed to by
Agent.
"Lender" shall have the meaning assigned to such term in the
preamble to this Agreement.
"Letter of Credit" shall have the meaning assigned such term in
Section 2A.01 hereof.
"Letter of Credit Usage" shall mean at any time, (i) the
aggregate undrawn amount of all outstanding Letters of Credit plus (ii) the
unreimbursed drawing at such time under Letters of Credit.
"Lien" shall mean, with respect to any asset, (i) any mortgage,
lien, pledge, encumbrance, charge or security interest in or on such asset,
(ii) the interest of a vendor or a lessor under any conditional sale
agreement, capital lease or other title retention agreement relating to
such asset, (iii) in the case of securities, any purchase option, call or
similar right of a third party with respect to such securities or (iv) any
other right of or arrangement with any creditor to be entitled to receive
any such mortgage, lien, pledge, encumbrance, charge or security interest
on or to have such creditor's claim satisfied out of such assets, or the
proceeds therefrom, prior to the general creditors of the owner thereof.
"Loan" shall mean, collectively, each Revolving Loan and each
Term Loan.
"Loan Documents" shall mean this Agreement, each Security
Document, the Notes, the Intercreditor Agreement, any letter of credit
applications with respect to Letters of Credit and each other document,
instrument, or agreement now or hereafter delivered to the Agent, any
Lender or NatWest in connection herewith or therewith.
"Margin Stock" shall have the meaning assigned to such term in
Regulation U.
"Material Adverse Effect" shall mean a material adverse effect on
(i) the business, assets, liabilities, properties, prospects (within one
year of the date of determination and in any event excluding the effects of
the opening or expansion of competing stores), operations or financial
condition of the Parent, New Linden or Reading, or the Parent and its
subsidiaries taken as a whole, (ii) the ability of the Parent, any Borrower
or any Guarantor to perform or pay the Obligations in accordance with the
terms hereof or of any other Loan Document or to perform its other material
obligations thereunder or (iii) the Agent's Lien on any material portion of
the Collateral or the priority of such Lien.
"Mortgages" shall have the meaning set forth in Section 3.03
hereof.
"Multiemployer Plan" shall mean a "multiemployer plan" as defined
in Section 4001(a)(3) of ERISA.
"NatWest" shall mean NatWest Bank N.A. (formerly National
Westminster Bank USA).
"Net Amount of Eligible Inventory" shall mean, at any time, the
aggregate value, computed at the lower of cost (on a FIFO basis) and
current market value, of Eligible Inventory of the Borrowers.
"Net Income" shall mean, for any period, the aggregate income (or
loss) of the Parent and its subsidiaries determined on a Consolidated basis
for such period, all computed and calculated in accordance with generally
accepted accounting principles consistently applied.
"Net Worth" shall mean, at any time, (i) the sum of the Parent's
Consolidated capital stock, capital in excess of par or stated value of
shares of its capital stock and retained earnings, as reported on the
Parent's Consolidated financial statement in accordance with generally
accepted accounting principles which, in accordance with generally accepted
accounting principles, constitutes stockholders' common and/or preferred
equity (which shall in any event exclude treasury stock), plus (ii) non-
cash extraordinary losses occasioned by compliance with changes in
generally accepted accounting principles occurring after the Closing Date,
less (iii) any minority interest in other persons if included in clause (i)
above, less (iv) the amount of increases in Net Worth occasioned by
extraordinary gains (net of taxes) occurring subsequent to the Closing Date
and less (v) the cumulative amount of any benefit received after the
Closing Date from the reversal of reserves taken before the Closing Date.
"Non-Ratable Loans" shall have the meaning assigned to such term
in Section 2.15(c)(iii) hereof.
"Noteholders" shall mean each of the holders of the $31,000,000
aggregate original principal amount of the Parent's senior secured
promissory notes issued and delivered pursuant to the several Note Purchase
Agreements, each dated June 1, 1989, among the Parent and each of the
noteholders, as amended.
"Notes" shall mean collectively, the Revolving Notes and the Term
Notes.
"Obligations" shall mean all obligations, liabilities and
Indebtedness of the Parent, any Borrower and/or any Guarantor to the
Lenders, the Agent and/or NatWest, whether now existing or hereafter
created, direct or indirect, due or not, whether created directly or
acquired by assignment, participation or otherwise, under or with respect
to this Agreement, the Notes, the Security Documents and the other Loan
Documents, including without limitation, the principal of and interest on
the Loans and the payment or performance of all other obligations,
liabilities, and Indebtedness of the Parent, any Borrower and/or any
Guarantor to the Lenders, the Agent and/or NatWest hereunder, under or with
respect to the Letters of Credit or under any one or more of the other Loan
Documents, including but not limited to all fees, costs, expenses and
indemnity obligations hereunder and thereunder.
"Other Taxes" shall have the meaning assigned to such term in
Section 2.13(b) hereof.
"Parent" shall have the meaning assigned to such term in the
introductory paragraph hereof.
"PBGC" shall mean the Pension Benefit Guaranty Corporation.
"Pension Plan" shall mean any Plan which is subject to the
provisions of Title IV of ERISA.
"Permits" shall have the meaning assigned to such term in Section
4.18 hereof.
"person" shall mean any natural person, corporation, business
trust, association, company, joint venture, partnership or government or
any agency or political subdivision thereof.
"Plan" shall mean any employee benefit plan within the meaning of
Section 3(3) of ERISA and which is maintained (in whole or in part) for
employees of the Parent, any subsidiary thereof or any ERISA Affiliate.
"Pledge Agreement" shall mean the Pledge Agreement, dated as of
the date hereof, among the Parent, the Borrowers, the Guarantors and the
Agent, for the benefit of the Secured Parties, in substantially the form of
Exhibit D annexed hereto, as amended, modified or supplemented from time to
time.
"Pledged Stock" shall have the meaning assigned to such term in
the Pledge Agreement.
"Prime Rate" shall mean the rate which NatWest announces from
time to time as its prime lending rate, as in effect from time to time.
The Prime Rate is a reference rate and does not necessarily represent the
lowest or best rate actually charged to any customer. NatWest may make
commercial loans or offer loans at, above or below the Prime Rate. Any
change in the Prime Rate shall be effective hereunder on the effective date
of such change announced by NatWest.
"Register" shall have the meaning assigned to such term in
Section 11.03(e) hereof.
"Regulation D" shall mean Regulation D of the Board, as the same
is from time to time in effect, and all official rulings and
interpretations thereunder or thereof.
"Regulation G" shall mean Regulation G of the Board, as the same
is from time to time in effect, and all official rulings and
interpretations thereunder or thereof.
"Regulation T" shall mean Regulation T of the Board, as the same
is from time to time in effect, and all official rulings and
interpretations thereunder or thereof.
"Regulation U" shall mean Regulation U of the Board, as the same
is from time to time in effect, and all official rulings and
interpretations thereunder or thereof.
"Regulation X" shall mean Regulation X of the Board, as the same
is from time to time in effect, and all official rulings and
interpretations thereunder.
"Release" shall mean any releasing, spilling, leaking, seepage,
pumping, pouring, emitting, emptying, discharging, injecting, escaping,
leaching, disposing or dumping, in each case as defined in Environmental
Law, and shall include any "Threatened Release," as defined in
Environmental Law.
"Remedial Work" shall mean any investigation, site monitoring,
containment, cleanup, removal, restoration or other remedial work of any
kind or nature with respect to any property of any Borrower or its
subsidiaries (whether such property is owned, leased, subleased or used),
including, without limitation, with respect to Hazardous Materials and the
Release thereof.
"Reportable Event" shall mean a Reportable Event as defined in
Section 4043(b) of ERISA.
"Required Lenders" shall mean Lenders having 51% of the Total
Commitment; provided, however, in the event there are one or more
Defaulting Lenders, the term "Required Lenders" shall mean at least two (2)
Non-Defaulting Lenders having an aggregate of 51% of the aggregate
Commitments of all Non-Defaulting Lenders.
"Responsible Officer" shall mean, with respect to any person, any
senior vice president or president, or the chief financial officer, of such
person.
"Revolving Commitment" shall mean, with respect to each Lender,
the Revolving Credit Commitment of such Lender set forth in Schedule
2.01(a), as it may be adjusted from time to time pursuant to Section 2.07.
"Revolving Loans" shall mean each Loan made pursuant to Section
2.01(a) hereof.
"Revolving Notes" shall mean the revolving notes of the
Borrowers, executed and delivered as provided in Section 2.04 hereof, in
substantially the form of Exhibit A annexed hereto, as amended, modified or
supplemented from time to time.
"Secured Parties" shall mean the Agent, the Lenders and NatWest.
"Security Agreement" shall mean the Security Agreement, dated as
of the date hereof, between the Grantor(s) and the Agent, for the benefit
of the Secured Parties, substantially in the form of Exhibit E annexed
hereto, as amended, modified or supplemented from time to time.
"Security Agreement (Partnership Interests)" shall mean the
Security Agreement (Partnership Interests) dated as of the date hereof,
between the Parent and the Agent, for the benefit of the Secured Parties,
substantially in the form of Exhibit H annexed hereto, as amended, modified
or supplemented from time to time.
"Security Documents" shall mean the Pledge Agreement, the
Security Agreement, the Security Agreement (Partnership Interests), the
Mortgages and each other agreement now existing or hereafter created
providing collateral security for the payment or performance of any
Obligations.
"Settlement Date" shall mean each Business Day after the Closing
Date selected by the Agent in its sole discretion subject to and in
accordance with the provisions of Section 2.15(c) as of which a Settlement
Report is delivered by the Agent and on which settlement is to be made
among the Lenders in accordance with the provisions of Section 2.15 hereof.
"Settlement Report" shall mean each report, substantially in the
form attached hereto as Exhibit J hereto, prepared by the Agent and
delivered to each Lender and setting forth, among other things, as of the
Settlement Date indicated thereon and as of the next preceding Settlement
Date, the aggregate principal balance of all Loans outstanding, each
Lender's ratable portion thereof, each Lender's Loans and all Non-Ratable
Loans made, and all payments of principal received by the Agent from or for
the account of the Borrowers during the period beginning on such next
preceding Settlement Date and ending on such Settlement Date.
"Subordinated Indebtedness" shall mean, with respect to the
Parent or any subsidiary thereof, Indebtedness subordinated in right of
payment to such person's monetary obligations under this Agreement and the
other Loan Documents upon terms satisfactory to and approved in writing by
the Agent, to the extent it does not by its terms (except as otherwise
approved in writing by the Agent) mature or become subject to any mandatory
prepayment or amortization of principal prior to the Final Maturity Date.
"subsidiary" shall mean, with respect to any person, the parent
of such person, any corporation, association or other business entity of
which securities or other ownership interests representing more than 50% of
the ordinary voting power are, at the time as of which any determination is
being made, owned or controlled, directly or indirectly, by the parent or
one or more subsidiaries of the parent. All references to subsidiaries of
the Parent shall include each of the Borrowers, but shall exclude the
entities listed on Schedule B.
"Taxes" shall have the meaning assigned to such term in
Section 2.13(a) hereof.
"Term Commitment" shall mean, with respect to each Lender, the
Term Commitment of such Lender as set forth in Schedule 2.01(b).
"Term Loan" shall mean, collectively, Term Loan A, Term Loan B
and Term Loan C.
"Term Loan A" shall mean the Loan made on the Closing Date
pursuant to Section 2.01(b)(i) hereof.
"Term Loan B" shall mean the Loan made on the Closing Date
pursuant to Section 2.01(b)(ii) hereof.
"Term Loan C" shall mean the Loan made on the Closing Date
pursuant to Section 2.01(b)(iii) hereof.
"Term Notes" shall mean, collectively, Term Note A, Term Note B
and Term Note C.
"Term Note A" shall mean, collectively, the term notes of the
Borrowers, executed and delivered as provided in Section 2.04 hereof, in
substantially the form of Exhibit B-1 annexed hereto, as amended, modified
or supplemented from time to time.
"Term Note B" shall mean, collectively, the term notes of the
Borrowers, executed and delivered as provided in Section 2.04 hereof, in
substantially the form of Exhibit B-2 annexed hereto, as amended, modified
or supplemented from time to time.
"Term Note C" shall mean, collectively, the term notes of the
Borrowers, executed and delivered as provided in Section 2.04 hereof, in
substantially the form of Exhibit B-3 annexed hereto, as amended, modified
or supplemented from time to time.
"Termination Date" shall mean the earlier to occur of (i) the
Final Maturity Date and (ii) the date on which the Revolving Credit
Commitments shall terminate, expire or be canceled in accordance with the
terms of this Agreement.
"Total Commitment" shall mean the sum of the Lenders' Total
Revolving Commitments and Total Term Commitments.
"Total Revolving Commitment" shall mean the sum of the Lenders'
Revolving Commitments.
"Total Term Commitment" shall mean the sum of the Lenders' Term
Commitments.
"Transactions" shall have the meaning assigned to such term in
Section 4.02 hereof.
"Undrawn Availability" shall mean, at any time, an amount equal
to (A) the lesser of (i) the Total Revolving Commitment and (ii) the
Borrowing Base, minus (B) the sum of (i) all Revolving Loans outstanding at
such time, (ii) the Letter of Credit Usage at such time and (iii) reserves
established pursuant to Section 2.01(a)(iii) below at such time.
"Wakefern Shareholder Agreement" shall mean the Stockholders'
Agreement dated as of August 20, 1987, by and among Wakefern Food Corp. and
each of its member-stockholders (including Parent) as heretofore and
hereafter amended, restated, modified and supplemented.
Unless otherwise expressly provided herein, each accounting term
used herein shall have the meaning given it under generally accepted
accounting principles in effect from time to time in the United States
applied on a basis consistent with those used in preparing the financial
statements referred to in Section 6.05 hereof; provided, however, that each
reference in Article VII hereof, or in the definition of any term used in
Article VII hereof, to generally accepted accounting principles shall mean
generally accepted accounting principles as in effect on the date hereof.
II. THE LOANS
SECTION 2.01. Commitments.
(a) Revolving Commitment. (i) Subject to the terms and
conditions and relying upon the representations and warranties herein set
forth, each Lender, severally and not jointly, agrees to make Loans to the
Borrowers, at any time and from time to time from the date hereof to the
Termination Date in an aggregate principal amount at any time outstanding
not to exceed the amount of such Lender's Revolving Commitment set forth
opposite its name in Schedule 2.01(a) annexed hereto, as such Revolving
Commitment may be reduced from time to time in accordance with the
provisions of this Agreement. Notwithstanding the foregoing, the aggregate
principal amount of Loans outstanding at any time to the Borrowers shall
not exceed (1) the lesser of (A) the Total Revolving Commitment (as such
amount may be reduced pursuant to Section 2.07 hereof) and (B) an amount
equal to sixty percent (60%) of the Net Amount of Eligible Inventory (this
clause (1) (B) referred to herein as the "Borrowing Base"), minus (2) the
Letter of Credit Usage at such time (which Letter of Credit Usage shall not
exceed $2,500,000 at any time), and minus (3) reserves established pursuant
to Section 2.01(a)(iii) below at such time. The Borrowing Base will be
computed weekly and a compliance certificate from a Responsible Officer of
the Borrowers presenting its computation will be delivered to the Agent in
accordance with Section 6.05 hereof.
(ii) Subject to the foregoing and within the foregoing limits,
and subject to all other applicable terms, provisions and limitations set
forth in this Agreement, the Borrowers may borrow, repay (or, subject to
the provisions of Section 2.09 hereof, prepay) and reborrow Revolving
Loans, on and after the date hereof and prior to the Termination Date.
(iii) The Agent may from time to time decrease the Loans and
Letters of Credit available to the Borrowers by an amount equal to the
aggregate amount of all reserves which the Agent deems necessary or
desirable to maintain hereunder, such reserves to be determined by the
Agent in its commercially reasonable judgment and to include, without
limitation, reserves with respect to (i) rent payments past due and owing
by the Borrowers with respect to premises leased by the Borrowers for which
a Landlord Waiver has not been obtained, (ii) trust fund liabilities under
the Perishable Agricultural Commodities Act and the Packers and Stockyards
Act, (iii) environmental remediation and liability, (iv) Liens on
Collateral (other than Liens in existence on the Closing Date which are
listed on Schedule 7.01 and other than encumbrances permitted under Section
7.02) and (v) credit exposure of any Borrowers with respect to interest
rate protection arrangements.
(b) Term Commitments. Subject to the terms and conditions and
relying upon the representations and warranties herein set forth, each
Lender, severally (on a pro rata basis based upon such Lender's Term
Commitment set forth opposite its name in Schedule 2.01(b) annexed hereto)
and not jointly, agrees to lend to the Borrowers on the Closing Date:
(i) a term loan in the aggregate principal amount of $2,000,000;
(ii) a term loan in the aggregate principal amount of $8,500,000;
and
(iii) a term loan in the aggregate principal amount of
$12,500,000.
SECTION 2.02. Loans. (a) Subject to the provisions of Sections
2.15 and 2.16 hereof, Loans shall be made ratably by the Lenders in
accordance with their respective Commitments; provided, however, that the
failure of any Lender to make any Loan shall not in itself relieve any
other Lender of its obligation to lend hereunder. The initial Loans shall
be made by the Lenders against delivery of Notes, payable to the order of
the Lenders, as referred to in Section 2.04 hereof.
(b) Subject to the provisions of Sections 2.15 and 2.16 hereof,
each Lender shall make its Loans on the proposed dates thereof by paying
the amount required to the Agent in New York, New York in immediately
available funds not later than 2:00 p.m., New York City time, and the Agent
shall as soon as practicable, but in no event later than 3:00 p.m., New
York City time, credit the amounts so received to the general deposit
account of the Borrowers with the Agent in immediately available funds or,
if Loans are not to be made on such date because any condition precedent to
a borrowing herein specified is not met, return the amounts so received to
the respective Lenders.
SECTION 2.03. Notice of Loans. The Borrowers shall, through a
Responsible Officer of the Borrowers, give the Agent irrevocable written,
telex or facsimile notice of each borrowing not later than 1:00 P.M.,
New York City time, on the Business Day of a Loan borrowing or conversion.
Such notice shall specify the date of such borrowing (which shall be a
Business Day) and amount thereof. The Agent shall promptly advise the
Lenders of any notice given pursuant to this Section 2.03 and of each
Lender's portion of the requested borrowing.
SECTION 2.04. Notes; Repayment of Loans.
(a) Revolving Notes. All Revolving Loans made by a Lender to
the Borrowers shall be evidenced by a single Revolving Note, duly executed
on behalf of the Borrowers, dated the Closing Date, in substantially the
form of Exhibit A annexed hereto, delivered and payable to such Lender in a
principal amount equal to its Revolving Commitment in respect of the
Borrowers on such date. The outstanding balance of each Revolving Loan, as
evidenced by any such Revolving Note, shall mature and be due and payable
on the Termination Date.
(b) Term Notes. All Term Loans made by a Lender to the
Borrowers shall be evidenced by a single Term Note A, a single Term Note B
and a single Term Note C, as the case may be, each duly executed on behalf
of the Borrowers, dated the Closing Date, in substantially the form of
Exhibit B-1 annexed hereto, Exhibit B-2 annexed hereto and Exhibit B-3
annexed hereto, as the case may be, delivered and payable to such Lender in
an aggregate principal amount equal to its Term Commitment in respect of
the Borrowers on such date (allocated to each Lender's Term Note A, Term
Note B and Term Note C on a pro rata basis). The outstanding balance of
Term Loan A, as evidenced by Term Note A, shall mature and be due and
payable on the earlier of (i) the date which is six months from the Closing
Date and (ii) the Termination Date. The outstanding balance of Term Loan
B, as evidenced by Term Note B, shall mature and be due and payable on the
earlier of (i) the one year anniversary of the Closing Date and (ii) the
Termination Date. The outstanding balance of Term Loan C, as evidenced by
Term Note C, shall be repaid as follows:
Period Principal Installment
March 31, 1996 $750,000
June 30, 1996 $750,000
September 30, 1996 $750,000
December 31, 1996 $750,000
March 31, 1997 $1,125,000
June 30, 1997 $1,125,000
September 30, 1997 $1,125,000
December 31, 1997 $1,125,000
March 31, 1998 $1,250,000
June 30, 1998 $1,250,000
September 30, 1998 $1,250,000
December 31, 1998 $1,250,000
Notwithstanding the foregoing, the entire outstanding balance of Term Loan
C shall mature and be due and payable on the earlier of (i) the Final
Maturity Date and (ii) the Termination Date.
(c) Each Note shall bear interest from its date on the
outstanding principal balance thereof, as provided in Section 2.05 hereof.
(d) Each Lender, or the Agent on its behalf, shall, and is
hereby authorized by the Borrowers to, endorse on the schedule attached to
the Notes of such Lender (or on a continuation of such schedule attached to
such Note and made a part thereof) an appropriate notation evidencing the
date and amount of each Loan to the Borrowers from such Lender, as well as
the date and amount of each payment and prepayment with respect thereto;
provided, however, that the failure of any person to make such a notation
on a Note shall not affect any obligations of the Borrowers under such
Note. Any such notation shall be conclusive and binding as to the date and
amount of such Loan or portion thereof, or payment or prepayment of
principal or interest thereon, absent manifest error.
(e) Each Borrower hereby irrevocably authorizes and directs the
Agent on behalf of itself and the Lenders to charge the accounts of the
Borrowers with the Agent for all amounts which may now or hereafter be due
and payable by any Borrower and its subsidiaries hereunder or under any
other Loan Document, including, without limitation, all amounts of
principal and interest, fees and expenses. If at any time there is not
sufficient availability to cover any of the payments referred to in the
prior sentence, and, in any event, upon the occurrence and during the
continuance of any Default, the Borrowers shall make any such payments to
the Agent on demand.
SECTION 2.05. Interest on Loans. (a) Subject to the provisions
of Sections 2.05(c) and Section 2.08 hereof, each Revolving Loan shall bear
interest at a rate per annum equal to the Prime Rate plus one and one half
percent (1-1/2%); provided, however, that on and after the full and final
payment of Term Loan A and Term Loan B, each Revolving Loan shall bear
interest at a rate per annum equal to the Prime Rate plus one and
one-quarter percent (1-1/4%); and provided, further, that on and after the
full and final payment of Term Loan A, Term Loan B and Term Loan C, each
Revolving Loan shall bear interest at a rate per annum equal to the Prime
Rate plus one percent (1%).
(b) Subject to the provisions of Sections 2.05(c) and Section
2.08 hereof, each Term Loan shall bear interest at a rate per annum equal
to the Prime Rate plus two percent (2%); provided, however, that on and
after the full and final payment of Term Loan A and Term Loan B, Term Loan
C shall bear interest at a rate per annum equal to the Prime Rate plus one
and one quarter percent (1-1/4%).
(c) Interest on each Loan shall be payable in arrears on each
applicable Interest Payment Date and on the maturity thereof (whether as
scheduled, by acceleration or otherwise). Interest on each Loan shall be
computed based on the number of days elapsed in a year of 360 days. The
Agent shall determine each interest rate applicable to the Loans and shall
promptly advise the Borrowers and the Lenders of the interest rate so
determined (which determination shall be conclusive and binding on the
Borrowers and the Lenders absent manifest error).
SECTION 2.06. Fees. (a) The Borrowers shall pay each Lender,
through the Agent, (i) on the last Business Day of each March, June,
September and December in arrears commencing March 31, 1995, (ii) on the
date of any reduction of the Revolving Commitment pursuant to Section 2.07
hereof and (iii) on the Termination Date, in immediately available funds, a
commitment fee (the "Commitment Fee") of one-half percent (1/2%) per annum on
the average amount, calculated on a daily basis, by which the Revolving
Commitment of such Lender, during the quarter (or shorter period commencing
with the date hereof or ending with the Termination Date) ending on such
date exceeds the aggregate outstanding principal amount of the Revolving
Loans made by such Lender and such Lender's pro rata share of the aggregate
undrawn amount of all outstanding Letters of Credit. The Commitment Fee
due to each Lender under this Section 2.06 shall commence to accrue on the
date hereof and cease to accrue on the earlier of (i) the Termination Date
and (ii) the termination of the Revolving Commitment of such Lender
pursuant to Section 2.07 hereof. The Commitment Fee shall be calculated on
the basis of the actual number of days elapsed in a year of 360 days.
(b) The Borrowers shall pay to the Agent and/or NatWest for
their respective accounts the fees payable in the Fee Letter and other
letters to be entered into when and as such fees are due and payable as
therein provided.
SECTION 2.07. Termination of Revolving Commitments. (a) Upon
at least five (5) Business Days' prior irrevocable written notice (or
facsimile notice promptly confirmed in writing) to the Agent, the Borrowers
may at any time in whole permanently terminate the Total Revolving
Commitment.
(b) Simultaneously with any termination of the Total Revolving
Commitment pursuant to paragraph (a) of this Section 2.07, the Borrowers
shall (i) pay to each Lender, through the Agent, the Commitment Fee due and
owing through and including the date of such termination on the amount of
the Revolving Commitment of such Lender so terminated and (ii) repay the
entire Term Loan (including accrued interest thereon).
(c) In any event, the Revolving Commitment of each Lender shall
automatically and permanently terminate on the Termination Date unless
extended as herein provided, and all Revolving Loans still outstanding on
such date shall be due and payable in full together with accrued interest
thereon.
SECTION 2.08. Interest on Overdue Amounts. If there shall occur
and be continuing any Event of Default, the Borrowers shall on demand from
time to time pay interest, to the extent permitted by law, on principal,
interest, fees and any other amount which is payable hereunder or under any
other Loan Document (whether then due and payable or not) (after as well as
before judgment) at a rate per annum equal to two percent (2%) in excess of
the rates otherwise applicable thereto (or if no rate is applicable
thereto, at a rate per annum equal to four percent (4%) in excess of the
Prime Rate).
SECTION 2.09. Prepayment of Loans. (a) Subject to the terms
and conditions contained in this Section 2.09 and elsewhere in this
Agreement, the Borrower shall have the right to prepay any Revolving Loan
and/or Term Loan at any time in whole or from time to time in part without
penalty (except as otherwise provided for herein).
(b) On the date of any termination of the Total Revolving
Commitment pursuant to Section 2.07(a) hereof or elsewhere in this
Agreement, the Borrowers shall pay the aggregate principal amount of all
Loans then outstanding, together with interest to the date of such payment
and all fees and other amounts due under this Agreement and deposit in a
cash collateral account with the Agent on terms satisfactory to the Agent
an amount equal to 105% of the amount of the Letter of Credit Usage.
(c) The Borrowers shall make prepayments of the Revolving Loans
from time to time such that the outstanding principal balance of the
Revolving Loans plus the Letter of Credit Usage plus the reserves then in
effect under Section 2.01(a)(iii) hereof does not exceed the lesser of
(i) the Total Revolving Commitment and (ii) the Borrowing Base. In the
event that after the prepayment in full (or cash collateralization thereof
as provided above) of the Revolving Loans, the Letter of Credit Usage plus
other reserves then in effect under Section 2.01(a)(iii) hereof shall still
exceed the lesser of (i) the Total Revolving Commitment and (ii) the
Borrowing Base, the Borrowers shall deposit cash in the amount of such
excess with the Agent in a cash collateral account with the Agent to be
held in such account on terms satisfactory to the Agent.
(d) Within five days of (i) the consummation of any transaction
in the Asset Redeployment Program; (ii) the sale or other disposition
(other than the sale of Inventory in the ordinary course of business,
collections of accounts receivable arising out of the sale of Inventory in
the ordinary course of business, payments made to the Parent or any of its
subsidiaries as lessors with respect to store leases, and sales of assets
of less than $10,000 per transaction or series of transactions, or $50,000
in the aggregate over the term of this Agreement) of any assets of the
Parent or any of its subsidiaries, any Grantor or any Guarantor or any sale
or issuance by any subsidiary of the Parent of any of such subsidiary's
capital stock or other equity interests in such subsidiary or any option,
warrant or similar right to acquire any of same, other than as described in
clause (d)(i) above; or (iii) the consummation of the issuance of any debt
securities of the Parent or any of its subsidiaries, the Borrowers shall
make a mandatory prepayment of the Loans in an amount equal to 100% of the
proceeds received by the Parent or any of its subsidiaries (net of related
pension obligations, estimated taxes due, any reasonable expenses of sale
and any Indebtedness secured by Liens on the assets sold), which proceeds
shall be applied as set forth in paragraph (g) below. Nothing contained in
this paragraph shall constitute, or be deemed to constitute, a consent to
any of the transactions described in this paragraph (d).
(e) (i) Except as provided in clause (ii) below, not later than
the third day following the receipt by the Agent or the Parent or any of
its subsidiaries (x) of any net proceeds of any insurance required to be
maintained pursuant to Section 6.03 hereof on account of each separate
loss, damage or injury to any asset of the Parent or such subsidiary
(including, without limitation, any Collateral) or of any condemnation or
eminent domain awards with respect to any real property or improvements
thereon owned by the Parent or any of its subsidiaries, or (y) of any net
proceeds of any business interruption insurance required to be maintained
pursuant to Section 6.03 hereof, the Parent or such subsidiary shall notify
the Agent of such receipt in writing or by telephone promptly confirmed in
writing, and not later than the third day following receipt by the Agent or
the Parent or such subsidiary of any such proceeds or awards, there shall
become due and payable a prepayment of the Loans in an amount equal to 100%
of such proceeds or award. Prepayments from such net proceeds or award
shall be applied as set forth in paragraph (g) below.
(ii) In the case of the receipt of net proceeds or awards
described in clause (i) above with respect to the loss, damage or injury to
any asset of the Parent or any of its subsidiaries or the condemnation or
taking by eminent domain of any real property or improvements thereon owned
by the Parent or any of its subsidiaries (other than net proceeds of any
business interruption insurance), the Parent or such subsidiary may elect,
by written notice delivered to the Agent not later than the day on which a
prepayment would otherwise be required under clause (i), to apply all or a
portion of such net proceeds or award for the purpose of replacing,
repairing, restoring or rebuilding the relevant tangible property, and, in
such event, any required prepayment under clause (i) above shall be reduced
dollar for dollar by the amount of such election. An election under this
clause (ii) shall not be effective unless: (x) at the time of such
election there is continuing no Default or Event of Default; (y) the
Borrowers shall have certified to the Agent that: (1) the net proceeds of
the insurance adjustment for such loss, damage or injury or the amount of
such award, together with other funds available to the Borrowers, shall be
substantially sufficient to complete such replacement, repair, restoration
or rebuilding in accordance with all applicable laws, regulations and
ordinances; and (2) to the best knowledge of the Borrowers, no Default or
Event of Default has arisen or will arise as a result of such loss, damage,
injury, condemnation, taking, replacement, repair or rebuilding; and (z) if
the amount of net proceeds or awards in all such cases exceeds $1,000,000
in the aggregate from the Closing Date to the Final Maturity Date, the
Borrowers shall have obtained the written consent of the Agent to such
election.
(iii) In the event of an election under clause (ii) above,
pending application of the net proceeds or award to the required
replacement, repairs, restoration or rebuilding, the Parent or such
subsidiary shall not later than the time at which prepayment would have
been, in the absence of such election, required under clause (i) above,
apply such net proceeds or award to the prepayment of the outstanding
principal balance, if any, of the Revolving Loans (not in permanent
reduction of the Revolving Commitment), and deposit (the "Special Deposit")
with the Agent, the balance, if any, of such net proceeds or award
remaining after such application, pursuant to agreements in form, scope and
substance reasonably satisfactory to the Agent. The Special Deposit,
together with all earnings on such Special Deposit, shall be available to
the Parent and its subsidiaries solely for the replacement, repair,
rebuilding or restoration of the tangible property suffering the injury,
loss, damage condemnation or taking by eminent domain in respect of which
such prepayment and Special Deposit were made or to such other purpose as
to which the Agent may consent in writing; provided, however, that at such
time as a Default or Event of Default shall occur, the balance of the
Special Deposit and earnings thereon may be applied by the Agent to repay
the Obligations in such order as the Agent shall elect. The Agent shall be
entitled to require proof, as a condition to the making of any withdrawal
from the Special Deposit, that the proceeds of such withdrawal are being
applied for the purposes permitted hereunder.
(iv) Notwithstanding anything to the contrary in this
paragraph (e), promptly upon the receipt by the Agent or the Parent or any
of its subsidiaries of any net proceeds of any insurance referred to in
Section 6.03 hereof, there shall become due and payable a prepayment of
principal in respect of the Obligations in an amount equal to 100% of such
net proceeds. All prepayment made pursuant to this clause (iv) shall be
applied in the manner set forth in paragraph (g) below.
(f) Within 90 days after the end of each Fiscal Year, the
Borrowers shall prepay the Obligations in an amount equal to fifty percent
(50%) (or, upon written notice by the Agent to the Borrowers in the Agent's
sole discretion, up to one hundred percent (100%)) of Excess Cash Flow for
such Fiscal Year, calculated on the basis of the audited financial
statements for such Fiscal Year delivered to the Agent pursuant to Section
6.05(a) hereof. All such prepayments from Excess Cash Flow shall be
applied in repayment of principal installments on Term Loan C on a pro rata
basis with respect to each outstanding installment. Concurrently with the
making of any payment under this paragraph (f), the Borrowers shall deliver
to the Agent a certificate of their chief executive officer or chief
financial officer demonstrating its calculation of the amount required to
be repaid.
(g) When making a prepayment, whether mandatory or otherwise,
pursuant to paragraph (a), (b), (c), (d), (e) or (f) above, the Borrowers
shall furnish to the Agent, not later than 11:00 a.m. (New York City time)
one (1) Business Day prior to the date of such prepayment of Loans,
written, telex or facsimile notice (promptly confirmed in writing) of
prepayment which shall specify the prepayment date and the principal amount
of each Loan (or portion thereof) to be prepaid, which notice shall be
irrevocable and shall commit the Borrowers to prepay such Loan by the
amount stated therein on the date stated therein. All prepayments shall be
accompanied by accrued interest on the principal amount being prepaid to
the date of prepayment. Prepayments made pursuant to paragraph (d) or
(e)(i)(x) above shall be first, applied to the repayment of Term Loan A,
second, applied to the repayment of Term Loan B, third, applied in equal
amounts to the repayment of Term Loan C and to the repayment of the
Revolving Loans (with respect to Term Loan C, such payment being applied to
outstanding installments on a pro rata basis). Payments made pursuant to
paragraph (e)(i)(y) above shall be applied as a prepayment of the Revolving
Loans. To the extent that proceeds of transactions described in Sec-
tion 2.09(d)(i) shall not be sufficient to repay in full Term Loan A when
due (the amount of such deficiency, the "Shortfall"), the Borrowers may, if
both (i) average Undrawn Availability for the thirty day period immediately
preceding such proposed repayment date equals or exceeds the sum of
$4,000,000 plus the amount of such Shortfall and (ii) Undrawn Availability
shall be at least $4,000,000 immediately after such proposed repayment, use
Revolving Loans to make such repayment to the extent of such Shortfall and
in such event proceeds of any subsequent transactions described in
Section 2.09(d)(i) shall be applied to the Revolving Loan, rather than as
set forth in the second sentence of this paragraph (g) (provided that any
proceeds in excess of the amount of the Shortfall shall be applied pursuant
to the terms of the second sentence of this paragraph (g)). The Borrowers
shall provide the Agent with a certified calculation of Undrawn
Availability in the event that the repayment in the immediately preceding
sentence is sought to be made.
(h) All prepayments under this Section 2.09 shall be subject to
Section 2.12 hereof.
(i) Except as otherwise expressly provided in this Section 2.09,
payments with respect to any paragraph of this Section 2.09 are in addition
to payments made or required to be made under any other paragraph of this
Section 2.09.
(j) All fees payable under or in connection with this Agreement
shall be fully earned upon payment and shall be nonrefundable in all
circumstances.
SECTION 2.10. Reserve Requirements; Change in Circumstances.
(a) If at any time and from time to time after the date of this Agreement,
any Lender shall determine that the adoption of any applicable law, rule,
regulation or guideline regarding capital adequacy, or any change in any
applicable law, rule, regulation or guideline regarding capital adequacy,
or any change in the interpretation or administration of any thereof by any
governmental authority, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by such Lender (or
its lending office or an affiliate) with any request or directive regarding
capital adequacy (whether or not having the force of law) of any such
authority, central bank or comparable agency, has or will have the effect
of reducing the rate of return on such Lender's or its affiliate's capital
as a consequence of such Lender's obligations hereunder to a level below
that which such Lender or affiliate could have achieved but for such
adoption, change or compliance (taking into consideration such Lender's or
its affiliate's policies with respect to capital adequacy), then from time
to time the Borrowers shall pay to such Lender such additional amount or
amounts as will compensate such Lender or its affiliate for such reduction.
Each Lender agrees to give notice to the Borrowers of any adoption of,
change in, or change in interpretation or administration of, any such law,
rule, regulation or guideline with reasonable promptness after becoming
actually aware thereof and of the applicability thereof to the
Transactions.
(b) A statement of any Lender or the Agent setting forth such
amount or amounts, supported by calculations in reasonable detail, as shall
be necessary to compensate such Lender or its affiliate (or the Agent) as
specified in paragraph (a) above shall be delivered to the Borrowers and
shall be conclusive absent manifest error. The Borrowers shall pay each
Lender or the Agent the amount shown as due on any such statement within
ten (10) days after its receipt of the same.
(c) Failure on the part of any Lender or the Agent to demand
compensation for any increased costs, reduction in amounts received or
receivable or reduction in the rate of return earned on such Lender's or
its affiliate's capital, shall not constitute a waiver of such Lender's or
the Agent's rights to demand compensation for any increased costs or reduc-
tion in amounts received or receivable or reduction in rate of return with
respect to any future period. The protection under this Section 2.10 shall
be available to each Lender and the Agent regardless of any possible
contention of the invalidity or inapplicability of any law, regulation or
other condition which shall give rise to any demand by such Lender or the
Agent for compensation.
SECTION 2.11. Pro Rata Treatment. Except as otherwise provided
hereunder and subject to the provisions of Sections 2.15 and 2.16 hereof,
each borrowing, each payment or prepayment of principal of the Notes, each
payment of interest on the Notes, each payment of any fee or other amount
payable hereunder and each reduction of the Total Revolving Commitment
shall be made pro rata among the Lenders in the proportions that their
Commitments bear to the Total Commitment.
SECTION 2.12. Sharing of Setoffs. Each Lender agrees that if it
shall, through the exercise of a right of banker's lien, setoff or
counterclaim against the Parent or any of its subsidiaries, including, but
not limited to, a secured claim under Section 506 of Title 11 of the United
States Code or other security or interest arising from, or in lieu of, such
secured claim, received by such Lender under any applicable bankruptcy,
insolvency or other similar law or otherwise, obtain payment (voluntary or
involuntary) in respect of a Note held by it as a result of which the
unpaid principal portion of the Notes held by it shall be proportionately
less than the unpaid principal portion of the Notes held by any other
Lender, it shall be deemed to have simultaneously purchased from such other
Lender a participation in the Notes held by such other Lender, so that the
aggregate unpaid principal amount of the Notes and participations in Notes
held by it shall be in the same proportion to the aggregate unpaid
principal amount of all Notes then outstanding as the principal amount of
the Notes held by it prior to such exercise of banker's lien, setoff or
counterclaim was to the principal amount of all Notes outstanding prior to
such exercise of banker's lien, setoff or counterclaim; provided, however,
that if any such purchase or purchases or adjustments shall be made
pursuant to this Section 2.12 and the payment giving rise thereto shall
thereafter be recovered, such purchase or purchases or adjustments shall be
rescinded to the extent of such recovery and the purchase price or prices
or adjustments restored without interest. The Parent and its subsidiaries
expressly consent to the foregoing arrangements and agree that any Lender
holding a participation in a Note deemed to have been so purchased may
exercise any and all rights of banker's lien, setoff or counterclaim with
respect to any and all moneys owing to such Lender as fully as if such
Lender held a Note in the amount of such participation.
SECTION 2.13. Taxes. (a) Any and all payments by the Parent,
the Borrowers and/or Guarantors hereunder shall be made, in accordance with
Section 2.14 hereof, free and clear of and without deduction for any and
all present or future taxes, levies, imposts, deductions, charges or
withholdings in any such case imposed by the United States or any political
subdivision thereof, provided that the following taxes may be deducted:
(i) in the case of the Agent and each Lender, taxes imposed
or based on its net income, and franchise or capital taxes
imposed on it, (A) if the Agent or such Lender is organized under
the laws of the United States or any political subdivision
thereof and (B) if the Agent or such Lender is not organized
under the laws of the United States or any political subdivision
thereof, and its principal office or Domestic Lending Office is
located in the United States, and in the case of both (A) and
(B), withholding taxes payable with respect to payments to the
Agent or such Lender at its principal office or Domestic Lending
Office under laws (including, without limitation, any treaty,
ruling, determination or regulation) in effect on the date
hereof, but not any increase in withholding tax resulting from
any subsequent change in such laws (other than withholding with
respect to taxes imposed or based on its net income or with
respect to franchise or capital taxes), and
(ii) taxes (including withholding taxes) imposed by reason
of the failure or inability of the Agent or any Lender, in either
case that is organized outside the United States, to comply with
Section 2.13(f) hereof (or the inaccuracy at any time of the
certificates, documents and other evidence delivered thereunder)
(all such nondeducted taxes, levies, imposts, deductions, charges,
withholdings and liabilities being hereinafter referred to as "Taxes"). If
the Parent, the Borrowers or any Guarantor shall be required by law to
deduct any Taxes from or in respect of any sum payable hereunder to the
Lenders or the Agent, (x) the sum payable shall be increased by the amount
necessary so that after making all required deductions (including without
limitation deductions applicable to additional sums payable under this
Section 2.13) such Lender or the Agent (as the case may be) receives an
amount equal to the sum it would have received had no such deductions been
made, (y) the Parent, the Borrowers and/or such Guarantor shall make such
deductions and (z) the Parent, the Borrowers and/or such Guarantor shall
pay the full amount deducted to the relevant tax authority or other
authority in accordance with applicable law.
(b) In addition, the Parent, each Borrower and each Guarantor
agrees to pay any present or future stamp or documentary taxes or any other
excise or property taxes, charges or similar levies which arise from any
payment made hereunder or from the execution, delivery or registration of,
or otherwise with respect to, this Agreement (hereinafter referred to as
"Other Taxes").
(c) The Borrowers will indemnify each Lender and the Agent for
the full amount of Taxes or Other Taxes (including, without limitation, any
Taxes or Other Taxes imposed by any jurisdiction (except as specified in
clauses (a)(i) and (ii)) on amounts payable under this Section 2.13) paid
by such Lender or the Agent (as the case may be) and any liability
(including penalties, interest and expenses) arising therefrom or with
respect thereto. This indemnification shall be made within 30 days from
the date such Lender or the Agent (as the case may be) makes written demand
therefor. If any Lender receives a refund in respect of any Taxes or Other
Taxes for which such Lender has received payment from the Borrowers
hereunder, such Lender shall promptly notify the Borrowers of such refund
and such Lender shall, within 30 days of receipt of a request by the
Borrowers, repay such refund to the Borrowers (or if there shall at such
time be continuing a Default or Event of Default, pay same to the Agent to
be applied to the Obligations in such order and manner as the Agent shall
choose in its discretion), provided that the Borrowers, upon the request of
such Lender, agrees to return such refund (whether returned to the
Borrowers or applied to the Obligations) (plus any penalties, interest or
other charges) to such Lender in the event such Lender is required to repay
such refund.
(d) Within 30 days after the date of any payment of Taxes or
Other Taxes withheld by the Parent, the Borrowers, or any Guarantor in
respect of any payment to any Lender, the Borrowers will furnish to the
Agent, at its address referred to in Section 11.01 hereof, such certifi-
cates, receipts and other documents as may be reasonably required to
evidence payment thereof.
(e) Without prejudice to the survival of any other agreement
hereunder, the agreements and obligations contained in this Section 2.13
shall survive the payment in full of principal and interest hereunder.
(f) Each Lender that is organized outside of the United States
shall deliver to the Borrowers on the date hereof (or, in the case of an
assignee, on the date of the assignment) and from time to time as required
for renewal under applicable law duly completed copies of United States
Internal Revenue Service Form 1001 or 4224 (or any successor or additional
forms as the Borrower may reasonably request), as appropriate, indicating
in each case that such Lender is entitled to receive payments under this
Agreement without any deduction or withholding of any United States federal
income taxes. The Agent (if the Agent is an entity organized outside the
United States) and each Lender that is organized outside the United States
shall promptly notify the Borrowers and the Agent of any change in its
Domestic Lending Office and upon written request of the Borrowers such
Lender shall, prior to the immediately following due date of any payment by
the Borrowers hereunder, deliver to the Borrowers (with copies to the
Agent), such certificates, documents or other evidence, as required by the
Code or Treasury Regulations issued pursuant thereto, including without
limitation Internal Revenue Service Form 4224, Form 1001 and any other cer-
tificate or statement of exemption required by Treasury Regulation Sec-
tion 1.1441-4(a) or Section 1.1441-6(c) or any subsequent version thereof,
properly completed and duly executed by such Lender establishing that such
payment is (i) not subject to withholding under the Code because such
payment is effectively connected with the conduct by such Lender of a trade
or business in the United States or (ii) totally exempt from United States
tax under a provision of an applicable tax treaty. The Borrowers shall be
entitled to rely on such forms in their possession until receipt of any
revised or successor form pursuant to this Section 2.13(f). If the Agent
or a Lender fails to provide a certificate, document or other evidence
required pursuant to this Section 2.13(f), then (i) the Borrowers shall be
entitled to deduct or withhold on payments to the Agent or such Lender as a
result of such failure, as required by law, and (ii) the Borrowers shall
not be required to make payments of additional amounts with respect to such
withheld Taxes pursuant to clause (x) of Section 2.13(a) to the extent such
withholding is required by reason of the failure of the Agent or such
Lender to provide the necessary certificate, document or other evidence.
SECTION 2.14. Payments and Computations. The Borrowers shall
make each payment hereunder and under any instrument delivered hereunder
not later than 12:00 noon (New York City time) on the day when due in
lawful money of the United States (in freely transferable dollars) to the
Agent at its offices at 175 Water Street, New York, New York 10038 for the
account of the Lenders, in immediately available funds. The Agent may
charge, when due and payable, the Borrowers' account with the Agent for all
interest, principal and Commitment Fees or other fees owing to the Agent,
the Lenders or NatWest on or with respect to this Agreement and/or the
Loans and Letters of Credit and other Loan Documents.
SECTION 2.15. Settlement Among Lenders. (a) The Agent shall
pay to each Lender not later than one (1) Business Day after each Interest
Payment Date, its ratable portion, based on the principal amount of the
Loans owing to such Lender, of all interest payments and any other fees
received by the Agent hereunder in respect of the Loans, net of any amounts
payable by such Lender to the Agent, by wire transfer.
(b) It is agreed that each Lender's Revolving Loans are intended
by the Lenders to be equal at all times to such Lender's ratable portion
(as determined in accordance with the percentage amounts set forth in
Schedule 2.01(a) hereto) of the aggregate principal amount of all Revolving
Loans outstanding. Notwithstanding such agreement, the Lenders agree that
in order to facilitate the administration of this Agreement and the other
Loan Documents, settlement among them shall, subject to the provisions of
clause (d) below, take place on a periodic basis in accordance with the
provisions of clause (c) below.
(c) (i) To the extent and in the manner hereinafter provided in
this Section 2.15, settlement among the Lenders as to Revolving Loans shall
occur periodically on Settlement Dates determined from time to time by the
Agent, which may occur before or after the occurrence or during the
continuance of a Default or Event of Default and whether or not all of the
conditions to the making of Revolving Loans set forth in Section 5.01 have
been met. On each Settlement Date, payments shall be made to the Agent for
the account of the Lenders in the manner provided in this Section 2.15 in
accordance with the Settlement Report delivered by the Agent pursuant to
the provisions of this Section 2.15 in respect of such Settlement Date so
that as of each Settlement Date, and after giving effect to the
transactions on such Settlement Date, each Lender's Revolving Loans shall
equal such Lender's ratable portion of the Revolving Loans outstanding as
determined in accordance with the percentage amounts set forth in Sched-
ule 2.01(a) hereto.
(ii) The Agent shall designate periodic Settlement Dates
which may occur on any Business Day after the Closing Date; provided,
however, that Settlement Dates shall occur on the closest Business Day to
the 10th and 25th day of each month or more frequently as determined by the
Agent in its discretion (including, without limitation, under clause (d)(i)
hereof). The Agent shall designate a Settlement Date by delivering to each
Lender a Settlement Report not later than 10:00 a.m. (New York City time)
on the proposed Settlement Date, which Settlement Report shall be with
respect to the period beginning on the next preceding Settlement Date and
ending on such designated Settlement Date.
(iii) Between Settlement Dates, the Agent shall request and
NatWest as a Lender shall, subject to the provisions of clause (d) below,
advance to the Borrowers out of NatWest's own funds, the entire principal
amount of any Revolving Loan requested or deemed requested pursuant to
Section 2.03 (any such Revolving Loan being referred to as a "Non-Ratable
Loan"). The making of each Non-Ratable Loan by NatWest shall be deemed to
be a purchase by NatWest of a 100% participation in each other Lender's
ratable portion of the amount of such Non-Ratable Loan. All payments of
principal, interest and any other amount with respect to such Non-Ratable
Loan shall be payable to and received by the Agent for the account of
NatWest. Any payments received by the Agent between Settlement Dates which
in accordance with the terms of this Agreement are to be applied to the
reduction of the outstanding principal balance of Revolving Loans, shall be
paid over to and retained by NatWest for such application, and such payment
to and retention by NatWest shall be deemed, to the extent of each other
Lender's ratable portion of such payment, to be a purchase by each such
other Lender of a participation in the Revolving Loans (including the
repurchase of participations in Non-Ratable Loans) held by NatWest
immediately prior to the receipt and application of such payment.
(iv) If on any Settlement Date the decrease, if any, in the
dollar amount of any Lender's Revolving Loans which is required to comply
with the first sentence of Section 2.15(b) is more than such Lender's
ratable portion of amounts received by the Agent and paid only to NatWest
since the next preceding Settlement Date, such Lender and the Agent, in
their respective records, shall apply such Lender's ratable portion of such
amounts to the decrease in such Lender's Revolving Loans, and NatWest shall
pay to the Agent, for the account of such Lender, the excess.
(v) If on any Settlement Date the increase, if any, in the
dollar amount of any Lender's Revolving Loans which is required to comply
with the first sentence of Section 2.15(b) exceeds such Lender's ratable
portion of amounts received by the Agent and paid only to NatWest since the
next preceding Settlement Date, such Lender and the Agent, in their
respective records, shall apply such Lender's ratable portion of such
amounts to the increase in such Lender's Loans, and such Lender shall pay
to the Agent, for the account of NatWest, the excess.
(vi) If a Settlement Report indicates that no Revolving
Loans have been made during the period since the next preceding Settlement
Date, then such Lender's ratable portion of any amounts received by the
Agent but paid only to NatWest shall be paid by NatWest to the Agent, for
the account of such Lender. If a Settlement Report indicates that the
increase in the dollar amount of a Lender's Revolving Loans which is
required to comply with the first sentence of Section 2.15(b) is exactly
equal to such Lender's ratable portion of amounts received by the Agent but
paid only to NatWest since the next preceding Settlement Date, such Lender
and the Agent, in their respective records, shall apply such Lender's
ratable portion of such amounts to the increase in such Lender's Revolving
Loans.
(vii) If any amounts received by NatWest in respect of the
Obligations are later required to be returned or repaid by NatWest to the
Borrowers or any other obligor or their respective representatives or
successors in interest, whether by court order, settlement or otherwise,
and such amounts repaid or returned by NatWest are in excess of NatWest's
ratable portion of all such amounts required to be returned by all Lenders,
each other Lender shall, upon demand by NatWest with notice to the Agent,
pay to the Agent for the account of NatWest, an amount equal to the excess
of such Lender's ratable portion of all such amounts required to be
returned by all Lenders over the amount, if any, returned directly by such
Lender.
(viii) (x) Payment by any Lender to the Agent shall be made
not later than 1:00 p.m. (New York City time) on the Business Day such
payment is due, provided that if such payment is due on written demand
by another Lender, including pursuant to clause (d) below, such
written demand shall be made on the paying Lender not later than 10:00
a.m. (New York City time) on such Business Day. Payment by the Agent
to any Lender shall be made by wire transfer, promptly following the
Agent's receipt of funds for the account of such Lender and in the
type of funds received by the Agent, provided that if the Agent
receives such funds at or prior to 12:00 noon (New York City time),
the Agent shall pay such funds to such Lender by 3:00 p.m. (New York
City time) on such Business Day. If a demand for payment is made
after the applicable time set forth above, the payment due shall be
made by 3:00 p.m. (New York City time) on the first Business Day
following the date of such demand.
(y) If a Lender shall, at any time, fail to make any payment to
the Agent required hereunder, the Agent may, but shall not be required
to, retain payments that would otherwise be made to such Lender
hereunder and apply such payments to such Lender's defaulted
obligations hereunder, at such time, and in such order, as the Agent
may elect in its sole discretion.
(z) With respect to the payment of any funds under this Section
2.15(c), whether from the Agent to a Lender or from a Lender to the
Agent, the party failing to make full payment when due pursuant to the
terms hereof shall, upon written demand by the other party, pay such
amount together with interest on such amount at the Federal Funds
Effective Rate.
(d) (i) The Agent shall have the right at any time to require,
by notice to each Lender, that all settlements in respect of advances and
repayments of Revolving Loans be made on a daily basis. From and after the
giving of such notice (and until such time, if any, as the Agent notifies
the Lenders of its determination to return to a periodic settlement basis),
each Lender shall pay to the Agent such Lender's ratable portion of the
amount of each Revolving Loan on the date such Revolving Loan is made in
accordance with the provisions of clause (c)(viii) above and the Agent
shall pay to each Lender by wire transfer by 5:00 p.m. (New York City time)
funds received before 1:00 p.m. (New York City time) on such Business Day
by the Agent from the Borrowers and by 3:00 p.m. (New York City time) funds
received after 1:00 p.m. (New York City time) of the preceding Business Day
by the Agent from the Borrowers, by wire transfer, such Lender's ratable
portion of the net amount of all payments received by the Agent hereunder
in respect of the principal of the Revolving Loans (after deducting the
principal amount of Revolving Loans made on such day) or in respect of
interest on the Revolving Loans. Any amount payable pursuant to this
subsection which is not paid when due shall bear interest, payable by the
Agent, for each day until paid in full at the Federal Funds Effective Rate
in effect on such day.
(ii) In addition to, and without limiting the right of the
Agent to require daily settlement pursuant to clause (i), upon written
demand by NatWest with notice thereof to the Agent, each other Lender shall
pay to the Agent, for the account of NatWest, as the repurchase of
NatWest's participation interest in such Lender's Loans, an amount equal to
100% of such Lender's ratable portion of the unpaid principal amount of all
Non-Ratable Loans. Payments made pursuant to this clause (ii) shall be made
not later than 5:00 p.m. (New York City time) on any Business Day if demand
for such payment is received by such Lender not later than 10:00 a.m. (New
York City time) on such Business Day; otherwise, any such payment shall be
made on the next Business Day after demand is received therefor.
SECTION 2.16. Making of Revolving Loans. (a) Unless the Agent
has been notified in writing to the contrary before 2:00 p.m. New York time
on the date of any borrowing, the Agent may assume that each Lender will
make its ratable portion of any amount to be borrowed available to the
Agent in accordance with Section 2.02(b) hereof, and the Agent may in its
discretion, in reliance upon such assumption, make available to the
Borrowers on such date a corresponding amount. If and to the extent such
Lender shall not make such ratable portion available to the Agent, such
Lender and the Borrowers severally agree to repay to the Agent forthwith on
demand such corresponding amount, together with interest thereon for each
day from the date such amount is made available to the Borrowers until the
date such amount is repaid to the Agent, as to the Borrowers, at the rate
of interest applicable to Loans hereunder, and as to such other Lender, at
the Federal Funds Effective Rate and until so repaid such amount shall be
deemed to constitute a Revolving Loan by the Agent to the Borrowers
hereunder entitled to the benefits of the Collateral and the other
provisions hereof applicable to the Revolving Loans. If such Lender shall
repay to the Agent such corresponding amount, the amount so repaid shall
constitute such Lender's ratable portion of the Revolving Loans made on
such borrowing date for purposes of this Agreement. No Lender shall be
responsible for the failure of any other Lender to make its ratable portion
of such Revolving Loans available on the borrowing date.
(b) Without limiting the generality of Article IX, each Lender
expressly authorizes the Agent to determine on behalf of such Lender
(i) whether to make Revolving Loans requested or deemed requested by the
Borrowers on any borrowing date (unless the Agent has been notified in
writing to the contrary before 2:00 p.m. New York time on such borrowing
date), (ii) the creation of any reserves against the Borrowing Base,
(iii) any reduction of advance rates applicable to the Borrowing Base and
(iv) whether specific items of inventory constitute "Eligible Inventory" in
accordance with the definition of such term set forth in Article I. The
Agent shall give prompt notice to the Lenders of any determinations made
pursuant to clause (ii) or (iii) above.
SECTION 2.17. Joint and Several Borrowers. The parties hereto
agree and confirm that the obligations of the Borrowers under and/or in
connection with this Agreement and the other Loan Documents (including,
without limitation, with respect to payments of principal, interest, fees
and all other amounts with respect to the Loans) are the joint and several
undertaking of each Borrower.
SECTION 2.18. Individual Borrowing and Letter of Credit Limit.
Notwithstanding any provision in this Agreement to the contrary, on and
after the sixtieth day after the Closing Date, no Borrower shall be
entitled to request Revolving Loans, receive Revolving Loan advances or
request the issuance of Letters of Credit unless (i) the Borrowing Base
(calculated for the purposes of this Section 2.18 using only Inventory
owned by such Borrower (and not any other Borrower)) minus (ii) all
Revolving Loans and Letters of Credit previously made to or on behalf of
such Borrower and not repaid, shall be greater than the aggregate amount of
Revolving Loans and Letters of Credit requested by such Borrower. On and
after the sixtieth day after the Closing Date, all borrowing base and other
collateral reporting material described in Section 6.05(g) and/or Sec-
tion 6.05(h) of this Agreement shall be presented on a Borrower by Borrower
basis in a manner consistent with this Section 2.18. Nothing contained in
this Section 2.18 shall permit Revolving Loans to be made or Letters of
Credit to be issued unless the Borrowers are in compliance with the other
provisions of this Agreement (including, without limitation, Section
2.01(a)).
IIA. LETTERS OF CREDIT
SECTION 2A.01. Issuance of Letters of Credit. Upon the request
of the Borrowers, and subject to the conditions set forth in Article V
hereof and such other conditions to the opening of Letters of Credit as
NatWest requires of its customers generally, the Agent shall cause NatWest
from time to time to open standby letters of credit (each, a "Letter of
Credit") for the account of the Borrowers, provided that the Letter of
Credit Usage shall not at any time exceed $2,500,000, and provided,
further, that the face amount of any Letter of Credit that the Borrowers
may request to be opened at any time shall not exceed an amount equal to
(A) the lesser of (i) the Total Revolving Commitment at such time and
(ii) the Borrowing Base at such time minus (B) the sum of (i) the unpaid
principal amount of all Revolving Loans outstanding at such time, (ii) the
Letter of Credit Usage at such time and (iii) the reserves then in effect
under Section 2.01 hereof. The issuance of each Letter of Credit shall be
made on at least four Business Days' prior written notice from the
Borrowers to the Agent, at its Domestic Lending Office, which written
notice shall be an application for a Letter of Credit on NatWest's
customary form. The expiration date of any Letter of Credit shall not be
later than 365 days from the date of issuance thereof and, in any event, no
Letter of Credit shall have an expiration date later than the Termination
Date. The Letters of Credit shall be issued with respect of transactions
occurring in the ordinary course of business of the Borrowers.
SECTION 2A.02. Payment; Reimbursement. Upon the issuance of any
Letter of Credit, the Agent shall notify each Lender of the principal
amount, the number, and the expiration date thereof and the amount of such
Lender's participation therein. By the issuance of a Letter of Credit
hereunder and without further action on the part of the Agent, NatWest or
the Lenders, each Lender hereby accepts from NatWest a participation (which
participation shall be nonrecourse to NatWest) in such Letter of Credit
equal to such Lender's pro rata (based on its Revolving Commitment) share
of such Letter of Credit, effective upon the issuance of such Letter of
Credit. Each Lender hereby absolutely and unconditionally assumes, as
primary obligor and not as a surety, and agrees to pay and discharge, and
to indemnify and hold NatWest harmless from liability in respect of, such
Lender's pro rata share of the amount of any drawing under a Letter of
Credit. Each Lender acknowledges and agrees that its obligation to acquire
participations in each Letter of Credit issued by NatWest and its
obligation to make the payments specified herein, and the right of NatWest
to receive the same, in the manner specified herein, are absolute and
unconditional and shall not be affected by any circumstance whatsoever,
including, without limitation, the occurrence and continuance of a Default
or an Event of Default hereunder, and that each such payment shall be made
without any offset, abatement, withholding or reduction whatsoever. The
Agent and/or NatWest shall review, on behalf of the Lenders, each draft and
any accompanying documents presented under a Letter of Credit and shall
notify each Lender of any such presentment. Promptly after the Agent
and/or NatWest shall have ascertained that any draft and any accompanying
documents presented under such Letter of Credit appear on their face to be
in substantial conformity with the terms and conditions of the Letter of
Credit, the Agent shall give telephonic or facsimile notice to the Lenders
and the Borrowers of the receipt and amount of such draft and the date on
which payment thereon will be made, and the Lenders shall, by 11:00 a.m.,
New York City time on the date such payment is to be made, pay the amounts
required to the Agent on behalf of NatWest in New York, New York in
immediately available funds, and NatWest, not later than 3:00 p.m. on such
day, shall make the appropriate payment to the beneficiary of such Letter
of Credit. If NatWest shall pay any draft presented under a Letter of
Credit, then the Agent and/or NatWest, on behalf of the Lenders, shall
charge the general deposit account of the Borrowers with the Agent and/or
NatWest, as the case may be, for the amount thereof, together with the
Agent's or NatWest's customary overdraft fee in the event the funds
available in such account shall not be sufficient to reimburse the Lenders
for such payment and the Borrowers shall not otherwise have discharged such
reimbursement obligation by 11:00 a.m., New York City time, on the date of
such payment. If the Lenders have not been reimbursed with respect to such
drawing as provided above, the Borrowers shall pay to the Agent, for the
account of the Lenders, the amount of the drawing together with interest on
such amount at a rate per annum (computed on the basis of the actual number
of days elapsed over a year of 360 days) equal to the Prime Rate plus 4%,
payable on demand. The obligation of the Borrowers under this
Section 2A.02 to reimburse the Lenders and NatWest for all drawings under
Letters of Credit shall be absolute, unconditional and irrevocable and
shall be satisfied strictly in accordance with their terms, irrespective
of:
(a) any lack of validity or enforceability of any Letter of
Credit;
(b) the existence of any claim, setoff, defense or other right
which any Borrower or any other person may at any time have against
the beneficiary under any Letter of Credit, the Agent, NatWest or any
Lender (other than the defense of payment in accordance with the terms
of this Agreement) or any other person in connection with this
Agreement or any other transaction;
(c) any draft or other document presented under any Letter of
Credit proving to be forged, fraudulent, invalid or insufficient in
any respect or any statement therein being untrue or inaccurate in any
respect;
(d) payment by the Agent, NatWest or any Lender under any Letter
of Credit against presentation of a draft or other document which does
not comply with the terms of such Letter of Credit; and
(e) any other circumstance or event whatsoever, whether or not
similar to any of the foregoing.
It is understood that in making any payment under any Letter of
Credit (x) the Agent's, NatWest's and any Lender's exclusive reliance on
the documents presented to it under such Letter of Credit as to any and all
matters set forth therein, including, without limitation, reliance on the
amount of any draft presented under such Letter of Credit, whether or not
the amount due to the beneficiary equals the amount of such draft and
whether or not any document presented pursuant to such Letter of Credit
proves to be insufficient in any respect, if such document on its face
appears to be in order, and whether or not any other statement or any other
document presented pursuant to such Letter of Credit proves to be forged or
invalid or any statement therein proves to be inaccurate or untrue in any
respect whatsoever and (y) any noncompliance in any immaterial respect of
the documents presented under such Letter of Credit with the terms thereof
shall, in each case, not be deemed willful misconduct or bad faith of the
Agent, NatWest or any Lender.
SECTION 2A.03. NatWest's Actions. Any Letter of Credit may, in
the discretion of NatWest or its correspondents, be interpreted by them (to
the extent not inconsistent with such Letter of Credit) in accordance with
the Uniform Customs and Practice for Documentary Credits of the
International Chamber of Commerce, as adopted or amended from time to time,
or any other rules, regulations and customs prevailing at the place where
any Letter of Credit is available or the drafts are drawn or negotiated.
NatWest and its correspondents may accept and act upon the name, signature,
or act of any party purporting to be the executor, administrator, receiver,
trustee in bankruptcy, or other legal representative of any party
designated in any Letter of Credit in the place of the name, signature, or
act of such party.
SECTION 2A.04. Payments in Respect of Increased Costs.
(a) Notwithstanding any other provision herein, if after the date of this
Agreement any change in applicable law or regulation or in the
interpretation or administration thereof by any governmental authority
charged with the interpretation or administration thereof (whether or not
having the force of law) or any change in generally accepted accounting
principles or regulatory accounting principles applicable to the Agent,
Natwest or any Lender shall (i) impose, modify or make applicable to the
Agent, NatWest or any Lender any reserve, special deposit or similar
requirement with respect to its obligations under this Article IIA or any
Letter of Credit, (ii) impose on the Agent, NatWest or any Lender any other
condition with respect to its obligations under this Article IIA or any
Letter of Credit, or (iii) subject the Agent, NatWest or any Lender to any
tax (other than (x) taxes imposed on the overall net income of the Agent,
NatWest or such Lender and (y) franchise taxes imposed on the Agent,
NatWest or such Lender, in either case by the jurisdiction in which the
Agent, NatWest or such Lender, as appropriate, has its principal office or
lending office or any political subdivision or taxing authority of any such
jurisdiction), charge, fee, deduction or withholding of any kind
whatsoever, and the result of any of the foregoing shall be to increase the
cost to the Agent, NatWest or such Lender of maintaining such Letter of
Credit or making any payment under such Letter of Credit or this
Article IIA or to reduce the amount of principal, interest or any fee or
compensation receivable by the Agent, NatWest or such Lender in respect of
this Article IIA or such Letter of Credit, then such additional amount or
amounts as will compensate the Agent, NatWest or such Lender for such
additional costs or reduction shall be paid to the Agent for its benefit or
the benefit of NatWest or such Lender by the Borrowers. Each Lender agrees
to give notice to the Borrowers and the Agent of any such change in law,
regulation, interpretation or administration with reasonable promptness
after becoming actually aware thereof and of the applicability thereof to
the transactions contemplated in this Article IIA.
(b) If, after the date of this Agreement, any Lender or NatWest
shall have determined that the adoption of any applicable law, rule,
regulation or guideline regarding capital adequacy, or any change therein,
or any change in the interpretation or administration thereof by any
governmental authority, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by any Lender or
NatWest (or its lending office) with any request or directive regarding
capital adequacy (whether or not having the force of law) of any such
authority, central bank or comparable agency, has or would have the effect
of reducing the rate of return on such Lender's or NatWest's capital as a
consequence of its obligations under this Article IIA or with respect to a
Letter of Credit to a level below that which such Lender or NatWest could
have achieved but for such adoption, change or compliance (taking into
consideration such Lender's and NatWest's policies with respect to capital
adequacy) then from time to time, the Borrowers shall pay to such Lender or
the Agent on behalf of NatWest such additional amount or amounts as will
compensate NatWest or such Lender for such reduction. Each Lender agrees
to give notice to the Borrowers and the Agent of any adoption of, change
in, or change in interpretation or administration of, any such law, rule,
regulation or guideline with reasonable promptness after becoming actually
aware thereof and of the applicability thereof to the transactions
contemplated hereby.
(c) A certificate of the Agent, NatWest or a Lender setting
forth such amount or amounts, supported by calculations in reasonable
detail, as shall be necessary to compensate the Agent, NatWest or such
Lender, as appropriate, as specified in paragraphs (a) and (b) above shall
be delivered to the Borrowers and shall be conclusive and binding upon the
Borrowers absent manifest error. The Borrowers shall pay the Agent on
behalf of NatWest or such Lender the amount shown as due on any such
certificate within five (5) Business Days after its receipt of the same.
(d) Failure on the part of any Lender, NatWest or the Agent to
demand compensation for any increased costs, reduction in amounts received
or receivable with respect to this Article IIA or any Letter of Credit or
reduction in the rate of return earned on such Lender's or NatWest's
capital, in each case pursuant to paragraph (a) or (b) above, shall not
constitute a waiver of the Agent's, NatWest's or such Lender's rights to
demand compensation for any increased costs or reduction in amounts
received or receivable or reduction in rate of return pursuant to
paragraph (a) or (b) above. The protection under this Section 2A.04 shall
be available to each Lender, NatWest and the Agent regardless of any
possible contention of the invalidity or inapplicability of any law,
regulation or other condition which shall give rise to any demand by such
Lender, NatWest or the Agent for compensation (but if such law, regulation
or other condition is finally determined to be invalid or inapplicable, the
Agent on its behalf and on behalf of NatWest or Lenders shall promptly
refund (without interest) all amounts paid under this Section 2A.04 arising
from such invalid or inapplicable law, regulation or other condition).
SECTION 2A.05. Indemnity as to Letters of Credit. Each Borrower
hereby agrees to indemnify and hold harmless the Agent, NatWest and the
Lenders from and against any and all claims, damages, losses, liabilities,
costs or expenses whatsoever which the Agent, NatWest or the Lenders may
incur or suffer by reason of or in connection with the execution and
delivery or assignment of, or payment under, any Letter of Credit, except
only if and to the extent that any such claim, damage, loss, liability,
cost or expense shall be caused by the gross negligence, willful misconduct
or bad faith of the Agent, NatWest or any Lender performing its obligations
under this Agreement. Without limiting the foregoing, the Parent, each
Borrower and each Guarantor further agrees to indemnify and hold harmless
the Agent, NatWest, their respective officers and directors, each person
who controls the Agent or NatWest within the meaning of Section 15 of the
Securities Act of 1933 or any applicable state securities law and their
respective successors from and against any and all claims, damages, losses,
liabilities, costs or expenses, joint or several, to which they or any of
them may become subject under any Federal or state securities law, rule or
regulation, at common law or otherwise, insofar as such claims, damages,
losses, liabilities, costs or expenses arise out of or are based upon the
execution and delivery by NatWest of any Letters of Credit or the execution
and delivery of any other document in connection therewith (but not
including any claims, damages, losses, liabilities, costs or expenses
arising from the gross negligence, bad faith or willful misconduct of
NatWest). The Borrowers, upon demand by the Agent or NatWest at any time,
shall reimburse the Agent and NatWest for any reasonable legal or other
expenses incurred in connection with investigating or defending against any
of the foregoing. The indemnities contained herein shall survive the
expiration or termination of the Letters of Credit and this Agreement.
SECTION 2A.06. Letter of Credit Fees. The Borrowers agree to
pay to the Agent (a) for the ratable benefit of the Lenders, with respect
to any Letter of Credit, on the last business day of each September,
December, March and June and on the date of the full drawing, cancellation,
termination or expiration of such Letter of Credit, a letter of credit fee
for such calendar quarter or shorter period equal to two and one half
percent (2-1/2%) per annum on the average daily undrawn amount thereof for
such calendar quarter or shorter period, payable to the Agent at its
Domestic Lending Office in immediately available funds and (b) for the sole
benefit of NatWest, with respect to any Letter of Credit, on the same dates
as the Letter of Credit fee with respect to such Letter of Credit is
payable under clause (a) above, a fronting fee for such calendar quarter or
shorter period equal to one quarter percent (1/4%) per annum on the average
daily undrawn amount thereof for such calendar quarter or shorter period,
payable to the Agent on behalf of NatWest at the Agent's Domestic Lending
Office in immediately available funds. The foregoing fees shall be
computed on the basis of the actual number of days elapsed over a year of
360 days. Additionally, the Borrowers shall pay to the Agent at its
Domestic Lending Office for the sole account of NatWest upon demand by the
Agent or NatWest all of NatWest's customary fees and expenses with respect
to the opening, drawing upon, extending, amending, transferring, canceling
or administration of Letters of Credit from time to time in effect. The
Agent shall disburse to each Lender such Lender's pro rata share of any
payment of the letter of credit fees referred to in clause (a) of the first
sentence of this Section 2A.06 in immediately available funds within one
(1) Business Day of the Agent's receipt of such payment.
III. COLLATERAL SECURITY
SECTION 3.01. Security Documents. The Obligations shall be
secured by the Collateral described in the Security Documents and are
entitled to the benefits thereof. The Parent shall, and shall cause the
other Grantors to, duly execute and deliver the Security Documents, all
consents of third parties necessary to permit the effective granting of the
Liens created in such agreements, financing statements pursuant to the
Uniform Commercial Code and other documents, all in form and substance
satisfactory to the Agent, as may be reasonably required by the Agent to
grant to the Agent for the benefit of the Secured Parties a valid,
perfected and enforceable first priority Lien on and security interest in
(subject only to the Liens permitted under Section 7.01 hereof) the
Collateral.
SECTION 3.02. Filing and Recording. The Parent and its
subsidiaries shall, at their sole cost and expense, cause all instruments
and documents given as evidence of security pursuant to this Agreement to
be duly recorded and/or filed or otherwise perfected in all places
necessary, in the opinion of the Agent, and take such other actions as the
Agent may reasonably request, in order to perfect and protect the Liens of
the Agent and the Secured Parties in the Collateral. The Parent, each
Borrower and each Guarantor, to the extent permitted by law, hereby
authorizes the Agent to file any financing statement in respect of any Lien
created pursuant to the Security Documents which may at any time be
required or which, in the opinion of the Agent, may at any time be
desirable although the same may have been executed only by the Agent or, at
the option of the Agent, to sign such financing statement on behalf of the
Parent, any Borrower or the Guarantor, as the case may be, and file the
same, and the Parent, each Borrower and each Guarantor hereby irrevocably
designates the Agent, its agents, representatives and designees as its
agent and attorney-in-fact for this purpose. In the event that any re-
recording or refiling thereof (or the filing of any statements of
continuation or assignment of any financing statement) is required to
protect and preserve such Lien, each Borrower shall, at the Borrowers' cost
and expense, cause the same to be recorded and/or refiled at the time and
in the manner requested by the Agent.
SECTION 3.03. Real Property; Mortgages; Title Insurance. (a)
To the extent requested prior to the Closing Date by the Agent:
(i) the Parent and each of its subsidiaries shall duly
execute and deliver to the Agent mortgages or deeds of trust (each
such mortgage or deed of trust, as it may be amended, modified or
supplemented from time to time in accordance with its terms, a
"Mortgage") in respect of real property owned or leased by the Parent
or such subsidiary, together with consents of third parties to the
Mortgages executed and delivered by it, and such title searches, non-
disturbance agreements, lease amendments and/or consents, landlord's
waivers, estoppel certificates and waivers, as the Agent shall request
(in each case in form and substance satisfactory to the Agent)
(excluding the real property owned by the Parent in Aberdeen, New
Jersey and excluding (except for landlord's waivers) the real property
owned or leased by the Parent or any subsidiary thereof and described
on Schedule 3.03 hereof, with respect to which real property described
on Schedule 3.03 the Parent and its subsidiaries agree to use their
best efforts to deliver and/or cause the delivery, within forty-five
days of the Closing Date, of such Mortgages, lease amendments, title
searches and opinions, and also other documents, each as shall be
requested by the Agent, provided, however, that the requirements for
deliveries of any documents in this parenthetical (other than
landlord's waivers) shall be waived upon the repayment in full of all
principal and interest with respect to Term Loan A and Term Loan B) so
as to create in the Agent's favor, for the benefit of the Secured
Parties, upon recordation thereof, a valid, perfected and enforceable
first priority Lien (subject to Liens permitted under Section 7.01
hereof) on the real property and improvements described therein, such
Mortgages to be in form and substance satisfactory to the Agent; and
(ii) the Parent and each of its subsidiaries shall cause
the Mortgages executed and delivered to be duly recorded in the
appropriate recording office or offices and shall pay all fees and
taxes payable in connection therewith.
(b) The Parent and each of its subsidiaries shall furnish to the
Agent for the benefit of the Secured Parties, at the expense of the Parent
and its subsidiaries, one or more policies of mortgagee title insurance, in
form, substance and amount satisfactory to the Agent, insuring that each of
the Mortgages executed and delivered by it pursuant hereto is a valid and
perfected first priority Lien (except for the Liens permitted by Section
7.01) in favor of the Agent, for the benefit of the Secured Parties, on the
fee or leasehold interest of the Parent or such subsidiary, in the real
property and improvements described therein, and that the Parent or such
subsidiary has good and marketable title thereto, issued by a title
insurance company reasonably satisfactory to the Agent, together with
satisfactory evidence that all title insurance premiums have been fully
paid. The Parent shall furnish to the Agent certified surveys of real
property and such other certificates and documents as the Agent may
reasonably request and which are customary in financing of this type. The
Parent and each applicable subsidiary shall also provide to each Lender
with respect to any real property to be subject to a Mortgage, on or prior
to the taking of such Mortgage, such appraisals of such real property as
shall be reasonably requested by the Agent. If requested by the Agent, the
Parent and its subsidiaries shall, at their cost and expense, furnish to
the Agent, for the benefit of the Secured Parties, flood insurance with
respect to any real property subject to any Mortgage to the extent such
flood insurance can be obtained by the Parent and its subsidiaries on
commercially reasonable terms; provided, however, that, at the cost and
expense of the Parent and its subsidiaries, the Parent and its subsidiaries
shall in any event maintain and shall furnish to the Agent flood insurance
with respect to any real property subject to any Mortgage to the extent
flood insurance with respect to such real property is required to be
maintained by applicable law (whether such law is applicable to any Lender
(including, without limitation, by reason of such Mortgage), the Parent,
any subsidiary thereof or otherwise).
(c) Upon the Parent or any of its subsidiaries acquiring any
real property (whether owned or leased) after the Closing Date in
accordance with the provisions of this Agreement, the Parent or such
subsidiary shall, to the extent requested by the Agent, execute and deliver
a Mortgage with respect to such real property and such other documents as
may be reasonably requested by the Lenders with respect thereto and shall,
to the extent requested by the Agent, deliver or cause to be delivered to
the Agent each of the documents described in clause (b) above. This Sec-
tion 3.03 shall not be deemed to allow the Parent or any subsidiary to
acquire any property if otherwise prohibited by this Agreement.
SECTION 3.04. Additional Collateral. The Parent, each Borrower
and each Guarantor acknowledges that it is its intention to provide the
Agent with a Lien on all the property of the Parent and its subsidiaries
(personal, real and mixed), whether now owned or hereafter acquired (other
than as agreed to in writing by the Agent), subject only to Liens permitted
hereunder. Without limitation of Section 3.03(d) hereof, the Parent and
its subsidiaries shall from time to time promptly notify the Agent of the
acquisition by the Parent or any of its subsidiaries of any material
property in which the Agent does not then hold a perfected Lien (other than
as agreed to in writing by the Agent), or the creation or existence of any
such property, and such person shall, upon request by the Agent, promptly
execute and deliver to the Agent or cause to be executed and delivered to
the Agent pledge agreements, security agreements, mortgages or other like
agreements with respect to such property, together with such other
documents, certificates, opinions of counsel and the like as the Agent
shall reasonably request in connection therewith, in form and substance
satisfactory to the Agent, such that the Agent shall receive valid and
perfected first priority Liens (subject to Liens permitted hereby) on all
such property (including property which, on the Closing Date, is not
subject to a Lien in favor of the Agent). In addition, in the event that
the Borrower or any subsidiary acquires or owns any material trademarks,
copyrights, patents or other intellectual property, the Borrowers shall
notify the Agent promptly in writing and shall execute, or cause the
execution of a security agreement and other documents with respect thereto
in form and substance reasonably satisfactory to the Agent.
IV. REPRESENTATIONS AND WARRANTIES
The Parent, each of the Borrowers and each of the Guarantors
jointly and severally represents and warrants to each of the Lenders that:
SECTION 4.01. Organization, Legal Existence. The Parent, each
Borrower and each Guarantor (and each of their respective subsidiaries) are
legal entities duly organized, validly existing and in good standing under
the laws of the jurisdiction of their respective organization, have the
requisite power and authority to own their property and assets and to carry
on their business as now conducted and as currently proposed to be
conducted and are qualified to do business in each jurisdiction where the
failure to so qualify would not have a Material Adverse Effect (all such
jurisdictions being listed in Schedule 4.01 annexed hereto). The Parent,
each Borrower and each Guarantor has the corporate power to execute,
deliver and perform its obligations under this Agreement and the other Loan
Documents to which it is a party, and, with respect to each Borrower, to
borrow hereunder and to execute and deliver the Notes.
SECTION 4.02. Authorization. The execution, delivery and
performance by the Parent, each Borrower and each Guarantor of this
Agreement and each of the other Loan Documents to which it is a party, the
borrowings hereunder by each Borrower, the execution and delivery by each
Borrower of the Notes and the grant of security interests in the Collateral
created by the Security Documents (collectively, the "Transactions")
(a) have been duly authorized by all requisite corporate and, if required,
stockholder action and (b) will not (i) violate (A) any provision of law,
statute, rule or regulation applicable to the Parent, any Borrower or any
Guarantor or the certificate or articles of incorporation or other
applicable constitutive documents or the by-laws of the Parent, any
Borrower, any Guarantor, or its subsidiaries, as the case may be, (B) any
order of any court, or any rule, regulation or order of any other agency of
government binding upon the Parent, any Borrower, any Guarantor, or its
subsidiaries, or (C) any provisions of any indenture, agreement or other
instrument to which the Parent, any Borrower, any Guarantor or its
subsidiaries, or any of their respective properties or assets are or may be
bound, (ii) be in conflict with, result in a breach of or constitute (alone
or with notice or lapse of time or both) a default under any indenture,
agreement or other instrument referred to in (b)(i)(C) above or (iii)
result in the creation or imposition of any Lien of any nature whatsoever
(other than in favor of the Agent, for the benefit of the Secured Parties,
as contemplated by this Agreement and the Security Documents) upon any
property or assets of the Parent, any Borrower, any Guarantor, or its
subsidiaries.
SECTION 4.03. Governmental Approvals. No registration or filing
(other than the filings necessary to perfect the Liens created by the
Security Documents and the filing of a SEC form 8K) with, consent or
approval of, or other action by, any Federal, state or other governmental
agency, authority or regulatory body is or will be required on behalf of
the Parent, any Borrower or any Guarantor in connection with the
Transactions, other than any which have been made or obtained.
SECTION 4.04. Binding Effect. This Agreement and each of the
other Loan Documents to which it is a party constitutes, and each of the
Notes when duly executed and delivered will constitute, a legal, valid and
binding obligation of the Parent, each Borrower and each Guarantor, as
appropriate, enforceable in accordance with its terms, subject to the
effect of any applicable bankruptcy, insolvency, reorganization, moratorium
or similar laws affecting creditors' rights generally and to general
principles of equity (regardless of whether considered in a proceeding in
equity or at law).
SECTION 4.05. Material Adverse Change. Other than as disclosed
by the Parent to the Agent and the Lenders in a letter dated the Closing
Date in the form of Schedule 4.05 annexed hereto, there has been no change,
event or facts that would reasonably be expected to have a Material Adverse
Effect since October 30, 1993.
SECTION 4.06. Litigation; Compliance with Laws; etc. (a)
Except as set forth in Schedule 4.06(a) annexed hereto, there are not any
actions, suits or proceedings at law or in equity or by or before any
governmental instrumentality or other agency or regulatory authority now
pending or, to the knowledge of any Responsible Officer of the Parent or
any subsidiary thereof, threatened, against or affecting the Parent or any
of its subsidiaries or the businesses, assets or rights of the Parent or
any of its subsidiaries (i) which involve any of the Transactions or (ii)
as to which it is probable (within the meaning of Statement of Financial
Accounting Standards No. 5) that there will be an adverse determination and
which, if adversely determined, would, individually or in the aggregate,
have a Material Adverse Effect.
(b) Except as set forth in Schedule 4.06(b) annexed hereto,
neither the Parent nor any of its subsidiaries is in violation of any law
in any material respect, or in default with respect to any judgment, writ,
injunction, decree, rule or regulation of any court or governmental agency
or instrumentality.
SECTION 4.07. Financial Statements. (a) The Parent has
heretofore furnished to the Lenders Consolidated balance sheets and
statements of income and cash flows of the Parent dated as of October 30,
1993 audited by and accompanied by the opinion of independent public
accountants. Such balance sheets and statements of income and cash flows
present fairly the Consolidated financial condition and results of
operations of the Parent and its subsidiaries as of the dates and for the
periods indicated, and such balance sheets and the notes thereto disclose
all material liabilities, direct or contingent, of the Parent and its
subsidiaries, as of the dates thereof to the extent such material
liabilities are required to be disclosed under GAAP. The Parent has
heretofore furnished to the Lenders unaudited Consolidated balance sheets
and statements of income and cash flows of the Parent dated as of
October 29, 1994. Such unaudited balance sheets and statements of income
and cash flows present fairly the Consolidated financial condition and
results of operations of the Parent and its subsidiaries as of the dates
and for the periods indicated, and such balance sheets and the notes
thereto disclose all material liabilities, direct or contingent, of the
Parent and its subsidiaries as of the dates thereof. The financial
statements referred to in this Section 4.07 have been prepared in
accordance with generally accepted accounting principles consistently
applied.
(b) The Parent has, on or about August 22, 1994 and as amended
in writing on September 22, 1994, furnished to the Lenders projected income
statements, balance sheets and cash flows of the Parent, on a Consolidated
basis through the fourth anniversary of the Closing Date (which projections
shall be on a quarterly basis for the first eight quarters after the
Closing Date and on a yearly basis thereafter), together with a schedule
confirming the ability of the Parent and its subsidiaries to consummate the
Transactions and demonstrating prospective compliance with all financial
covenants contained in this Agreement, such projections disclosing all
assumptions made by the Parent and its subsidiaries in formulating such
projections and giving effect to the Transactions. The projections are
based upon reasonable estimates and assumptions, all of which are
reasonable in light of the conditions which existed at the time the
projections were made, have been prepared on the basis of the assumptions
stated therein, and reflect as of the Closing Date the reasonable estimate
of the Parent and its subsidiaries of the results of operations and other
information projected therein.
(c) The Parent has, on or about the Closing Date, furnished to
the Lenders a Consolidated pro forma balance sheet of the Parent dated as
of October 29, 1994 which is consistent with the previous balance sheets of
the Parent and which sets forth information before and after giving effect
to the Transactions.
SECTION 4.08. Federal Reserve Regulations. (a) Neither the
Parent nor any of its subsidiaries is engaged principally, or as one of its
important activities, in the business of extending credit for the purpose
of purchasing or carrying Margin Stock.
(b) No part of the proceeds of the Loans will be used, whether
directly or indirectly, and whether immediately, incidentally or
ultimately, (i) to purchase or carry Margin Stock or to extend credit to
others for the purpose of purchasing or carrying Margin Stock or to refund
indebtedness originally incurred for such purpose, or (ii) for any purpose
which entails a violation of, or which is inconsistent with, the provisions
of the Regulations of the Board, including, without limitation,
Regulation G, T, U or X thereof. If requested by any Lender, the Parent or
any of its subsidiaries shall furnish to such Lender a statement on Federal
Reserve Form U-1 referred to in said Regulation U.
SECTION 4.09. Taxes. The Parent and each of its subsidiaries
have filed or caused to be filed all Federal, state, local and foreign tax
returns which are required to be filed by them, on or prior to the date
hereof, other than tax returns in respect of taxes that (x) are not
franchise, capital or income taxes, (y) in the aggregate are not material
and (z) would not, if unpaid, result in the imposition of any material Lien
on any property or assets of the Parent or any of its subsidiaries. The
Parent and its subsidiaries have paid or caused to be paid all taxes shown
to be due and payable on such filed returns or on any assessments received
by them, other than any taxes or assessments the validity of which the
Parent or a subsidiary is contesting in good faith by appropriate
proceedings, and with respect to which the Parent or such subsidiary shall,
to the extent required by generally accepted accounting principles
consistently applied have set aside on its books adequate reserves. After
the fiscal year ended October 30, 1993, no Federal income tax returns of
the Parent or any of its subsidiaries have been audited by the United
States Internal Revenue Service. All deficiencies which have been asserted
against the Parent or its subsidiaries as a result of such completed
examinations have been fully paid or finally settled and no issue has been
raised in any such examination which, by application of similar principles,
reasonably can be expected to result in assertion of a material deficiency
for any other year not so examined which has not been reserved for in any
financial statement of the Parent or any of its subsidiaries delivered to
the Lenders. Neither the Parent nor any of its subsidiaries has taken any
reporting positions for which they do not have a reasonable basis and
neither the Parent nor any of its subsidiaries anticipate any further
material tax liability with respect to the years which have not been
closed. Neither the Parent nor any of its subsidiaries has as of the date
hereof requested or been granted any extension of time to file any Federal,
state, local or foreign tax return, except for the fiscal year ended
October 29, 1994. Neither the Parent nor any of its subsidiaries is party
to or has any obligation under any tax sharing agreement. None of the
Parent or any subsidiary files a consolidated tax return with a person
other than the Parent or a subsidiary of the Parent.
SECTION 4.10. Employee Benefit Plans. With respect to the
provisions of ERISA:
(i) No Reportable Event has occurred or is continuing with
respect to any Pension Plan with respect to which the 30-day notice period
has not been waived.
(ii) No prohibited transaction (within the meaning of Section 406
of ERISA or Section 4975 of the Code) has occurred with respect to any Plan
(other than a Multiemployer Plan) subject to Part 4 of Subtitle B of
Title I of ERISA which could have a Material Adverse Effect.
(iii) Except as set forth on Schedule 4.10, none of the Parent,
any Borrower nor any ERISA Affiliate is now, or has been during the
preceding five years, obligated to contribute to a Pension Plan or a
Multiemployer Plan. Except as set forth on Schedule 4.10, none of the
Parent nor any ERISA Affiliate has (A) ceased operations at a facility so
as to become subject to the provisions of Section 4062(e) of ERISA,
(B) withdrawn as a substantial employer so as to become subject to the
provisions of Section 4063 of ERISA, (C) ceased making contributions to any
Pension Plan subject to the provisions of Section 4064(a) of ERISA to which
the Parent, any Borrower, any subsidiary of any Borrower or any ERISA
Affiliate made contributions, (D) incurred or caused to occur a "complete
withdrawal" (within the meaning of Section 4203 of ERISA) or a "partial
withdrawal" (within the meaning of Section 4205 of ERISA) from a
Multiemployer Plan that is a Pension Plan so as to incur withdrawal
liability under Section 4201 of ERISA (without regard to subsequent
reduction or waiver of such liability under Section 4207 or 4208 of ERISA),
or (E) been a party to any transaction or agreement under which the
provisions of Section 4204 of ERISA were applicable.
(iv) No notice of intent to terminate a Pension Plan (other than
a Multiemployer Plan) has been filed, nor has any Plan been terminated
pursuant to the provisions of Section 4041(e) of ERISA which termination
could have a Material Adverse Effect.
(v) The PBGC has not instituted proceedings to terminate (or
appoint a trustee to administer) a Pension Plan (other than a Multiemployer
Plan) and no event has occurred or condition exists which might constitute
grounds under the provisions of Section 4042 of ERISA for the termination
of (or the appointment of a trustee to administer) any such Plan.
(vi) With respect to each Pension Plan (other than a
Multiemployer Plan) that is subject to the provisions of Title I, Subtitle
B, Part 3 of ERISA, the funding method used in connection with such Plan is
acceptable under ERISA, and the actuarial assumptions and methods used in
connection with funding such Pension Plan satisfy the requirements of
Section 302 of ERISA. The aggregate present value of all accrued benefits
under all Pension Plan (other than Multiemployer Plans) do not exceed the
aggregate fair market value of the assets of such Plans by more than
$1,500,000, in each case as of the latest actuarial valuation date for such
Plan (determined in accordance with the same actuarial assumptions and
methods as those used by the Plan's actuary in its valuation of such Plan
as of such valuation date). No such Pension Plan has incurred any
"accumulated funding deficiency" (as defined in Section 412 of the Code),
whether or not waived.
(vii) There are no actions, suits or claims pending (other than
routine claims for benefits) or, to the knowledge of the Parent, any
Borrower or any ERISA Affiliate, which could reasonably be expected to be
asserted, against any Plan (other than a Multiemployer Plan) or the assets
of any such Plan. No civil or criminal action brought pursuant to the
provisions of Title I, Subtitle B, Part 5 of ERISA is pending or threatened
against any fiduciary or any Plan (other than a Multiemployer Plan) which
could have a Material Adverse Effect. None of the Plans or any fiduciary
thereof (in its capacity as such) has been the direct or indirect subject
of any audit, investigation or examination by any governmental or quasi-
governmental agency which could have a Material Adverse Effect.
(viii) All of the Plans (other than Multiemployer Plans) comply
currently, and have substantially complied in the past, both as to form and
operation, with their terms and with the provisions of ERISA and the Code,
and all other applicable laws, rules and regulations except for such
noncompliance as may be remedied during the remedial amendment period under
Section 401(b) of the Code; all necessary governmental approvals for the
Plans have been obtained and a favorable determination as to the
qualification under Section 401(a) of the Code of each of the Plans which
is an employee pension benefit plan (within the meaning of Section 3(2) of
ERISA) has been made by the Internal Revenue Service and a recognition of
exemption from federal income taxation under Section 501(a) of the Code of
each of the funded employee welfare benefit plans (within the meaning of
Section 3(1) of ERISA) has been made by the Internal Revenue Service, and
nothing has occurred since the date of each such determination or
recognition letter that would adversely affect such qualification which
could have a Material Adverse Effect.
SECTION 4.11. No Material Misstatements. No information,
report, financial statement, exhibit or schedule prepared or furnished by
or on behalf of the Parent, any Borrower or any Guarantor to the Agent or
any Lender in connection with any of the Transactions or this Agreement,
the Security Documents, the Notes or any other Loan Documents or included
therein contained or contains any material misstatement of fact or omitted
or omits to state any material fact necessary to make the statements
therein, taken together with all other such statements made to the Agent or
any Lender, in the light of the circumstances under which they were made,
not misleading.
SECTION 4.12. Investment Company Act; Public Utility Holding
Company Act. None of the Parent or any of its subsidiaries is an "invest-
ment company" as defined in, or is otherwise subject to regulation under,
the Investment Company Act of 1940. None of the Parent or any of its
subsidiaries is a "holding company" as that term is defined in or is
otherwise subject to regulation under, the Public Utility Holding Company
Act of 1935.
SECTION 4.13. Security Interest. Each of the Security Documents
creates and grants to the Agent, for the benefit of the Secured Parties, a
legal, valid and perfected first (except as permitted pursuant to Section
7.01 hereof) priority security interest in the collateral identified
therein. Such collateral or property is not subject to any other Liens
whatsoever, except Liens permitted by Section 7.01 hereof.
SECTION 4.14. Bank Accounts. Schedule 4.14 hereto sets forth as
of the Closing Date a list of all bank accounts of the Parent and its
subsidiaries.
SECTION 4.15. Subsidiaries. Except as set forth on Schedule
4.15 hereto, as of the Closing Date, the Parent has no subsidiaries.
SECTION 4.16. Title to Properties; Possession Under Leases;
Trademarks. (a) The Parent and each of its subsidiaries owns good and
marketable, indefeasible fee simple title to all of the real estate
described on Schedule 4.16(a-1) hereto as owned by it and has a valid
leasehold interest in all of the real estate described on Schedule 4.16(a-
2) hereto as leased by it, in each case free and clear of all Liens or
other encumbrances of any kind, except as described in Schedule 4.16(a-2)
and except Liens permitted under Section 7.01 hereof. Schedules 4.16(a-1)
and 4.16(a-2) hereto correctly identify as of the Closing Date (x) each
parcel of real property owned by the Parent and a subsidiary of the Parent,
together in each case with an accurate street address and description of
the use of such parcel, (y) each parcel of real property leased by or to
the Parent or a subsidiary, together in each case with an accurate street
address and description of the use of such parcel, and (z) each other
interest in real property owned, leased or granted to or held by the Parent
and each subsidiary of the Parent. Except as set forth on
Schedules 4.16(a-1) and 4.16(a-2):
(i) no structure owned or leased by the Parent or any
subsidiary of the Parent fails to conform in any material respect
with applicable ordinances, regulations, zoning laws and
restrictive covenants (including in any such case and without
limitation those relating to environmental protection) nor
encroaches upon property of others, nor is any such real property
encroached upon by structures of others in any case in any manner
that would have or would be reasonably likely to have a Material
Adverse Effect on the Agent's or Lenders' interest in any
material Collateral located on the premises or otherwise would
have or would be reasonably likely to have a Material Adverse
Effect;
(ii) no charges or violations have been filed, served, made
or threatened, to the knowledge of the Parent, against or relating to
any such property or structure or any of the operations conducted at
any such property or structure, as a result of any violation or
alleged violation of any applicable ordinances, requirements,
regulations, zoning laws or restrictive covenants (including in any
such case and without limitation those relating to environmental
protection) or as a result of any encroachment on the property of
others where the effect of same would have or would be reasonably
likely to have a Material Adverse Effect on the Agent's or Lenders'
interest in any material Collateral located on the premises or
otherwise would have or would be reasonably likely have a Material
Adverse Effect;
(iii) other than pursuant to applicable laws, rules,
regulations or ordinances, covenants that run with the land or
provisions in the applicable leases, there exists no restriction on
the use, transfer or mortgaging of any such property;
(iv) the applicable Parent, Borrower and/or subsidiary each
have adequate permanent rights of ingress to and egress from any such
property used by it for the operations conducted thereon;
(v) there are no developments affecting any of the real
property or interests therein pending or threatened which might
reasonably be expected to curtail or interfere in any material respect
with the use of such property for the purposes for which it is now
used; and
(vi) Neither the Parent nor any subsidiary of the Parent
has any option in, or any right or obligation to acquire any interest
in, any real property;
(b) Except as set forth in Schedule 4.16(a-2), the Parent and
each subsidiary of the Parent owns and has good and marketable title to all
the owned properties and assets reflected on its most recent balance sheet
and valid leasehold interests in the property it leases subject to no Liens
except Liens permitted under Section 7.01, and all such leases are in full
force and effect and the Parent and each of its subsidiaries enjoy peaceful
and undisturbed possession under all such leases.
(c) Except as set forth in Schedule C, the Parent and each of
its subsidiaries own or control all trademarks, trademark rights, trade
names, trade name rights, copyrights, patents, patent rights and licenses
which are material to the conduct of the business of the Parent and each of
its subsidiaries. To the best of the Parent's knowledge, neither the
Parent nor any of its subsidiaries is infringing upon or otherwise acting
adversely to any of such trademarks, trademark rights, trade names, trade
name rights, copyrights, patent rights or licenses owned by any other
person or persons. There is no claim or action by any such other person
pending, or to the knowledge of any Responsible Officer of the Parent or
any subsidiary thereof, threatened, against the Parent or any of its
subsidiaries with respect to any of the rights or property referred to in
this Section 4.16(c).
(d) Other than motor vehicles, none of the assets or properties
of the Parent or any of its subsidiaries is subject to a document of title.
SECTION 4.17. Solvency. (a) The fair salable value of the
assets of the Parent and each of its Consolidated subsidiaries is not less
than the amount that will be required to be paid on or in respect of the
probable liability on the existing debts and other liabilities (including
contingent liabilities) of the Parent and each such Consolidated
subsidiary, as they become absolute and mature.
(b) The assets of the Parent and each of its Consolidated
subsidiaries do not constitute unreasonably small capital for the Parent
and such Consolidated subsidiaries to carry out their respective businesses
as now conducted and as proposed to be conducted including the capital
needs of the Parent and such Consolidated subsidiaries, taking into account
the particular capital requirements of the business conducted by the Parent
and each such Consolidated subsidiary and projected capital requirements
and capital availability thereof.
(c) Neither the Parent nor any of its subsidiaries intends to
incur debts beyond its ability to pay such debts as they mature (taking
into account the timing and amounts of cash to be received by the Parent
and its subsidiaries, and of amounts to be payable on or in respect of debt
of the Parent and its subsidiaries). The cash flow of the Parent and its
Consolidated subsidiaries, after taking into account all anticipated uses
of the cash of the Parent and its Consolidated subsidiaries, will at all
times be sufficient to pay all such amounts on or in respect of debt of the
Parent and its Consolidated subsidiaries when such amounts are required to
be paid.
(d) Neither the Parent nor any of its subsidiaries believes that
final judgments against them in actions for money damages presently pending
will be rendered at a time when, or in an amount such that, they will be
unable to satisfy any such judgments promptly in accordance with their
terms (taking into account the maximum reasonable amount of such judgments
in any such actions and the earliest reasonable time at which such
judgments might be rendered). The cash flow of the Parent and its
Consolidated subsidiaries, after taking into account all other anticipated
uses of the cash of the Parent and its Consolidated subsidiaries (including
the payments on or in respect of debt referred to in paragraph (c) of this
Section), will at all times be sufficient to pay all such judgments
promptly in accordance with their terms.
SECTION 4.18. Permits, etc. The Parent and each of its
subsidiaries possess all licenses, permits, approvals and consents,
including, without limitation, all environmental, health and safety
licenses, permits, approvals and consents of all Federal, state and local
governmental authorities which are required under Environmental Law and are
material to the conduct of the business of the Parent, New Linden, Reading
and/or the Parent and its subsidiaries taken as a whole (collectively,
"Permits"), each such Permit is and will be in full force and effect, the
Parent and each of its subsidiaries are in compliance in all material
respects with all such Permits, and, to their knowledge, no event
(including, without limitation, any material violation of any law, rule or
regulation) has occurred which would be likely to lead to the revocation or
termination of any such Permit or any additional restriction thereon.
SECTION 4.19. Compliance with Environmental Laws. Except as
disclosed in Schedule 4.19 hereto: (i) the operations of the Parent and
its subsidiaries comply in all material respects with all applicable
Environmental Laws; (ii) the Parent and its subsidiaries and all of their
present facilities or operations, as well as to the best of their knowledge
their past facilities or operations, are not subject to any judicial
proceeding or administrative proceeding or any outstanding written order or
agreement with any governmental authority or private party respecting (a)
any Environmental Law, (b) any Remedial Work, or (c) any Environmental
Claims arising from the Release of a Contaminant into the environment;
(iii) to the best of the knowledge of the Parent and its subsidiaries, none
of their operations is the subject of any Federal or state investigation
evaluating whether any Remedial Work is needed to respond to a Release of
any Contaminant into the environment in violation of any Environmental Law;
(iv) neither the Parent nor any of its subsidiaries nor to the best of
their knowledge any predecessor of the Parent or any of its subsidiaries
has filed any notice under any Environmental Law indicating past or present
treatment, storage, or disposal of a Hazardous Material or reporting a
spill or Release of a Contaminant into the environment in violation of any
Environmental Law; (v) to the best of the knowledge of the Parent and its
subsidiaries, neither the Parent nor any of its subsidiaries has any
material contingent liability in connection with any Release of any
Hazardous Materials into the environment; (vi) none of the operations of
the Parent or any of its subsidiaries involves the generation,
transportation, treatment or disposal of Hazardous Materials, except for
fuel, household wastes and routine cleaning and maintenance products; (vii)
neither the Parent nor any of its subsidiaries has disposed of any
Hazardous Materials by placing it in or on the ground or waters of any
premises currently owned, leased or used by any of them and to the
knowledge of the Parent and its subsidiaries neither has any lessee, prior
owner, or other person; (viii) no underground storage tanks or surface
impoundments are on any property of the Parent and/or any of its
subsidiaries; and (ix) no Lien in favor of any governmental authority for
(A) any liability under any Environmental Law or regulation, or (B) damages
arising from or costs incurred by such governmental authority in response
to a Release of a Contaminant into the environment, has been filed or
attached to the property of the Parent and/or any of its subsidiaries.
SECTION 4.20. Material Agreements. Schedule 4.20 hereto sets
forth as of the Closing Date a list of all material agreements, contracts
and instruments to which the Parent or any of its subsidiaries is a party
or by which any of such persons is bound and all amendments, modifications
and supplements to each of the foregoing.
V. CONDITIONS OF CREDIT EVENTS
The obligation of each Lender to make Loans and provide other
Credit Events hereunder shall be subject to the following conditions
precedent:
SECTION 5.01. All Credit Events. On each date on which a Credit
Event is to occur:
(a) The Agent shall have received a notice of borrowing as
required by Section 2.03 hereof or a notice of the issuance of a
Letter of Credit as required by Section 2A.01 hereof, as appropriate.
(b) The representations and warranties set forth in Article IV
hereof and in any documents delivered herewith, including, without
limitation, the Loan Documents, shall be true and correct in all
material respects with the same effect as though made on and as of
such date (except insofar as such representations and warranties
relate expressly to an earlier date).
(c) The Parent and its subsidiaries shall be in compliance with
all the terms and provisions contained herein on their part to be
observed or performed, and at the time of and immediately after such
Credit Event no Default or Event of Default shall have occurred and be
continuing.
(d) The Agent shall have received a certificate signed by the
Financial Officer of the Borrowers (i) as to the compliance with (b)
and (c) above and (ii) with respect to each Loan and each Letter of
Credit, demonstrating that after giving effect thereto the Borrowers
are in compliance with the Borrowing Base.
SECTION 5.02. First Borrowing. The obligations of the Lenders
in respect of the first Credit Event hereunder are subject to the following
additional conditions precedent:
(a) The Lenders shall have received the favorable written
opinion of counsel for the Parent, the Borrowers and each of the
Guarantors and Grantors, substantially in the form of Exhibit C
hereto, dated the Closing Date, addressed to the Lenders and
satisfactory to the Agent.
(b) The Lenders shall have received (i) a copy of the
certificate or articles of incorporation or constitutive documents, in
each case as amended to date, of the Parent and each of the Borrowers,
the Grantors and the Guarantors, certified as of a recent date by the
Secretary of State or other appropriate official of the state of its
organization, and a certificate as to the good standing of each from
such Secretary of State or other official, in each case dated as of a
recent date; (ii) a certificate of the Secretary of the Parent and
each of the Borrowers, Grantors and Guarantors, dated the Closing Date
and certifying (A) that attached thereto is a true and complete copy
of such person's By-laws as in effect on the date of such certificate
and at all times since a date prior to the date of the resolution
described in item (B) below, (B) that attached thereto is a true and
complete copy of a resolution adopted by such person's Board of
Directors authorizing the execution, delivery and performance of this
Agreement, the Security Documents, the Notes, the other Loan Documents
and the Credit Events hereunder, as applicable, and that such
resolution has not been modified, rescinded or amended and is in full
force and effect, (C) that such person's certificate or articles of
incorporation or constitutive documents has not been amended since the
date of the last amendment thereto shown on the certificate of good
standing furnished pursuant to (i) above, and (D) as to the incumbency
and specimen signature of each of such person's officers executing
this Agreement, the Notes, each Security Document or any other Loan
Document delivered in connection herewith or therewith, as applicable;
(ii) a certificate of another of such person's officers as to
incumbency and signature of its Secretary; and (iii) such other
documents as the Agent or any Lender may reasonably request.
(c) The Agent shall have received a certificate, dated the
Closing Date and signed by the Financial Officer of the Borrowers,
confirming compliance with the conditions precedent set forth in
paragraphs (b) and (c) of Section 5.01 hereof and the conditions set
forth in this Section 5.02.
(d) Each Lender shall have received each of its Revolving Note,
Term Note A, Term Note B and Term Note C, each duly executed by the
Borrowers, payable to its order and otherwise complying with the
provisions of Section 2.04 hereof.
(e) The Agent shall have received the Security Documents,
certificates evidencing the Pledged Stock, together with undated stock
powers executed in blank, each duly executed by the applicable
Grantors, the Intercreditor Agreement, and each of the other
documents, instruments, insurance policies and agreements requested by
the Agent.
(f) The Agent shall have received certified copies of requests
for copies or information on Form UCC-11 or certificates satisfactory
to the Lenders of a UCC Reporter Service, listing all effective
financing statements which name as debtor the Parent, any Borrower,
any Guarantor or any Grantor and which are filed in the appropriate
offices in the States in which are located the chief executive office
and other operating offices of such person or where Collateral is
located, together with copies of such financing statements. With
respect to any Liens not permitted pursuant to Section 7.01 hereof,
the Agent shall have received termination statements, and/or payoff
letters which provide further assurances regarding the provision of
termination statements, in form and substance satisfactory to it.
(g) Each document (including, without limitation, each Uniform
Commercial Code financing statement) required by law or requested by
the Agent to be filed, registered or recorded in order to create in
favor of the Agent for the benefit of the Secured Parties a first
priority perfected security interest in the Collateral shall have been
properly filed, registered or recorded in each jurisdiction in which
the filing, registration or recordation thereof is so required or
requested. The Agent shall have received an acknowledgment copy, or
other evidence satisfactory to it, of each such filing, registration
or recordation.
(h) The Agent shall have received the results of a search of the
Uniform Commercial Code filings made with respect to the Parent, each
Borrower and each Grantor and Guarantor in the jurisdictions in which
Uniform Commercial Code filings have been made against the Parent,
each Borrower, each Guarantor and each Grantor pursuant to paragraph
(g) above, and such results shall be satisfactory to the Agent.
(i) The Lenders and the Agent shall have received and determined
to be in form and substance satisfactory to them:
(i) the most recent schedule of inventory designations of
the Borrowers together with sales, inbound gross profit and other
financial information requested by the Agent;
(ii) evidence that, immediately after giving effect to the
Credit Events to be made on the Closing Date, the Borrowers have
Undrawn Availability on the Closing Date in an amount not less
than the sum of $5,000,000 plus the aggregate amount of all trade
payables owing by any Borrower on the Closing Date which on the
Closing Date have not been paid within normal industry trade
terms therefor;
(iii) a copy of a field examination of the books and records
of the Parent and its subsidiaries;
(iv) evidence of the compliance by the Parents and its
subsidiaries with Section 6.03 hereof;
(v) the financial statements described in Section 4.07
hereof and such financial statements shall not differ in any
material and adverse respect from estimates previously delivered
in writing to the Agent;
(vi) evidence that the Transactions are in compliance with
all applicable laws and regulations;
(vii) evidence of payment of all fees owed to the Agent and
the Lenders by the Borrowers under this Agreement, the Fee Letter
or otherwise;
(viii) evidence that all requisite third party consents and
waivers (including, without limitation, consents with respect to
each Borrower and each of the Grantors and Guarantors, landlords'
waivers, and lease amendments required under Section 3.03) to the
Transactions, have been received;
(ix) copies of all major customer and supplier contracts
with respect to the Parent and each Borrower;
(x) a representation by the Borrowers that since October
30, 1993, there has been no event that could reasonably be
expected to have a Material Adverse Effect, other than as
disclosed by the Parent to the Agent in writing pursuant to a
letter dated the Closing Date;
(xi) evidence that there are no actions, suits or
proceedings at law or in equity or by or before any governmental
instrumentality or other agency or regulatory authority now
pending or (to the best of the knowledge of the Parent and its
subsidiaries) threatened against or affecting the Parent, any
Borrower, any of the Grantors or Guarantors, any of their
respective businesses, assets or rights or any Lender (i) which
is reasonably likely to have a Material Adverse Effect or which
may materially impair the ability of any Borrower, any Grantor or
any Guarantor to perform its obligations under any Loan Document
to which it is a party or (ii) which involve any of the
Transactions;
(xii) evidence that the Existing Credit Agreement shall have
been terminated, all amounts of principal, interest, fees,
expenses and other obligations owing thereunder shall have been,
or shall be concurrently with the Credit Events on the Closing
Date, satisfied in full and that all Liens securing any
obligations arising thereunder shall have been released; and
(xiii) evidence of compliance with the representations and
warranties made in Section 4.17 hereof;
(j) The Agent and the Lenders shall have had the opportunity, if
they so choose, to examine the books of account and other records and
files of the Parent and its subsidiaries, the Grantors and the
Guarantors and to make copies thereof, and to conduct a pre-closing
audit or perform other due diligence which shall include, without
limitation, verification of payment of payroll taxes and accounts
payable, formulation of an opening Borrowing Base and review of
environmental and labor issues, and the results of such examination,
audit and due diligence shall have been reasonably satisfactory to the
Agent and Lenders in all respects. Neither the Agent or any Lender
shall have become aware of any previously undisclosed materially
adverse information with respect to the Parent or any of its
subsidiaries or the Transactions or of any material adverse change in
the facts, circumstances or information with respect to the Parent or
any of its respective subsidiaries or the Transactions as understood
by the Agent on or as of November 30, 1994. None of the information
submitted prior to the Closing Date shall have been or become, taken
together with all other such information submitted prior to the
Closing Date, false, incomplete, or inaccurate in any material and
adverse respect, and none of the conditions represented or indicated
by the Parent or any of its subsidiaries to exist shall change in any
material and adverse respect.
(k) The Agent shall have received and had the opportunity to
review and determine to be in form and substance satisfactory to it:
(i) copies of all lease agreements entered into by the
Parent and/or its subsidiaries; and
(ii) copies of all loan agreements, notes and other
documentation evidencing Indebtedness for borrowed money of the
Parent, its subsidiaries, Grantors or Guarantors and of all other
material agreements of the Parent, its subsidiaries, the Grantors
and the Guarantors.
(l) Messrs. Kaye, Scholer, Fierman, Hays & Handler, counsel to
the Agent, shall have received payment in full for all legal fees
charged, and all costs and expenses incurred, by such counsel through
the Closing Date in connection with the transactions contemplated
under this Agreement, the Security Documents and the other Loan
Documents and instruments in connection herewith and therewith.
(m) The corporate structure and capitalization of the Parent and
its subsidiaries shall be satisfactory to the Lenders in all respects.
(n) All legal matters in connection with the Transactions shall
be satisfactory to the Agent, the Lenders and their respective counsel
in their sole discretion.
(o) The Borrowers shall have executed and delivered to the Agent
a disbursement authorization letter with respect to the disbursement
of the proceeds of the Credit Events made on the Closing Date, in form
and substance satisfactory to the Agent.
(p) The Borrowers shall have entered into blocked account and
other cash management arrangements pursuant to documentation
satisfactory in form and substance to the Agent as contemplated by
Section 10.01 hereof.
(q) The Agent shall have received such other documents as the
Lenders or the Agent or Agent's counsel shall reasonably deem
necessary.
VI. AFFIRMATIVE COVENANTS
The Parent and each Borrower covenants and agrees with each
Lender that, so long as this Agreement shall remain in effect or the
principal of or interest on any Note, any amount under or with respect to
any Letter of Credit or any fee, expense or amount payable hereunder or in
connection with any of the Transactions shall be unpaid, it will, and will
cause each of its subsidiaries and, with respect to Section 6.07 hereof,
each ERISA Affiliate, to:
SECTION 6.01. Legal Existence. Do or cause to be done all
things necessary to preserve, renew and keep in full force and effect its
legal existence.
SECTION 6.02. Businesses and Properties. At all times do or
cause to be done all things necessary to preserve, renew and keep in full
force and effect the rights, licenses, Permits, franchises, patents,
copyrights, trademarks and trade names material to the conduct of its
businesses; maintain and operate such businesses in the same general manner
in which they are presently conducted and operated; comply with all laws,
rules, regulations and governmental orders (whether Federal, state or
local) applicable to the operation of such businesses whether now in effect
or hereafter enacted (including, without limitation, all applicable laws,
rules, regulations and governmental orders relating to public and employee
health and safety and all Environmental Laws) and with any and all other
applicable laws, rules, regulations and governmental orders the lack of
compliance with which would have a Material Adverse Effect; take all
actions which may be required to obtain, preserve, renew and extend all
Permits and other authorizations which are material to the operation of
such businesses; and at all times maintain, preserve and protect all
property material to the conduct of such businesses and keep such property
in good repair, working order and condition, ordinary wear and tear
excepted, and from time to time make, or cause to be made, all needful and
proper repairs, renewals, additions, improvements and replacements thereto
necessary in order that the business carried on in connection therewith may
be properly conducted at all times.
SECTION 6.03. Insurance. (a) Keep its insurable properties
adequately insured at all times by financially sound and reputable insurers
with a rating of "A-" or better (except for Home Insurance, which may be
rated B+ or better), as established by Best's Rating Guide (or an
equivalent rating with such other publications of a similar nature as shall
be in current use), (b) maintain such other insurance, to such extent and
against all risks, including fire and other risks insured against by
extended coverage, provided, however, that such insurance shall insure the
property of the Borrowers and their respective subsidiaries against all
risk of physical damage, including, without limitation, loss by fire,
explosion, theft, fraud and such other casualties as may be reasonably
satisfactory to the Agent, but in no event at any time in an amount less
than the greater of (i) the Obligations and (ii) the replacement value of
the Collateral, (c) maintain in full force and effect public liability
insurance against claims for personal injury or death or property damage
occurring upon, in, about or in connection with the use of any properties
owned, occupied or controlled by the Borrowers or any of their respective
subsidiaries, in such amount as the Agent shall reasonably deem necessary,
and (d) maintain such other insurance as may be required by law or as may
be reasonably requested by the Agent for purposes of assuring compliance
with this Section 6.03. All insurance covering tangible personal property
subject to a Lien in favor of the Agent for the benefit of the Lenders
granted pursuant to the Security Documents shall provide that, in the case
of each separate loss the full amount of insurance proceeds shall be
payable to the Agent and shall further provide for at least 30 days' prior
written notice to the Agent of the cancellation or substantial modification
thereof.
SECTION 6.04. Taxes. Pay and discharge promptly when due all
taxes, assessments and governmental charges or levies imposed upon it or
upon its income or profits or in respect of its property before the same
shall become delinquent or in default, as well as all lawful claims for
labor, materials and supplies or otherwise, which, if unpaid, would give
rise to Liens upon such properties or any part thereof, except such taxes,
assessments and governmental charges and levies which are diligently
contested in good faith by appropriate proceedings and as to which adequate
reserves have been established in accordance with generally accepted
accounting principles and except for di minimus Liens on property other
than inventory and accounts receivable securing not more than $50,000 in
the aggregate.
SECTION 6.05. Financial Statements, Reports, etc. Furnish to
the Agent, with copies for each of the Lenders:
(a) within 90 days after the end of each Fiscal Year, (i) Con-
solidated balance sheets and Consolidated income statements showing
the financial condition of the Parent and its subsidiaries as of the
close of such Fiscal Year and the results of their operations during
such year, and (ii) a Consolidated statement of shareholders' equity
and a Consolidated statement of cash flow, as of the close of such
Fiscal Year, all the foregoing financial statements to be audited by a
Big 6 or other independent public accountants reasonably acceptable to
the Agent (which report shall not contain any qualification except
with respect to new accounting principles mandated by the Financial
Accounting Standards Board), and to be in form and substance
reasonably acceptable to the Agent;
(b) (i) within 45 days after the end of each fiscal quarter,
unaudited Consolidated balance sheets and Consolidated income
statements showing the financial condition and results of operations
of the Parent and its subsidiaries as of the end of each such quarter,
a Consolidated statement of shareholders' equity and a Consolidated
statement of cash flow as of the end of each such quarter, together
with a statement comparing actual results for such quarter with the
projections set forth in paragraph (f) below, prepared and certified
by the Financial Officer of the Parent as presenting fairly the
financial condition and results of operations of the Parent and its
subsidiaries and as having been prepared in accordance with generally
accepted accounting principles consistently applied, setting forth in
each case in comparative form the corresponding figures for the
corresponding quarter of the preceding year and corresponding figures
for the period beginning with the first day of the relevant Fiscal
Year and ending on the last day of the relevant fiscal quarter and the
corresponding period for the previous Fiscal Year, in each case
subject to normal year-end audit adjustments; and (ii) within 30 days
after the end of each fiscal month, sales information, inbound gross
profit information, SG&A information, inventory reports, receivables
reports and accounts payable reports, each for the Parent and its
subsidiaries, prepared and certified by the Financial Officer of the
Parent as presenting fairly (subject to normal quarterly accruals and
physical inventory adjustments) the financial condition and results of
operations of the Parent and its subsidiaries and as having been
prepared in accordance with generally accepted accounting principles
consistently applied, setting forth in each case in comparative form
the corresponding figures for the corresponding month of the preceding
year and corresponding figures for the period beginning with the first
day of the current Fiscal Year and ending on the last day of the
relevant fiscal month and the corresponding period for the previous
Fiscal Year, in each case subject to normal year-end audit
adjustments;
(c) promptly after the same become publicly available, copies of
such registration statements, annual, periodic and (upon the request
of the Agent) other reports, and such proxy statements and (upon the
request of the Agent) other information, if any, as shall be filed by
the Parent or any of its subsidiaries with the Securities and Exchange
Commission or any governmental authority that may be substituted
therefor, or any national securities exchange and copies of all proxy
statements, financial statements and reports submitted to its
shareholders;
(d) concurrently with any delivery under (a) and (b) above, a
certificate of the firm or person referred to therein and a
certificate of the Financial Officer of the Parent (which certificate
furnished by the independent public accountants referred to in
paragraph (a) above may be limited to accounting matters and disclaim
responsibility for legal interpretations), each certifying that to the
best of its, his or her knowledge no Default or Event of Default has
occurred (including calculations demonstrating compliance, as of the
dates of the financial statements being furnished at such time, with
the covenants set forth in Sections 7.07, 7.08, 7.09, 7.10 and 7.11
hereof and, if such a Default or Event of Default has occurred,
specifying the nature and extent thereof and any corrective action
taken or proposed to be taken with respect thereto;
(e) within 60 days of any delivery under (a) above, a management
letter prepared by the independent public accountants who reported on
the financial statements delivered under (a) above, with respect to
the internal audit and financial controls of each of the Parent and
its subsidiaries;
(f) within 45 days prior to the beginning of each Fiscal Year, a
summary of business plans and financial operation projections
(including, without limitation, with respect to Capital Expenditures)
for the Parent and its subsidiaries for such Fiscal Year (including
fiscal quarterly balance sheets, statements of income and of cash flow
and an Undrawn Availability forecast) and annual projections through
the Final Maturity Date prepared by management and in form, substance
and detail (including, without limitation, principal assumptions)
reasonably satisfactory to the Agent;
(g) no later than Friday of each week, a certificate, in form,
substance and detail reasonably satisfactory to the Agent, of the
Financial Officer of the Borrowers demonstrating compliance as at the
close of business on Saturday of the preceding week with the Borrowing
Base (which certificate shall reflect the weekly payment to Wakefern
to be made on the Wednesday between such Saturday and such Friday);
(h) promptly upon the request of the Agent, a certificate, in
form, substance and detail satisfactory to the Agent, of the Financial
Officer of the Borrowers demonstrating compliance with the Borrowing
Base as at such previous date as Agent shall reasonably request;
(i) immediately upon becoming aware thereof, notice to the Agent
of the breach beyond any applicable grace period by any party of any
material agreement with the Parent or any of its subsidiaries; and
(j) such other information as the Agent or any Lender may
reasonably request, including, without limitation, profit and loss
information on a store by store basis, as well as supplemental expense
information. At the reasonable request of any Lender, the Agent
agrees to promptly forward such request for information to the
Borrowers.
SECTION 6.06. Litigation and Other Notices. Give the Agent
prompt written notice of the following:
(a) the issuance by any court or governmental agency or
authority of any injunction, order, decision or other restraint
prohibiting, or having the effect of prohibiting, the making of the
Loans or occurrence of other Credit Events, or invalidating, or having
the effect of invalidating, any provision of this Agreement, the Notes
or the other Loan Documents, or the initiation of any litigation or
similar proceeding seeking any such injunction, order, decision or
other restraint;
(b) the filing or commencement of any action, suit or proceeding
against the Parent or any of its subsidiaries, whether at law or in
equity or by or before any court or any Federal, state, municipal or
other governmental agency or authority, (i) which is material and is
brought by or on behalf of any governmental agency or authority, or in
which injunctive or other equitable relief is sought or (ii) as to
which it is probable (within the meaning of Statement of Financial
Accounting Standards No. 5) that there will be an adverse
determination and which, if adversely determined, would (A) reasonably
be expected to result in liability of the Parent or a subsidiary
thereof in an aggregate amount of $100,000 or more, not reimbursable
by insurance, or (B) materially impair the right of the Parent or a
subsidiary thereof to perform its obligations under this Agreement,
any Note or any other Loan Document to which it is a party;
(c) any Default or Event of Default, specifying the nature and
extent thereof and the action (if any) which is proposed to be taken
with respect thereto; and
(d) any development in the business or affairs of the Parent or
its subsidiaries which has had or which is likely, in the reasonable
judgment of any Responsible Officer of the Parent or any Borrower, to
have, a Material Adverse Effect (including, without limitation, any
actual or threatened strike, work stoppage or other labor action,
whether or not authorized by labor unions).
SECTION 6.07. ERISA. (a) Except as set forth on Exhibit
6.07(a), pay and discharge promptly any liability imposed upon it pursuant
to the provisions of Title IV of ERISA except to the extent the Parent or
any Borrower is contesting the liability in good faith.
(b) Deliver to the Agent, promptly, and in any event within 30
days, after (i) the occurrence of any Reportable Event, a copy of the
materials that are filed with the PBGC, (ii) the Parent, any Borrower or
any ERISA Affiliate or an administrator of any Pension Plan files with
participants, beneficiaries or the PBGC a notice of intent to terminate any
such Plan, a copy of any such notice, (iii) the receipt of notice by the
Parent, any Borrower or any ERISA Affiliate or an administrator of any
Pension Plan from the PBGC of the PBGC's intention to terminate any Pension
Plan or to appoint a trustee to administer any such Plan, a copy of such
notice, (iv) the filing thereof with the Internal Revenue Service, copies
of each annual report that is filed on Treasury Form 5500 with respect to
any Plan, together with certified financial statements (if any) for the
Plan and any actuarial statements on Schedule B to such Form 5500, (v) the
Parent, any Borrower or any ERISA Affiliate knows or has reason to know of
any event or condition which might constitute grounds under the provisions
of Section 4042 of ERISA for the termination of (or the appointment of a
trustee to administer) any Pension Plan, an explanation of such event or
condition, (vi) the receipt by the Parent, any Borrower or any ERISA
Affiliate of an assessment of withdrawal liability under Section 4201 of
ERISA from a Multiemployer Plan, or any other notice from such
Multiemployer Plan of any action or event involving or in connection with
insolvency, reorganization or termination (each as defined in ERISA) a copy
of such assessment, or notice (vii) the Parent, any Borrower or any ERISA
Affiliate knows or has reason to know of any event or condition which might
cause any one of them to incur a liability under Section 4062, 4063, 4064
or 4069 of ERISA or Section 412(n) or 4971 of the Code, an explanation of
such event or condition, and (viii) the Parent, any Borrower or any ERISA
Affiliate knows or has reason to know that an application is to be, or has
been, made to the Secretary of the Treasury for a waiver of the minimum
funding standard under the provisions of Section 412 of the Code, a copy of
such application, and in each case described in clauses (i) through (iii)
and (v) through (vii) together with a statement signed by the Financial
Officer of the Parent setting forth details as to such Reportable Event,
notice, event or condition and the action which the Parent, the Borrowers
or such ERISA Affiliate proposes to take with respect thereto.
(c) within 30 days after the end of any fiscal quarter in which
Parent or any Borrower becomes aware, directly or indirectly, of any fact
or information that materially changes the status of the Parent or Borrower
with respect to the Multiemployer Plans, give notice thereof to the Agent.
SECTION 6.08. Maintaining Records; Access to Properties and
Inspections; Right to Audit. Maintain financial records in accordance with
accepted financial practices and, upon reasonable notice (which may be
telephonic), at all reasonable times and as often as any Agent may request,
permit any authorized representative designated by such Agent to visit and
inspect the properties and financial records of the Parent and its
subsidiaries and to make extracts from such financial records at the
Parent's and the Borrowers') expense, and permit any authorized represen-
tative designated by such Agent to discuss the affairs, finances and
condition of the Parent and its subsidiaries with the appropriate Financial
Officer and such other officers as such Agent shall deem appropriate and
the Parent's independent public accountants, as applicable. An authorized
representative of each of the Lenders may accompany the Agent on such
visits and inspections. The Agent shall have the right to audit, as often
as it may request, the existence and condition of the inventory, books and
records of the Parent and its subsidiaries and to review their compliance
with the terms and conditions of this Agreement and the other Loan
Documents. The Parent and the Borrowers shall pay Agent's customary per
diem rates, all out-of-pocket expenses of Agent's auditors and all costs of
Agent with respect to third-party examiners. Notwithstanding the
foregoing, prior to a Default or Event of Default, the Parent and the
Borrowers shall not be obligated to reimburse Agent for more than four
visits each calendar year.
SECTION 6.09. Fiscal Year-End. Cause its Fiscal Year to end on
the Saturday nearest to October 31 in each year.
SECTION 6.10. Further Assurances. Execute any and all further
documents and take all further actions which may be required under
applicable law, or which the Agent may reasonably request, to grant,
preserve, protect and perfect the first priority security interest created
by the Security Documents in the Collateral.
SECTION 6.11. Additional Grantors and Guarantors. Promptly
inform the Agent of the creation or acquisition of any direct or indirect
subsidiary (subject to the provisions of Section 7.06 hereof) and cause
each direct or indirect subsidiary not in existence on the date hereof to
become a Guarantor hereunder pursuant to an agreement in form and substance
reasonably satisfactory to the Agent, and to execute the Security
Documents, as applicable, as a Grantor, and cause the direct parent of each
such subsidiary to pledge all of the capital stock of such subsidiary
pursuant to the Pledge Agreement and cause each such subsidiary to pledge
its inventory and all other owned assets pursuant to the Security
Agreement.
SECTION 6.12. Environmental Laws. (a) Comply, and cause each
of its subsidiaries to comply, in all material respects with the provisions
of all Environmental Laws, and shall keep its properties and the properties
of its subsidiaries free of any Lien imposed pursuant to any Environmental
Law. The Parent shall not cause or suffer or permit, and shall not suffer
or permit any of its subsidiaries to cause or suffer or permit, the
property of the Parent or its subsidiaries to be used for the use,
generation, production, processing, handling, storage, transporting or
disposal of any Hazardous Material, except for the use, generation, storage
or transportation of fuel, household wastes and routine cleaning and
maintenance products.
(b) Supply to the Agent copies of all submissions by the Parent
or any of its subsidiaries to any governmental body and of the reports of
all environmental audits and of all other environmental tests, studies or
assessments (including the data derived from any sampling or survey of
asbestos, soil, or subsurface or other materials or conditions) that may be
conducted or performed (by or on behalf of the Parent or any of its
subsidiaries) on or regarding the properties owned, operated, leased or
occupied by the Parent or any of its subsidiaries or regarding any
conditions that might have been affected by Hazardous Materials on or
Released or removed from such properties. The Parent shall also permit and
authorize, and shall cause its subsidiaries to permit and authorize, the
consultants, attorneys or other persons that prepare such submissions or
reports or perform such audits, tests, studies or assessments to discuss
such submissions, reports or audits with the Agent and the Lenders.
(c) Promptly (and in no event more than two Business Days after
the Parent or any subsidiary becomes aware or is otherwise informed of such
event) provide oral and written notice to the Agent upon the happening of
any of the following:
(i) the Parent, any subsidiary of the Parent, or any tenant
or other occupant of any property of the Parent or such
subsidiary receives notice of any claim, complaint, charge or
notice of a violation or potential violation of any Environmental
Law;
(ii) there has been a Release of Hazardous Materials upon,
under or about or affecting any of the properties owned,
operated, leased or occupied by the Parent or any of its
subsidiaries, or Hazardous Materials at levels or in amounts that
may have to be reported, remedied or responded to under
Environmental Law are detected on or in the soil or groundwater;
(iii) the Parent or any of its subsidiaries is or may be
liable for any costs of cleaning up or otherwise responding to a
Release of Hazardous Materials;
(iv) any part of the properties owned, operated, leased or
occupied by the Parent or any of its subsidiaries is or may be
subject to a Lien under any Environmental Law; or
(v) the Parent or any of its subsidiaries undertakes any
Remedial Work with respect to any Hazardous Materials.
(d) Timely undertake and complete any Remedial Work required to
be undertaken of the Parent, any Borrower or any Guarantor by any
Environmental Law.
(e) Without in any way limiting the scope of Section 11.04(c)
and in addition to any obligations thereunder, the Parent and each Borrower
hereby indemnifies and agrees to hold the Agent and the Lenders harmless
from and against any liability, loss, damage, suit, action or proceeding
arising out of its business or the business of its subsidiaries pertaining
to Hazardous Materials, including, but not limited to, claims of any
governmental body or any third person arising under any Environmental Law
or under tort, contract or common law. To the extent laws of the United
States or any state or local jurisdiction in which property owned,
operated, leased or occupied by the Parent, any Borrower or any of their
respective subsidiaries is located provide that a Lien upon such property
of the Parent, the Borrower or such subsidiary may be obtained for the
removal of Hazardous Materials which have been Released, no later than
sixty days after notice is given by the Agent to the Parent, the Borrower
or such subsidiary, the Parent, the Borrower or such subsidiary shall
deliver to the Agent a report issued by a qualified third party engineer
certifying as to the existence of any Hazardous Materials located upon or
beneath the specified property. To the extent any Hazardous Materials
located therein or thereunder either subject the property to Lien or
require removal pursuant to any applicable Environmental Laws, the removal
thereof shall be an affirmative covenant of the Parent and the Borrowers
hereunder.
(f) In the event that any Remedial Work is required to be
performed by the Parent or any of its subsidiaries under any applicable
Environmental Law, any judicial order, or by any governmental entity, the
Parent or such subsidiaries shall commence all such Remedial Work at or
prior to the time required therefor under such Environmental Law or
applicable judicial orders and thereafter diligently prosecute to
completion all such Remedial Work in accordance with and within the time
allowed under such applicable Environmental Laws or judicial orders.
SECTION 6.13. Pay Obligations to Lenders and Perform Other
Covenants. (a) Make full and timely payment of the Obligations, whether
now existing or hereafter arising, (b) duly comply with all the terms and
covenants contained in this Agreement (including, without limitation, the
borrowing limitations and mandatory prepayments in accordance with
Article II hereof) in each of the other Loan Documents, all at the times
and places and in the manner set forth therein, and (c) except for the
filing of continuation statements and the making of other filings by the
Agent as secured party or assignee, at all times take all actions necessary
to maintain the Liens and security interests provided for under or pursuant
to this Agreement and the Security Documents as valid and perfected first
Liens on the property intended to be covered thereby (subject only to Liens
expressly permitted hereunder) and supply all requested information to the
Agent necessary for such maintenance.
SECTION 6.14. Maintain Operating Accounts. Maintain its
principal disbursement accounts with the Agent, maintain all of its
operating accounts and cash management arrangements with the Agent or as
otherwise contemplated by Section 10.01 hereof; and notify the Agent
promptly of the closing of any account specified in Schedule 4.14 and the
opening up of any new accounts, in detail satisfactory to the Agent.
SECTION 6.15. Amendments. Promptly supply to the Agent
certified copies of any amendments to any Subordinated Indebtedness
(subject to Section 7.17 hereof).
SECTION 6.16. Use of Proceeds. Use all proceeds of each
borrowing under the Commitment to repay Indebtedness outstanding under the
Existing Credit Agreement (but not in excess of the amount of principal and
interest owing thereunder), to pay out-of-pocket fees and expenses incurred
by the Borrowers in connection with the financing contemplated hereunder,
to provide for working capital requirements and the general corporate
purposes of the Borrowers to the extent that such purposes are permitted
hereunder and to fund the Wakefern Distribution (as defined in Section
7.04).
VII. NEGATIVE COVENANTS
The Parent and each Borrower covenants and agrees with each
Lender that, so long as this Agreement shall remain in effect or the
principal of or interest on any Note, any amount under or with respect to
any Letter of Credit, or any fee, expense or amount payable hereunder or in
connection with any of the Transactions shall be unpaid, it will not and
will not cause or permit any of its subsidiaries and, in the case of
Section 7.15 hereof, any ERISA Affiliate to, either directly or indirectly:
SECTION 7.01. Liens. Incur, create, assume or permit to exist
any Lien on any of its property or assets (including the stock of any
direct or indirect subsidiary), whether owned at the date hereof or
hereafter acquired, or assign or convey any rights to or security interests
in any future revenues, except:
(a) Liens incurred and pledges and deposits made in the ordinary
course of business in connection with workers' compensation,
unemployment insurance, old-age pensions and other social security
benefits (not including any lien described in Section 412(m) of the
Code);
(b) Liens imposed by law, such as landlord, carriers', ware-
housemen's, mechanics', materialmen's and vendors' liens and other
similar liens, incurred in good faith in the ordinary course of
business and securing obligations which are not overdue or which are
being contested in good faith by appropriate proceedings as to which
the Parent or any of its subsidiaries, as the case may be, shall, to
the extent required by generally accepted accounting principles
consistently applied, have set aside on its books adequate reserves;
(c) Liens securing the payment of taxes, assessments and
governmental charges or levies, that are not delinquent or are being
diligently contested in good faith by appropriate proceedings and as
to which adequate reserves have been established in accordance with
generally accepted accounting principles; provided, however, that in
no event shall the aggregate amount of such reserves be less than the
aggregate amount secured by such Liens, and provided, further, that
the amount secured by such Liens shall at no time exceed an aggregate
of $50,000;
(d) zoning restrictions, easements, licenses, reservations,
provisions, covenants, conditions, waivers, restrictions on the use of
real property or minor irregularities of title (and with respect to
leasehold interests, mortgages, obligations, liens and other
encumbrances incurred, created, assumed or permitted to exist and
arising by, through or under a landlord, ground lessor or owner of the
leased property, with or without consent of the lessee) which do not
in the aggregate materially detract from the value of its property or
assets or materially impair the use thereof in the operation of its
business;
(e) Liens upon any equipment acquired through the purchase or
lease by the Borrowers or any of their respective subsidiaries which
are created or incurred by the Borrowers as a condition to the
financing of such acquisition to secure or provide for the payment of
any part of the purchase price of, or lease payments on, such
equipment (but no other amounts and not in excess of the purchase
price or lease payments); provided, however, that any such Lien shall
not apply to any other property of the Borrowers or any of their
respective subsidiaries; and provided, further, that after giving
effect to such purchase or lease, compliance is maintained with
Section 7.07 hereof;
(f) Liens created in favor of NatWest for the benefit of the
Secured Parties with respect to Letters of Credit;
(g) Liens existing on the date of this Agreement and set forth
in Schedule 7.01 annexed hereto or set forth in Schedule B to each of
the title policies referred to in Section 3.03 hereof and the
extension, renewal or refunding of the Indebtedness secured thereby
provided, (i) no additional property shall become subject to such
Lien, (ii) the amount of the relevant Indebtedness shall not be
increased, (iii) the terms thereof and the related interest rate
fairly reflect market conditions for companies in businesses and with
credit standing similar to the Parent and (iv) such Indebtedness is
not more senior in rank than that being so extended, renewed or
refunded;
(h) Liens created in favor of the Agent for the benefit of the
Secured Parties;
(i) Liens securing the performance of bids, tenders, leases,
contracts (other than for the repayment of borrowed money), statutory
obligations, surety, customs and appeal bonds and other obligations of
like nature, incurred as an incident to and in the ordinary course of
business;
(j) Liens (excluding Liens on inventory or accounts receivable)
securing no more than $50,000;
(k) consigned inventory in display cases owned by the consignor;
or
(l) Liens created pursuant to the Asset Redeployment Program.
SECTION 7.02. Sale and Lease-Back Transactions. Other than
transactions included in the Asset Redeployment Program pursuant to terms
that are reasonably satisfactory to the Agent, enter into any arrangement,
directly or indirectly, with any person whereby the Parent or any of its
subsidiaries shall sell or transfer any property, real or personal, and
used or useful in its business, whether now owned or hereafter acquired,
and thereafter rent or lease such property or other property which the
Parent or such subsidiary intends to use for substantially the same purpose
or purposes as the property being sold or transferred.
SECTION 7.03. Indebtedness. Incur, create, assume or permit to
exist any Indebtedness other than (i) Indebtedness secured by Liens
permitted under Section 7.01 (provided, however, that Indebtedness secured
by Liens permitted under Section 7.01(e) shall not exceed an aggregate
amount of (a) $1,000,000 in Fiscal Year 1995; (b) $11,000,000 in Fiscal
Year 1996; (c) $8,000,000 in Fiscal Year 1997; and (d) $6,500,000 in Fiscal
Year 1998, in each case for the Borrowers and their respective
subsidiaries, (ii) Indebtedness (including, without limitation, Guarantees)
existing on the date hereof and listed in Schedule 7.03 annexed hereto, but
not the increase, extension, renewal or refunding thereof except as
indicated in Section 7.01(g) hereof, (iii) Indebtedness incurred hereunder
and under the other Loan Documents, (iv) Indebtedness of the Parent to
Wakefern and affiliates of Wakefern required to be incurred under the
Wakefern Shareholder Agreement, the Certificate of Incorporation of
Wakefern and/or the bylaws of Wakefern, (v) Guarantees constituting the
endorsement of negotiable instruments for deposit or collection in the
ordinary course of business, (vi) Guarantees of the Obligations,
(vii) Subordinated Indebtedness, but not the increase, extension, renewal
or refunding thereof except as indicated in Section 7.01(g),
(viii) Indebtedness, if any, under Section 7.02 hereof and (ix)(a)
Indebtedness owing by the Parent to either Borrower incurred in the
ordinary course of business and Indebtedness owing by the Borrowers to the
Parent incurred in the ordinary course of business, in an amount of up to
$35,000,000 in the aggregate for all Indebtedness permitted under this
clause (ix)(a) and (b) Indebtedness owing by Malverne to the Parent in
existence on the Closing Date plus an amount of up to $200,000 in the
aggregate at any time outstanding.
SECTION 7.04. Dividends, Distributions and Payments. Declare or
pay, directly and indirectly, any cash dividends or make any other
distribution, whether in cash, property, securities or a combination
thereof, with respect to (whether by reduction of capital or otherwise) any
shares of its capital stock or directly or indirectly redeem, purchase,
retire or otherwise acquire for value (or permit any subsidiary to purchase
or acquire) any shares of any class of its capital stock or set aside any
amount for any such purpose, except that (i) any subsidiary of the Parent
may pay dividends to the Parent; (ii) any subsidiary of the Borrowers may
pay dividends to a Borrower; (iii) distributions of Common Stock of the
Parent may be made to shareholders of the Parent other than Wakefern and
its subsidiaries or affiliates; and (iv) the Parent may pay an aggregate
amount (the "Wakefern Distribution") equal to $1,700,000 plus accrued
dividends not in excess of $450,000 to Wakefern Food Corporation
("Wakefern") in consideration for the repurchase of all preferred stock of
Parent owned by Wakefern, provided, however, that the Wakefern Distribution
shall be permitted only if, in the judgment of the Required Lenders
exercised in good faith based upon the Parent's certified financial
statements for the 1995 Fiscal Year, the Parent and their subsidiaries
shall have met or exceeded their projected performance and debt reduction
targets for the 1995 Fiscal Year, as such targets are set forth in the
Parent's financial projections dated August 22, 1994 and as amended on
September 22, 1994 as delivered to the Agent. Notwithstanding the
foregoing, no payment referred to herein may be made unless both before and
immediately after giving effect thereto, there shall exist no Default or
Event of Default.
SECTION 7.05. Consolidations, Mergers and Sales of Assets.
Consolidate with or merge into any other person, or sell, lease, transfer
or assign to any persons or otherwise dispose of (whether in one
transaction or a series of transactions) any portion of its assets (whether
now owned or hereafter acquired), or permit another person to merge into
it, or acquire all or substantially all the capital stock or assets of any
other person except as otherwise permitted by Section 7.02 and 7.06 hereof,
except that (a) the Borrowers and their respective subsidiaries may sell
any of their inventory in the normal course of their business, (b) subject
to Section 2.09 hereof, the Parent and its subsidiaries may enter into
transactions described in Schedule 7.05 hereof pursuant to terms that are
reasonably acceptable to the Required Lenders and (c) subject to Section
2.09 hereof, the Parent and its subsidiaries may sell any of their assets
for fair market value, provided that the aggregate fair market value of all
assets sold under this clause (c) during the period from the Closing Date
through and including the Final Maturity Date shall not, without the prior
written consent of the Agent, exceed $5,000,000.
SECTION 7.06. Investments. Own, purchase or acquire any stock,
obligations, assets or securities of, or any interest in, or make any
capital contribution or loan or advance to, any other person, or make any
other investments, except:
(a) certificates of deposit in dollars of any commercial banks
registered to do business in any state of the United States (i) having
capital and surplus in excess of $1,000,000,000 and (ii) whose long-
term debt rating is at least investment grade as determined by either
Standard & Poor's Corporation or Moody's Investor Service, Inc.;
(b) readily marketable direct obligations of the United States
government or any agency thereof which are backed by the full faith
and credit of the United States;
(c) commercial paper at the time of acquisition having the
highest rating obtainable from either Standard & Poor's Corporation or
Moody's Investor Service, Inc.;
(d) federally tax exempt securities rated A or better by either
Standard & Poor's Corporation or Moody's Investor Service, Inc.;
(e) investments in the stock of any subsidiary existing on the
Closing Date, but not any additional investments therein;
(f) capital contributions by the Parent or any subsidiary in
Wakefern or any Affiliate thereof as required under the certificate of
incorporation or bylaws of Wakefern or under the Wakefern Shareholder
Agreement;
(g) interest rate protection agreements in a notional amount not
exceeding $20,000,000; and
(h) charitable contributions not in excess of $25,000
individually and $100,000 in the aggregate over the term of this
Agreement.
provided that, in each case mentioned in (a), (b), (c) and (d) above, such
obligations shall mature not more than one year from the date of
acquisition thereof; and provided, further, that Loans may not be used to
purchase or otherwise fund the investments described in clauses (a) through
and including (e) above.
SECTION 7.07. Capital Expenditures and Other Expenditures.
Permit the aggregate amount of payments made for Capital Expenditures,
together with new purchases under Capitalized Lease Obligations (excluding
real property monthly rental payments) and payments under Indebtedness
permitted under Section 7.01(e) of this Agreement, in each of the periods
indicated below, to exceed the following amounts for the Parent and its
subsidiaries:
Period Maximum Amount
Two Consecutive Fiscal Quarters
ending April, 1995 $2,364,000
Three Consecutive Fiscal Quarters
ending July, 1995 $4,796,000
Four Consecutive Fiscal Quarters
ending October, 1995 $7,653,000
Four Consecutive Fiscal Quarters
ending January, 1996 $10,080,000
Four Consecutive Fiscal Quarters
ending April, 1996 $9,839,000
Four Consecutive Fiscal Quarters
ending July, 1996 $8,332,000
Four Consecutive Fiscal Quarters
ending October, 1996 $5,900,000
Four Consecutive Fiscal Quarters
ending January, 1997 $5,700,000
Four Consecutive Fiscal Quarters
ending April, 1997 $5,800,000
Four Consecutive Fiscal Quarters
ending July, 1997 $7,100,000
Four Consecutive Fiscal Quarters
ending October, 1997 $8,900,000
Four Consecutive Fiscal Quarters
ending January, 1998 $8,500,000
Four Consecutive Fiscal Quarters
ending April, 1998 $8,100,000
Four Consecutive Fiscal Quarters
ending July, 1998 $7,700,000
Four Consecutive Fiscal Quarters
ending October, 1998 $7,300,000
Four Consecutive Fiscal Quarters
ending January, 1999 $6,700,000
Notwithstanding the foregoing, to the extent that on any date of
determination under Section 7.09 of this Agreement, clause (ii) of the
definition of Fixed Charge Coverage Ratio exceeds clause (i) of the
definition of Fixed Charge Coverage Ratio by greater than $2,000,000 (such
excess over $2,000,000, the "Fixed Charge Excess"), then the amount of such
Fixed Charge Excess shall, for the purposes of this Section 7.07, be
deducted from the maximum permitted amount of Capital Expenditures
applicable to such date of determination and for each date of determination
for the four Fiscal Quarter periods immediately succeeding such date of
determination.
SECTION 7.08. Net Worth. Permit the Net Worth of the Parent and
its subsidiaries on a Consolidated basis at the end of each fiscal quarter
of the Parent set forth below (excluding the effect of any prepayment
penalties paid and accrued to the Noteholders with respect to Indebtedness
existing prior to the Closing Date) to be less than the respective amounts
set forth below:
Date of Determination Amount
Each Fiscal Quarter beginning
with April, 1995 through
and including October, 1996 $27,500,000
Fiscal Quarter ending
January, 1997 $28,500,000
Fiscal Quarter ending
April, 1997 $29,000,000
Fiscal Quarter ending
July, 1997 $29,500,000
Fiscal Quarter ending
October, 1997 $30,000,000
Fiscal Quarter ending
January, 1998 $30,500,000
Fiscal Quarter ending
April, 1998 $31,000,000
Fiscal Quarter ending
July, 1998 $31,500,000
Fiscal Quarter ending
October, 1998 $32,000,000
Fiscal Quarter ending
January, 1999 $32,000,000
SECTION 7.09. Fixed Charge Coverage Ratio. Permit the Fixed
Charge Coverage Ratio of the Parent and its subsidiaries at the end of each
fiscal quarter for the four most recent consecutive fiscal quarters (or
such lesser period as may be referred to below) of the Parent ending on or
prior to the date of determination to be less than:
Date of Determination Ratio
Two consecutive Fiscal Quarters
ending April, 1995 1.05:1.00
Three consecutive Fiscal Quarters
ending July, 1995 0.90:1.00
Fiscal Quarter ending
October, 1995 0.80:1.00
Fiscal Quarter ending
January, 1996 0.80:1.00
Fiscal Quarter ending
April, 1996 0.80:1.00
Fiscal Quarter ending
July, 1996 0.80:1.00
Fiscal Quarter ending
October, 1996 0.95:1.00
Fiscal Quarter ending
January, 1997 0.90:1.00
Fiscal Quarter ending
April, 1997 0.85:1.00
Fiscal Quarter ending
July, 1997 0.80:1.00
Fiscal Quarter ending
October, 1997 0.80:1.00
Fiscal Quarter ending
January, 1998 0.80:1.00
Fiscal Quarter ending
April, 1998 0.85:1.00
Fiscal Quarter ending
July, 1998 0.90:1.00
Fiscal Quarter ending
October, 1998 0.95:1.00
Fiscal Quarter ending
January, 1999 0.95:1.00
SECTION 7.10. Total Liabilities to Net Worth. Permit the ratio
of (x) total liabilities (as defined in GAAP) (giving credit for
collections received by the end of the applicable Fiscal Quarter, so long
as they are applied to the Obligations within the next two Business Days)
of the Parent and its subsidiaries to (y) Net Worth of the Parent and its
subsidiaries (excluding the effect of any prepayment penalties paid and
accrued to the Noteholders with respect to Indebtedness existing prior to
the Closing Date), at the end of each fiscal quarter of the Parent set
forth below to be greater than the respective ratios set forth below:
Date of Determination Ratio
Fiscal Quarter ending
April, 1995 3.15:1.00
Fiscal Quarter ending
July, 1995 3.15:1.00
Fiscal Quarter ending
October, 1995 3.30:1.00
Fiscal Quarter ending
January, 1996 2.80:1.00
Fiscal Quarter ending
April, 1996 2.80:1.00
Fiscal Quarter ending
July, 1996 2.70:1.00
Fiscal Quarter ending
October, 1996 2.60:1.00
Fiscal Quarter ending
January, 1997 2.45:1.00
Fiscal Quarter ending
April, 1997 2.40:1.00
Fiscal Quarter ending
July, 1997 2.35:1.00
Fiscal Quarter ending
October, 1997 2.30:1.00
Fiscal Quarter ending
January, 1998 2.20:1.00
Fiscal Quarter ending
April, 1998 2.10:1.00
Fiscal Quarter ending
July, 1998 2.00:1.00
Fiscal Quarter ending
October, 1998 1.90:1.00
Fiscal Quarter ending
January, 1999 1.90:1.00
The parties hereto agree that in the event that all or part of
the Wakefern Distribution is made as permitted under Section 7.04, then the
financial covenants set forth in Sections 7.08, 7.09 and 7.10 hereof shall
be prospectively and promptly amended to reflect such Wakefern Distribution
pursuant to the good faith and reasonable negotiations of the Agent, the
Required Lenders, and the Parent.
SECTION 7.11. EBITDA. Permit EBITDA of the Parent and its
subsidiaries at the end of each fiscal quarter for the four most recent
consecutive fiscal quarters (or such lesser period as may be referred to
below) of the Parent ending on or prior to the date of determination to be
less than:
Date of Determination Amount
Two consecutive Fiscal Quarters
ending April, 1995 $ 6,700,000
Three Consecutive Fiscal Quarters
ending July, 1995 $10,300,000
Fiscal Quarter ending
October, 1995 $13,100,000
Fiscal Quarter ending
January, 1996 $13,900,000
Fiscal Quarter ending
April, 1996 $14,200,000
Fiscal Quarter ending
July, 1996 $14,800,000
Fiscal Quarter ending
October, 1996 $15,100,000
Fiscal Quarter ending
January, 1997 $15,100,000
Fiscal Quarter ending
April, 1997 $15,100,000
Fiscal Quarter ending
July, 1997 $15,100,000
Fiscal Quarter ending
October, 1997 $15,300,000
Fiscal Quarter ending
January, 1998 $15,500,000
Fiscal Quarter ending
April, 1998 $15,800,000
Fiscal Quarter ending
July, 1998 $16,200,000
Fiscal Quarter ending
October, 1998 $16,500,000
Fiscal Quarter ending
January, 1999 $16,500,000
SECTION 7.12. Business. Alter the nature of its business as
operated on the date of this Agreement in any material respect.
SECTION 7.13. Sales of Receivables. Sell, assign, discount,
transfer, or otherwise dispose of any accounts receivable, promissory
notes, drafts or trade acceptances or other rights to receive payment held
by it, with or without recourse, except for the purpose of collection or
settlement in the ordinary course of business.
SECTION 7.14. Use of Proceeds. Permit the proceeds of any
Credit Event to be used for any purpose which entails a violation of, or is
inconsistent with, Regulation G, T, U or X of the Board, or for any purpose
other than those set forth in Section 6.17 hereof.
SECTION 7.15. ERISA. (a) Engage in any transaction in
connection with which the Parent, any Borrower or any ERISA Affiliate could
be subject to either a material civil penalty assessed pursuant to the
provisions of Section 502 of ERISA or a material tax imposed under the
provisions of Section 4975 of the Code.
(b) Terminate any Pension Plan in a "distress termination" under
Section 4041 of ERISA which could result in a material liability of the
Parent, any Borrower or any ERISA Affiliate to the PBGC, or take any other
action which could result in a material liability of the Parent, any
Borrower or any ERISA Affiliate to the PBGC.
(c) Fail to make payment when due of all amounts which, under
the provisions of any Plan, the Parent, any Borrower or any ERISA Affiliate
is required to pay as contributions thereto, or, with respect to any
Pension Plan, permit to exist any "accumulated funding deficiency" (within
the meaning of Section 302 of ERISA and Section 412 of the Code), whether
or not waived, with respect thereto.
(d) Adopt an amendment to any Pension Plan requiring the
provision of security under Section 307 of ERISA or Section 401(a)(29) of
the Code.
SECTION 7.16. Accounting Changes. Make, or permit any
subsidiary to make any material change in its accounting treatment or
financial reporting practices except as required or permitted by generally
accepted accounting principles in effect from time to time.
SECTION 7.17. Prepayment or Modification of Indebtedness;
Modification of Charter Documents. (a) Directly or indirectly prepay,
redeem, purchase or retire in advance of its scheduled maturity any
Indebtedness other than Indebtedness incurred hereunder and other than the
repayment of any Indebtedness secured by a Lien on an asset being sold
pursuant to the Asset Redeployment Program as permitted under this
Agreement. Nothing herein contained shall be deemed to prevent the
refinancing of Indebtedness otherwise permitted under Section 7.01(g) of
this Agreement.
(b) Directly or indirectly modify, amend or otherwise alter the
terms and provisions of any Subordinated Indebtedness.
(c) Directly or indirectly modify, amend or alter their
certificates or articles of incorporation, preferred stock/certificates of
designations or by-laws.
SECTION 7.18. [Intentionally Omitted]
SECTION 7.19. Transactions with Affiliates. Except as otherwise
specifically permitted in this Agreement, directly or indirectly purchase,
acquire or lease any property from, or sell, transfer or lease any property
to, or enter into any other transaction with, any stockholder, Affiliate or
agent of Parent, any subsidiary thereof, or any relative thereof, except at
prices and on any terms not less favorable to it than that which would have
been obtained in an arm's-length transaction with a non-affiliated third
party.
SECTION 7.20. Consulting Fees. Pay any management, consulting
or other fees of any kind to any Affiliate of Parent or any subsidiary
thereof, other than salaries to employees consistent with industry
practice, legal fees and consulting and investment banking fees, but only
to the extent that the payment of the foregoing legal, consulting and
investment banking fees complies with Section 7.19.
SECTION 7.21. Limitations on Dividends and Other Payments.
Create or otherwise cause or suffer to exist or become effective any
encumbrance or restriction on the ability of any subsidiary of Parent to
(a) pay dividends or make any other distributions on its capital stock or
any other equity interest or participation in, or measured by, its profits,
owned by Parent or any subsidiary of Parent, or pay any indebtedness owed
to, Parent or any subsidiary of Parent, (b) make loans or advances to
Parent, or any subsidiary of Parent, or (c) transfer any of its properties
or assets to Parent, except for such encumbrances or restrictions existing
under or by reason of (i) applicable law or (ii) this Agreement.
VIII. EVENTS OF DEFAULT
In case of the happening of any of the following events (herein
called "Events of Default"):
(a) any representation or warranty made or deemed made in or in
connection with this Agreement, any of the Security Documents, the
Notes or other Loan Documents or any Credit Events hereunder, shall
prove to have been incorrect in any material respect when made or
deemed to be made;
(b) default shall be made in the payment of any principal of any
Note when and as the same shall become due and payable, whether at the
due date thereof or at a date fixed for prepayment thereof or by
acceleration thereof or otherwise;
(c) default shall be made in the payment of any interest on any
Note, any fee or any other amount payable hereunder, or under or with
respect to the Notes, Letters of Credit, or any other Loan Document or
in connection with any other Credit Event or any of the Transactions
when and as the same shall become due and payable;
(d) (i) default shall be made in the due observance or
performance of any covenant, condition or agreement (not within
preceding clauses VIII(a) or VIII(b) or within clause VIII(d)(ii)) to
be observed or performed on the part of the Parent or any of its
subsidiaries pursuant to the terms of this Agreement, any of the
Notes, any of the Security Documents or any other Loan Document; or
(ii) default shall be made on the due observance or performance of
Sections 6.01, 6.02, 6.07, 6.09, 6.10, 6.11, 6.12(a), 6.12(b),
6.12(d), 6.13, 7.12, 7.15 and/or 7.16 of this Agreement, and such
default under this clause (d)(ii) shall not be cured by the Borrowers
within a period of 10 days after the Parent or any of its subsidiaries
becomes aware, or after the Parent of any of its subsidiaries should
reasonably have become aware, of such default, whichever is earlier;
provided, however, that if such default under this clause (d)(ii) is
not curable within such 10 day period then such 10 day period shall be
extended by twenty (20) days to a total of thirty (30) days in the
event that the Borrowers shall, within such ten (10) day period and
continuously thereafter, diligently proceed to cure such default;
(e) the Parent, any Borrower, any Guarantor, any Grantor or any
subsidiary of any thereof shall (i) voluntarily commence any
proceeding or file any petition seeking relief under Title 11 of the
United States Code or any other Federal, state or foreign bankruptcy,
insolvency, liquidation or similar law, (ii) consent to the
institution of, or fail to contravene in a timely and appropriate
manner, any such proceeding or the filing of any such petition,
(iii) apply for or consent to the appointment of a receiver, trustee,
custodian, sequestrator or similar official for the Parent, such
Borrower, such Guarantor, such Grantor or such subsidiary or for a
substantial part of its property or assets, (iv) file an answer
admitting the material allegations of a petition filed against it in
any such proceeding, (v) make a general assignment for the benefit of
creditors, (vi) become unable, admit in writing its inability or fail
generally to pay its debts as they become due or (vii) take corporate
action for the purpose of effecting any of the foregoing;
(f) an involuntary proceeding shall be commenced or an
involuntary petition shall be filed in a court of competent
jurisdiction seeking (i) relief in respect of the Parent, any
Borrower, any Guarantor, any Grantor or any subsidiary of any thereof,
or of a substantial part of the property or assets of the Parent, any
Borrower, any Guarantor, any Grantor or any subsidiary of any thereof,
under Title 11 of the United States Code or any other Federal state or
foreign bankruptcy, insolvency, receivership or similar law, (ii) the
appointment of a receiver, trustee, custodian, sequestrator or similar
official for the Parent, any Borrower, any Guarantor, any Grantor or
any subsidiary of any thereof or for a substantial part of the
property of the Parent, any Borrower, any Guarantor, any Grantor or
any subsidiary of any thereof or (iii) the winding-up or liquidation
of the Parent any Borrower, any Guarantor, any Grantor or any
subsidiary of any thereof; and such proceeding or petition shall
continue undismissed for 45 days or an order or decree approving or
ordering any of the foregoing shall continue unstayed and in effect
for 45 days;
(g) default shall be made with respect to any Indebtedness or
obligations under a capitalized lease of the Parent, any Borrower,
any Guarantor, any Grantor or any subsidiary of any thereof, whose
unpaid principal payments exceed in the aggregate $100,000 at any time
(excluding Indebtedness outstanding hereunder) if the effect of any
such default shall be to accelerate, or to permit the holder or
obligee of any such Indebtedness or obligations under a capitalized
lease (or any trustee on behalf of such holder or obligee) at its
option to accelerate, the maturity of such Indebtedness or obligations
under a capitalized lease, or if any such Indebtedness or obligations
under a capitalized lease shall not be paid when scheduled to be due
and payable (taking into account any grace periods);
(h) (i) a Reportable Event shall have occurred with respect to a
Pension Plan, (ii) the filing by the Parent, any Borrower, any ERISA
Affiliate, or an administrator of any Plan of a notice of intent to
terminate such a Plan in a "distress termination" under the provisions
of Section 4041 of ERISA, (iii) the receipt of notice by the Parent,
any Borrower, any ERISA Affiliate, or an administrator of a Plan that
the PBGC has instituted proceedings to terminate (or appoint a trustee
to administer) such a Pension Plan, (iv) any other event or condition
exists which might, in the opinion of the Agent, constitute grounds
under the provisions of Section 4042 of ERISA for the termination of
(or the appointment of a trustee to administer) any Pension Plan by
the PBGC, (v) a Pension Plan shall fail to maintain the minimum
funding standard required by Section 412 of the Code for any plan year
or a waiver of such standard is sought or granted under the provisions
of Section 412(d) of the Code, (vi) except for the withdrawal set
forth on Schedule 4.10 with respect to the Tri-State Pension Fund
incur a partial or complete withdrawal from a Multiemployer Plan that
results in any liability to the Parent, any Borrower, or any ERISA
Affiliate; (vii) the Parent, any Borrower or any ERISA Affiliate has
incurred, or is likely to incur, a liability under the provisions of
Section 4062, 4063, 4064, 4201 or 4203 of ERISA, (viii) the Parent,
any Borrower or any ERISA Affiliate fails to pay the full amount of an
installment required under Section 412(m) of the Code, (ix) the
occurrence of any other event or condition with respect to any Plan
which would constitute an event of default under any other agreement
entered into by the Parent, any Borrower or any ERISA Affiliate, and
in each case in clauses (i) through (ix) of this subsection (h), such
event or condition, together with all other such events or conditions,
if any, could subject the Parent, any Borrower or any ERISA Affiliate
to any taxes, penalties or other liabilities which, in the opinion of
the Agent, could have a Material Adverse Effect on the financial
condition of the Parent, the Borrowers and the ERISA Affiliates taken
as a whole;
(i) the Parent, any Borrower or any ERISA Affiliate (i) shall
have been notified by the sponsor of a Multiemployer Plan that it has
incurred any material withdrawal liability to such Multiemployer Plan,
and (ii) does not have reasonable grounds for contesting such
withdrawal liability and is not in fact contesting such withdrawal
liability in a timely and appropriate manner;
(j) a judgment (not reimbursed by insurance policies of the
Parent, any Borrower, any Guarantor, any Grantor or any subsidiary of
any thereof or, if an admission of coverage by the applicable
insurance company has been issued and delivered to the Agent, if not
reimbursable within 45 days of such judgment) or decree for the
payment of money, a fine or penalty which when taken together with all
other such judgments, decrees, fines and penalties shall exceed
$1,000,000 shall be rendered by a court or other tribunal against the
Parent, any Borrower, any Guarantor, any Grantor or any subsidiary of
any thereof;
(k) this Agreement, any Note, any of the Security Documents or
other Loan Documents shall for any reason cease to be, or shall be
asserted by the Parent, any Borrower, any Guarantor or any Grantor not
to be, a legal, valid and binding obligation of the Parent, such
Borrower, such Guarantor or such Grantor, as applicable, enforceable
in accordance with its terms, or the security interest or Lien
purported to be created by any of the Security Documents shall for any
reason cease to be, or be asserted by the Parent, any Borrower, any
Guarantor or any Grantor not to be, a valid, first priority perfected
security interest in any Collateral (except to the extent otherwise
permitted under this Agreement or any of the Security Documents);
(l) a Change of Control shall occur; or
(m) the Parent and the Borrowers shall have failed to obtain at
least $12,500,000 in Asset Redeployment Proceeds by the first
anniversary of the Closing Date
then, and in any such event (other than an event described in paragraph (e)
or (f) above), and at any time thereafter during the continuance of such
event, the Agent may, and upon the written request of the Required Lenders
shall, by written notice (or facsimile notice promptly confirmed in
writing) to the Borrowers, take any or all of the following actions at the
same or different times: (i) terminate forthwith all or any portion of the
Total Commitment and the obligations of NatWest to issue Letters of Credit
hereunder; and (ii) declare the Notes, any amounts then owing to the
Lenders or NatWest on account of drawings under any Letters of Credit and
all other Obligations to be forthwith due and payable, whereupon the
principal of such Notes, together with accrued interest and fees thereon
and any amounts then owing to the Lenders or NatWest on account of drawings
under any Letters of Credit and other liabilities of the Borrowers accrued
hereunder and all other Obligations, shall become forthwith due and
payable, without presentment, demand, protest or any other notice of any
kind, all of which are hereby expressly waived by each Borrower and each
Guarantor, anything contained herein or in the Notes to the contrary
notwithstanding; provided, however, that with respect to a default
described in paragraph (e) or (f) above, the Total Commitment and the
obligation of NatWest to issue Letters of Credit shall automatically
terminate and the principal of the Notes, together with accrued interest
and fees thereon and any amounts then owing to the Lenders and NatWest on
account of drawings under any Letters of Credit and any other liabilities
of any Borrower accrued hereunder and all other Obligations shall
automatically become due and payable, without presentment, demand, protest
or other notice of any kind, all of which are hereby expressly waived by
each Borrower and each Guarantor, anything contained herein or in the Notes
to the contrary notwithstanding.
During the continuance of an Event of Default, the Agent shall
have and may exercise all rights and remedies of a mortgagee or a secured
party under the Uniform Commercial Code in effect in the State of New York
at such time, whether or not applicable to the affected Collateral, and
otherwise, including, without limitation, the right to foreclose the Liens
granted herein or in any of the Security Documents by any available
judicial procedure and/or to take possession of any or all of the
Collateral, the other security for the Obligations and the books and
records relating thereto, with or without judicial process; for the
purposes of the preceding sentence, the Agent may enter upon any or all of
the premises where any of the Collateral, such other security or books or
records may be situated and take possession and remove the same therefrom;
provided, however, with respect to Events of Default other than under
Section VIII(a), Section VIII(b), Section VIII(c), Section VIII(e), Sec-
tion VIII(f) and/or Section VIII(k), in recognition of the obligations of
the Parent and its subsidiaries under the Wakefern Shareholder Agreement,
the Agent and the Lenders agree that if the Borrower promptly after such
Event of Default institutes and maintains asset deployment programs or
other actions intended to sell assets of the Parent and subsidiaries (which
program and actions shall be sufficient to repay all Obligations under this
Agreement and shall be otherwise acceptable to the Agent and the Lenders in
their good faith judgment), then the Agent and the Lenders shall not
foreclose on any Collateral at any time prior to the date that is sixty
days after the Default which gave rise to such Event of Default; provided,
however, that all Obligations under this Agreement shall be repaid no later
than the expiration of such sixty day period, and provided, further, that
the foregoing proviso shall not affect any other rights or remedies of the
Agent or any Lender during such sixty day period (including the right to
terminate the Commitment and to accelerate all Obligations).
The Agent shall have the right, in its sole discretion, to
determine which rights, Liens or remedies it shall at any time pursue,
relinquish, subordinate, modify or take any other action with respect
thereto, without in any way modifying or affecting any of them or any of
the Lenders', NatWest's or the Agent's rights hereunder or under any other
Loan Documents; and any moneys, deposits, accounts, balances or other
property which may come into any Lender's, NatWest's or the Agent's hands
at any time or in any manner, may be retained by such Lender, NatWest or
the Agent and applied to any of the Obligations.
In case any one or more Events of Default shall occur and be
continuing, the Agent may proceed to protect and enforce its rights or
remedies either by suit in equity or by action at law, or both, whether for
the specific performance of any covenant, agreement or other provision
contained herein or in any document or instrument delivered in connection
with or pursuant to this Agreement or any other Loan Document, or to
enforce the payment of the Obligations or any other legal or equitable
right or remedy.
No right or remedy herein conferred upon the Lenders, NatWest or
the Agent is intended to be exclusive of any other right or remedy
contained herein or in any instrument or document delivered in connection
with or pursuant to this Agreement or any other Loan Document, and every
such right or remedy shall be cumulative and shall be in addition to every
other such right or remedy contained herein and therein or now or hereafter
existing at law or in equity or by statute, or otherwise.
No course of dealing between the Parent, any Borrower or any
Grantor or Guarantor and any Lender, NatWest or the Agent or any failure or
delay on the part of any Lender, NatWest or the Agent in exercising any
rights or remedies hereunder or under any other Loan Document shall operate
as a waiver of any rights or remedies of the Lenders, NatWest or the Agent
and no single or partial exercise of any rights or remedies hereunder or
under any other Loan Document shall operate as a waiver or preclude the
exercise of any other rights or remedies hereunder or under any other Loan
Document or of the same right or remedy on a future occasion.
After the occurrence of an Event of Default and acceleration of
the Obligations as herein provided, the proceeds of the Collateral and of
property of persons other than the Borrowers and the Grantors securing the
Obligations and collections from each Guarantee of the Obligations shall be
applied by the Agent to payment of the Obligations in the following order,
unless a court of competent jurisdiction shall otherwise direct or if
otherwise provided in a Security Document:
(i) FIRST, to payment of all reasonable costs and expenses
of the Agent, NatWest and the Lenders incurred in connection with the
preservation, collection and enforcement of the Obligations or any
Guarantee thereof, or of any of the Liens granted to the Agent
pursuant to the Security Documents or otherwise, including, without
limitation, any amounts advanced by the Agent, NatWest or the Lenders
to protect or preserve the Collateral;
(ii) SECOND, to payment of that portion of the Obligations
constituting accrued and unpaid interest and fees and indemnities due
and payable under Section 2 hereof, ratably amongst the Agent, NatWest
and the Lenders in accordance with the proportion which the accrued
interest and fees and indemnities due and payable under Section 2
hereof constituting the Obligations owing to the Agent, NatWest and
each such Lender at such time bears to the aggregate amount of accrued
interest and fees and indemnities payable under Section 2 hereof
constituting the Obligations owing to the Agent, NatWest and all of
the Lenders at such time until such interest, fees and indemnities
shall be paid in full;
(iii) THIRD, to the Agent on behalf of NatWest in an amount
equal to 105% of the then aggregate undrawn amount of all outstanding
Letters of Credit to be held by the Agent for the payment of the
Obligations with respect thereto when and if due and payable;
(iv) FOURTH, to payment of the principal of the Obligations
(which shall exclude all Obligations with respect to the undrawn
amount of Letters of Credit), ratably amongst the Lenders and NatWest
in accordance with the proportion which the principal amount of the
Obligations (which shall exclude all Obligations with respect to the
undrawn amount of Letters of Credit) owing to each such Lender and
NatWest bears to the aggregate principal amount of the Obligations
(which shall exclude all Obligations with respect to the undrawn
amount of Letters of Credit) owing to all of the Lenders and NatWest
until such principal of the Obligations shall be paid in full;
(v) FIFTH, to the payment of all other Obligations, ratably
amongst the Lenders in accordance with the proportion which the amount
of such other Obligations owing to each such Lender bears to the
aggregate principal amount of such other Obligations owing to all of
the Lenders until such other Obligations shall be paid in full; and
(vi) SIXTH, the balance, if any, after all of the
Obligations have been satisfied, shall, except as otherwise provided
in the Security Documents, be deposited by the Agent in an operating
account of the Borrowers with the Agent designated by the Borrowers,
or paid over to such other person or persons as may be required by
law.
In the event that the amount of monies received by the Agent
under clause (iii) above with respect to a Letter of Credit for which there
are undrawn amounts at the time of the Agent's receipt of such monies shall
exceed the amount of actual payments NatWest shall have made with respect
to drawings under such Letter of Credit after the Agent's receipt of such
monies, which determination shall be made after such Letter of Credit has
been terminated or has expired, then the Agent shall apply such excess
monies and cash collateral in accordance with the immediately preceding
paragraph.
The Borrowers and the Guarantors acknowledge and agree that they
shall remain liable to the extent of any deficiency between the amount of
the proceeds of the Collateral and collections under the Guarantees of the
Obligations and the aggregate amount of the sums referred to in the first
through fifth clauses above.
IX. AGENT
In order to expedite the transactions contemplated by this
Agreement, NatWest Bank N.A. is hereby appointed to act as Agent on behalf
of the Lenders. Each of the Lenders and each subsequent holder of any Note
or issuer of any Letter of Credit by its acceptance thereof, irrevocably
authorizes the Agent to take such action on its behalf and to exercise such
powers hereunder and under the Security Documents and other Loan Documents
as are specifically delegated to or required of the Agent by the terms
hereof and the terms thereof together with such powers as are reasonably
incidental thereto. Neither the Agent nor any of its directors, officers,
employees or agents shall be liable as such for any action taken or omitted
to be taken by it or them hereunder or under any of the Security Documents
and other Loan Documents or in connection herewith or therewith (a) at the
request or with the approval of the Required Lenders (or, if otherwise
specifically required hereunder or thereunder, the consent of all the
Lenders) or (b) in the absence of its or their own gross negligence, bad
faith or willful misconduct.
The Agent is hereby expressly authorized on behalf of the
Lenders, without hereby limiting any implied authority, (a) to receive on
behalf of each of the Lenders any payment of principal of or interest on
the Notes outstanding hereunder and all other amounts accrued hereunder
paid to the Agent, and promptly to distribute to each Lender its proper
share of all payments so received, (b) to distribute to each Lender copies
of all notices, agreements and other material as provided for in this
Agreement or in the Security Documents and other Loan Documents as received
by such Agent and (c) to take all actions with respect to this Agreement
and the Security Documents and other Loan Documents as are specifically
delegated to the Agent.
In the event that (a) the Borrowers fail to pay when due the
principal of or interest on any Note, any amount payable under or with
respect to any Letter of Credit, or any fee payable hereunder or (b) the
Agent receives written notice of or otherwise becomes aware of the occur-
rence of a Default or an Event of Default, the Agent shall promptly give
written notice thereof to the Lenders, and shall take such action with
respect to such Event of Default or other condition or event as it shall be
directed to take by the Required Lenders (but shall not be required to take
any such actions which violate any law or any term of this Agreement or any
other Loan Document); provided, however, that, unless and until the Agent
shall have received such directions, the Agent may take such action or
refrain from taking such action hereunder or under the Security Documents
or other Loan Documents with respect to a Default or Event of Default as it
shall deem advisable in the best interests of the Lenders.
The Agent shall not be responsible in any manner to any of the
Lenders for the effectiveness, enforceability, perfection, value, genui-
neness, validity or due execution of this Agreement, the Notes or any of
the other Loan Documents or Collateral or any other agreements or
certificates, requests, financial statements, notices or opinions of
counsel or for any recitals, statements, warranties or representations
contained herein or in any such instrument or be under any obligation to
ascertain or inquire as to the performance or observance of any of the
terms, provisions, covenants, conditions, agreements or obligations of this
Agreement or any of the other Loan Documents or any other agreements on the
part of any Borrower or any Guarantor and, without limiting the generality
of the foregoing, the Agent shall, in the absence of knowledge to the
contrary, be entitled to accept any certificate furnished pursuant to this
Agreement or any of the other Loan Documents as conclusive evidence of the
facts stated therein and shall be entitled to rely on any note, notice,
consent, certificate, affidavit, letter, telegram, teletype message,
statement, order or other document which it believes in good faith to be
genuine and correct and to have been signed or sent by the proper person or
persons. It is understood and agreed that the Agent may exercise its
rights and powers under other agreements and instruments to which it is or
may be a party, and engage in other transactions with any Borrower or any
Guarantor, as though it were not Agent of the Lenders hereunder.
Neither the Agent nor any of its directors, officers, employees
or agents shall have any responsibility to any Borrower or any Guarantor on
account of the failure or delay in performance or breach by any Lender
other than the Agent of any of its obligations hereunder or to any Lender
on account of the failure of or delay in performance or breach by any other
Lender or any Borrower or any Guarantor of any of their respective
obligations hereunder or in connection herewith.
The Agent may consult with legal counsel selected by it in
connection with matters arising under this Agreement or any of the other
Loan Documents and any action taken or suffered in good faith by it in
accordance with the opinion of such counsel shall be full justification and
protection to it. The Agent may exercise any of its powers and rights and
perform any duty under this Agreement or any of the other Loan Documents
through agents or attorneys.
The Agent and the Borrowers may deem and treat the payee of any
Note as the holder thereof until written notice of transfer shall have been
delivered as provided herein by such payee to the Agent and the Borrowers.
With respect to the Loans made hereunder, the Notes issued to it
and any other Credit Event applicable to it, the Agent in its individual
capacity and not as an Agent shall have the same rights, powers and duties
hereunder and under any other Loan Document executed in connection herewith
as any other Lender and may exercise the same as though it were not the
Agent, and the Agent and its affiliates may accept deposits from, lend
money to and generally engage in any kind of business with any Borrower,
any Guarantor or other affiliate thereof as if it were not the Agent.
Each Lender agrees (i) to reimburse the Agent in the amount of
such Lender's pro rata share (based on its Total Commitment hereunder) of
any expenses incurred for the benefit of the Lenders by the Agent,
including counsel fees and compensation of agents paid for services
rendered on behalf of the Lenders, not reimbursed by the Borrowers and
(ii) to indemnify and hold harmless the Agent and any of its directors,
officers, employees or agents, on demand, in the amount of its pro rata
share, from and against any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind or nature whatsoever which may be imposed on,
incurred by or asserted against it or such directors, officers, employees
or agents in its or their capacity as, or acting on behalf of, the Agent in
any way relating to or arising out of this Agreement or any of the other
Loan Documents or any action taken or omitted by it or any of them under
this Agreement or any of the other Loan Documents, to the extent not
reimbursed by the Borrowers; provided, however, that no Lender shall be
liable to the Agent for any portion of such liabilities, obligations,
losses, damages, penalties, actions, judgment, suits, costs, expenses or
disbursements resulting from the gross negligence or willful misconduct of
the Agent or any of its directors, officers, employees or agents.
Each Lender acknowledges that it has, independently and without
reliance upon the Agent, NatWest or any other Lender and based on such
documents and information as it has deemed appropriate, made its own credit
analysis and decision to enter into this Agreement and any other Loan
Document to which such Lender is party. Each Lender also acknowledges that
it will, independently and without reliance upon the Agent, NatWest or any
other Lender and based on such documents and information as it shall deem
appropriate at the time, continue to make its own decisions in taking or
not taking action under or based upon this Agreement, any other Loan
Document, any related agreement or any document furnished hereunder.
Subject to the appointment and acceptance of a successor Agent as
provided below, the Agent may resign at any time by notifying the Lenders
and the Borrowers. Upon any such resignation, the Lenders shall have the
right to appoint a successor Agent. If no successor Agent shall have been
so appointed by such Lenders and shall have accepted such appointment
within 30 days after the retiring Agent gives notice of its resignation,
then the retiring Agent may, on behalf of the Lenders, appoint a successor
Agent which shall be a bank with an office (or an affiliate with an office)
in New York, New York, having a combined capital and surplus of at least
$500,000,000. Upon the acceptance of any appointment as Agent hereunder by
a successor bank, such successor shall thereupon succeed to and become
vested with all the rights, powers, privileges and duties of the retiring
Agent and the retiring Agent shall be discharged from its duties and
obligations hereunder and under each of the other Loan Documents. After
any Agent's resignation hereunder, the provisions of this Article shall
continue in effect for its benefit in respect of any actions taken or
omitted to be taken by it while it was acting as Agent.
The Lenders hereby acknowledge that the Agent shall be under no
duty to take any discretionary action permitted to be taken by the Agent
pursuant to the provisions of this Agreement or any of the other Loan
Documents unless it shall be requested in writing to do so by the Required
Lenders (and the Agent shall not be obligated to take any such requested
action which violates applicable law or any terms of this Agreement or any
other Loan Document).
X. CASH RECEIPTS COLLECTION
SECTION 10.01. Collection of Cash. (a) The Parent and its
subsidiaries will, at their own cost and expense, cause all payments
received by them from any source, whether in the form of cash, checks,
notes, drafts, bills of exchange, money orders, credit card payments, debit
card payments or otherwise (referred to herein as "Payments"), (i) to be
deposited daily in precisely the form received (but with any endorsements
of the Parent and its subsidiaries necessary for deposit or collection) in
one or more bank accounts maintained by the Parent and its subsidiaries and
acceptable to the Agent in which only the Payments will be deposited, (ii)
to be transferred daily from the accounts referred to in clause (i) to one
or more concentration accounts designated by the Agent with a bank
acceptable to the Agent in which only the Payments will be deposited, and
(iii) cause the Payments to be transferred daily from the concentration
accounts referred to in clause (ii) to an account of the Parent and its
subsidiaries maintained with the Agent, such Payments to be subject to
withdrawal by the Agent only, as hereinafter provided. Until such Payments
are deposited with the Agent in accordance with the prior sentence, such
Payments shall be deemed to be held in trust by the Parent and its
subsidiaries for and as the Lenders' property and shall not be commingled
with the other funds of the Parent and its subsidiaries. All Payments that
are deposited with the Agent in accordance with the foregoing will, if
deposited by 1:00 p.m. (New York time), be applied by the Agent to reduce
the outstanding balance of the Revolving Loans and thereafter other
Obligations then due and payable, subject to final collection in cash of
the item deposited. Each bank requested by the Agent at which an account
referred to in clause (i) of the first sentence of this Section 10.01(a) is
maintained and each bank at which a concentration account referred to in
clause (ii) of such sentence shall execute and deliver to the Agent such
agreements, in form and substance satisfactory to the Agent, as the Agent
shall request with respect to such accounts, including, without limitation,
with respect to prohibitions on the Parent and its subsidiaries withdrawing
funds from such accounts or otherwise directing or modifying actions with
respect to such accounts.
Upon the occurrence and continuance of an Event of Default, the
Agent may send a notice of assignment and/or notice of the Agent's security
interest to any and all third parties holding or otherwise concerned with
any of the Collateral, and thereafter the Agent shall have the sole right
to collect and/or take possession of the Collateral and the books and
records relating thereto.
(b) (i) The Parent and each Borrower hereby constitutes the
Agent or the Agent's designee as such person's attorney-in-fact with power
to endorse its name upon any notes, acceptances, checks, drafts, money
orders or other evidences of payment or Collateral that may come into its
possession; upon the occurrence of an Event of Default, to open and dispose
of all mail received by the Parent and its subsidiaries and to notify the
Postal Service authorities to change the address for delivery of mail
addressed to such person to such address as the Agent may designate; and to
do all other acts and things necessary to carry out this Agreement. All
acts of said attorney or designee are hereby ratified and approved, and
said attorney or designee shall not be liable for any acts of omission or
commission, for any error of judgment or for any mistake of fact or law,
provided that the Agent or its designee shall not be relieved of liability
to the extent it is determined by a final judicial decision that its act,
error or mistake constituted gross negligence, bad faith or willful
misconduct. This power of attorney being coupled with an interest is
irrevocable until all of the Obligations are paid in full and this
Agreement and the Total Commitment is terminated.
(ii) The Agent, without notice to or consent of the Parent
or any Borrower, upon the occurrence and during the continuance of an Event
of Default, shall have the right to receive, endorse, assign and/or deliver
in its name or the name of the Parent or any Borrower any and all checks,
drafts and other instruments for the payment of money relating to the
Collateral, and the Parent and each Borrower hereby waives notice of
presentment, protest and non-payment of any instrument so endorsed.
(c) Nothing herein contained shall be construed to constitute
the Parent or any Borrower as agent of the Agent for any purpose
whatsoever, and the Agent shall not be responsible or liable for any
shortage, discrepancy, damage, loss or destruction of any part of the
Collateral wherever the same may be located and regardless of the cause
thereof (except to the extent it is determined by a final judicial decision
that the Agent's or a Lender's act or omission constituted gross
negligence, bad faith or willful misconduct). The Agent and the Lenders
shall not, under any circumstances or in any event whatsoever, have any
liability for any error or omission or delay of any kind occurring in the
settlement, collection or payment of any of the Collateral or for any
damage resulting therefrom (except to the extent it is determined by a
final judicial decision that the Agent's or such Lender's error, omission
or delay constituted gross negligence, bad faith or willful misconduct).
The Agent and the Lenders do not, by anything herein or in any assignment
or otherwise, assume the Parent's or any Borrower's obligations under any
contract or agreement assigned to the Agent or the Lenders, and the Agent
and the Lenders shall not be responsible in any way for the performance by
the Parent or any Borrower of any of the terms and conditions thereof.
(d) If any of the Collateral includes a charge for any tax
payable to any governmental tax authority, the Agent is hereby authorized
(but in no event obligated) in its discretion to pay the amount thereof to
the proper taxing authority for the account of the Borrowers and to charge
the Borrowers' account therefor. The Borrowers shall notify the Agent if
any Collateral include any tax due to any such taxing authority and, in the
absence of such notice, the Agent shall have the right to retain the full
proceeds of such Collateral and shall not be liable for any taxes that may
be due from the Borrowers by reason of the sale of any of the Collateral.
SECTION 10.02. Monthly Statement of Account. The Agent shall
render to the Borrowers each month a statement of the Borrowers' account,
which shall constitute an account stated and shall be deemed to be correct
and accepted by and be binding upon the Borrowers unless the Agent receives
a written statement of the Borrowers' exceptions within 30 days after such
statement was rendered to the Borrowers.
SECTION 10.03. Collateral Custodian. Upon the occurrence and
continuance of an Event of Default, the Agent may at any time and from time
to time employ and maintain in the premises of the Parent and/or the
Borrowers a custodian selected by the Agent who shall have full authority
to do all acts necessary to protect the Agent's and Lenders' interests and
to report to the Agent thereon. The Parent and each Borrower hereby agrees
to cooperate with any such custodian and to do whatever the Agent may
reasonably request to preserve the Collateral. All costs and expenses
incurred by the Agent by reason of the employment of the custodian shall be
charged to the Borrowers' account and added to the Obligations.
XI. MISCELLANEOUS
SECTION 11.01. Notices. Notices, consents and other
communications provided for herein shall be in writing and shall be
delivered or mailed by certified mail return receipt requested (or in the
case of telex or facsimile communication, delivered by telex, graphic
scanning, telecopier or other telecommunications equipment, with receipt
confirmed with a copy mailed as aforesaid) addressed,
(a) if to the Parent, any Borrower, Guarantor, or Grantor, at
922 Highway 33, Building 6, Suite 1, Freehold, New Jersey 07728,
Attention: Mr. Joseph Saker, President and Mr. Michael Shapiro,
Senior Vice President, with a copy to Rosenman & Colin, 575 Madison
Avenue, New York, NY 10022, Attention: Arthur Borden, Esq.;
(b) if to the Agent, at NatWest Bank N.A., 175 Water Street, New
York, New York 10038, Attention: Mr. Thomas Maiale; and
(c) if to any Lender, at the address set forth below its name in
Schedule 2.01 annexed hereto.
All notices and other communications given to any party hereto in
accordance with the provisions of this Agreement shall be deemed to have
been given on the date of receipt if hand delivered or three days after
being sent by registered or certified mail, postage prepaid, return receipt
requested, if by mail, or upon receipt if by any telex, facsimile or other
telecommunications equipment, in each case addressed to such party as
provided in this Section 11.01 or in accordance with the latest unrevoked
direction from such party.
SECTION 11.02. Survival of Agreement. All covenants,
agreements, representations and warranties made by the Parent or any of its
subsidiaries herein and in the certificates or other instruments prepared
or delivered in connection with this Agreement, any of the Security
Documents or any other Loan Document, shall be considered to have been
relied upon by the Lenders and shall survive the making by the Lenders of
the Loans and the execution and delivery to the Lenders of the Notes and
occurrence of any other Credit Event and shall continue in full force and
effect as long as the principal of or any accrued interest on the Notes or
any other fee or amount payable under the Notes or this Agreement or any
other Loan Document is outstanding and unpaid and so long as the Total
Commitment has not been terminated.
SECTION 11.03. Successors and Assigns; Participations.
(a) Whenever in this Agreement any of the parties hereto is referred to,
such reference shall be deemed to include the successors and assigns of
such party; and all covenants, promises and agreements by or on behalf of
the Parent, any Borrower, any Guarantor, any Grantor, any ERISA Affiliate,
any subsidiary of any thereof, the Agent or the Lenders, that are contained
in this Agreement shall bind and inure to the benefit of their respective
successors and assigns. Without limiting the generality of the foregoing,
each Borrower specifically confirms that any Lender may at any time and
from time to time pledge or otherwise grant a security interest in any Loan
or any Note (or any part thereof) to any Federal Reserve Bank. The
Borrowers may not assign or transfer any of their rights or obligations
hereunder without the written consent of all the Lenders.
(b) Each Lender, without the consent of the Borrowers, may sell
participations to one or more banks or other entities in all or a portion
of its rights and obligations under this Agreement (including, without
limitation, all or a portion of its Commitment) and the Loans owing to it
and interest in undrawn Letters of Credit and the Notes held by it);
provided, however, that (i) such Lender's obligations under this Agreement
(including, without limitation, its Commitment, shall remain unchanged,
(ii) such Lender shall remain solely responsible to the other parties
hereto for the performance of such obligations, (iii) the banks or other
entities buying participations shall be entitled to the cost protection
provisions contained in Sections 2.10(a) (except to the extent that
application of such Section 2.10(a) to such banks and entities would cause
any Borrower to make duplicate payments thereunder), and 2A.04 hereof, but
only to the extent any of such Sections would be available to the Lender
which sold such participation, and (iv) the Borrowers, the Agent and the
other Lenders shall continue to deal solely and directly with such Lender
in connection with such Lender's rights and obligations under this
Agreement; provided, further, however, that each Lender shall retain the
sole right and responsibility to enforce the obligations of the Parent, the
Borrowers, Grantors and the Guarantors relating to the Loans, including,
without limitation, the right to approve any amendment, modification or
waiver of any provision of this Agreement, other than amendments,
modifications or waivers with respect to any fees payable hereunder or the
amount of principal or the rate of interest payable on, or the dates fixed
for any payment of principal of or interest on, the Loans in which such
entity is participating or the release of all Collateral.
(c) Each Lender may assign and delegate to any one or more banks
or other entities with the prior written consent of the Borrowers (which
shall not be unreasonably withheld or delayed) and the Agent (which shall
not be unreasonably withheld or delayed), all or a portion of its
interests, rights and obligations under this Agreement and the other Loan
Documents (including, without limitation, all or a portion of its
Commitment and the same portion of the Loans and interest in undrawn
Letters of Credit at the time owing to it and the Note or Notes held by
it), provided, however, that (i) each such assignment shall be of a
constant, and not a varying, percentage of all of the assigning Lender's
rights and obligations under this Agreement, which shall include the same
percentage interest in the Revolving Loans, Term Loan A, Term Loan B and
Term Loan C, interest in undrawn and unreimbursed Letters of Credit and
Notes, (ii) the amount of the Commitment of the assigning Lender being
assigned pursuant to each such assignment (determined as of the date the
Assignment and Acceptance with respect to such assignment is delivered to
the Agent) shall be in a minimum principal amount of $10,000,000 (provided
that this clause (ii) shall have no force and effect in the event that an
Event of Default shall have been in existence for greater than sixty (60)
days after written notice by the Agent to the Borrower of such Event of
Default, unless such Event of Default shall have been waived) and (iii) the
parties to each such assignment shall execute and deliver to the Agent, for
its acceptance and recording in the Register (as defined below), an
Assignment and Acceptance, together with any Note subject to such
assignment and a processing and recordation fee of $2,500 and, provided,
further, that NatWest shall at all times retain for its own account a
portion of the Total Commitment not less than that held by the Lender with
the largest portion of the Total Commitment. Upon such execution,
delivery, acceptance and recording and after receipt of the written consent
of the Agent, from and after the effective date specified in each
Assignment and Acceptance, which effective date shall be at least five (5)
Business Days after the execution thereof, (x) the assignee thereunder
shall be a party hereto and, to the extent provided in such Assignment and
Acceptance, have the rights and obligations of a Lender hereunder and under
the other Loan Documents and (y) the Lender which is assignor thereunder
shall, to the extent provided in such Assignment and Acceptance, be
released from its obligations under this Agreement with respect to the
period after the date of such assignment (and, in the case of an Assignment
and Acceptance covering all or the remaining portion of an assigning
Lender's rights and obligations under this Agreement, such Lender shall
cease to be a party hereto).
(d) By executing and delivering an Assignment and Acceptance,
the Lender which is assignor thereunder and the assignee thereunder confirm
to, and agree with, each other and the other parties hereto as follows:
(i) other than the representation and warranty that it is the legal and
beneficial owner of the interest being assigned thereunder free and clear
of any adverse claim, such Lender makes no representation or warranty and
assumes no responsibility with respect to any statements, warranties or
representations made in or in connection with this Agreement or the
execution, legality, validity, enforceability, perfection, genuineness,
sufficiency or value of this Agreement, the other Loan Documents or any
Collateral with respect thereto or any other instrument or document
furnished pursuant hereto or thereto; (ii) such Lender makes no
representation or warranty and assumes no responsibility with respect to
the financial condition of the Parent, any Borrower, or any Grantor or
Guarantor or the performance or observance by the Parent, any Borrower,
Grantor or the Guarantor of any of their respective obligations under this
Agreement, any of the other Loan Documents or any other instrument or
document furnished pursuant hereto or thereto; (iii) such assignee confirms
that it has received a copy of this Agreement and of the other Loan
Documents, together with copies of financial statements and such other
documents and information as it has deemed appropriate to make its own
credit analysis and decision to enter into such Assignment and Acceptance;
(iv) such assignee will, independently and without reliance upon the Agent,
such Lender or any other Lender and based on such documents and information
as it shall deem appropriate at the time, continue to make its own credit
decisions in taking or not taking action under this Agreement; (v) such
assignee appoints and authorizes the Agent to take such action as the Agent
on its behalf and to exercise such powers under this Agreement as are
delegated to the Agent by the terms hereof, together with such powers as
are reasonably incidental thereto; and (vi) such assignee agrees that it
will perform in accordance with their terms all of the obligations which by
the terms of this Agreement are required to be performed by it as a Lender.
(e) The Agent shall maintain at its address referred to in
Section 11.01 hereof a copy of each Assignment and Acceptance delivered to
it and a register for the recordation of the names and addresses of the
Lenders and the Commitment of, and principal amount of the Loans owing to,
each Lender from time to time (the "Register"). The entries in the
Register shall be conclusive, in the absence of manifest error, and the
Borrowers, the Agent and the Lenders may treat each person whose name is
recorded in the Register as a Lender hereunder for all purposes of this
Agreement. The Register shall be available for inspection by the Borrowers
or any Lender at any reasonable time and from time to time upon reasonable
prior notice.
(f) Upon its receipt of an Assignment and Acceptance executed by
an assigning Lender and an assignee together with any Note or Notes subject
to such assignment and the written consent to such assignment, the Agent
shall, if such Assignment and Acceptance has been completed and is
precisely in the form of Exhibit F annexed hereto, (i) accept such
Assignment and Acceptance, (ii) record the information contained therein in
the Register and (iii) give prompt notice thereof to the Lenders and the
Borrowers. Within five (5) Business Days after receipt of such notice, the
Borrowers, at their own expense, shall execute and deliver to the Agent in
exchange for each surrendered Note or Notes a new Note or Notes to the
order of such assignee in an amount equal to its portion of the Commitment
assumed by it pursuant to such Assignment and Acceptance and, if the
assigning Lender has retained any Commitment hereunder, a new Note or Notes
to the order of the assigning Lender in an amount equal to the Commitment
retained by it hereunder. Such new Note or Notes shall be in an aggregate
principal amount equal to the aggregate principal amount of such surren-
dered Note or Notes, shall be dated the effective date of such Assignment
and Acceptance and shall otherwise be in substantially the form of Exhibit
A, Exhibit B-1, Exhibit B-2 or Exhibit B-3, as the case may be. Notes
surrendered to the Borrowers shall be canceled by the Borrowers.
(g) Notwithstanding any other provision herein, any Lender may,
in connection with any assignment or participation or proposed assignment
or participation pursuant to this Section 11.03, disclose to the assignee
or participant or proposed assignee or participant, any information,
including, without limitation, any Information, relating to any Borrower,
any Grantor or any Guarantor furnished to such Lender by or on behalf of
any Borrower in connection with this Agreement; provided, however, that
prior to any such disclosure, each such assignee or participant or proposed
assignee or participant shall agree to preserve the confidentiality of any
confidential Information relating to the Borrowers received from such
Lender.
SECTION 11.04. Expenses; Indemnity. (a) Each Borrower agrees
to pay all reasonable out-of-pocket expenses incurred by the Agent in
connection with the preparation of this Agreement, the Security Documents,
the Notes and the other Loan Documents or with any amendments,
modifications, waivers, extensions, renewals, renegotiations or work-outs
of the provisions hereof or thereof (whether or not the transactions hereby
contemplated shall be consummated) or incurred by the Agent, NatWest or any
of the Lenders in connection with the enforcement or protection of its
rights in connection with this Agreement or any of the other Loan Documents
or with the Loans made or the Notes or Letters of Credit issued hereunder,
or in connection with any pending or threatened action, proceeding, or
investigation relating to the foregoing, including but not limited to the
reasonable fees and disbursements of counsel for the Agent, NatWest and
each Lender and ongoing field examination expenses and charges. Without
limitation of the foregoing, each Borrower hereby agrees to reimburse the
Agent for any and all costs and expenses incurred in connection with audits
and field exams of the Parents' and its subsidiaries' property, assets,
business and operations performed at the request of the Agent by an
independent party selected by the Agent. Each Borrower further indemnifies
the Lenders and NatWest from and agrees to hold them harmless against any
documentary taxes, assessments or charges made by any governmental
authority by reason of the execution and delivery of this Agreement, the
Notes or the making of any Credit Events.
(b) Each Borrower indemnifies the Agent, NatWest and each Lender
and their respective directors, officers, employees and agents against, and
agrees to hold the Agent, NatWest, each Lender and each such person
harmless from, any and all losses, claims, damages, liabilities and related
expenses, including reasonable counsel fees and expenses, incurred by or
asserted against the Agent, NatWest, the Lender or any such person arising
out of, in any way connected with, or as a result of (i) the use of any of
the proceeds of the Loans or of any Letter of Credit, (ii) this Agreement,
any of the Security Documents, or the other documents contemplated hereby
or thereby, except, as to any Lender, as a result of a breach thereof by
such Lender (iii) the performance by the parties hereto and thereto of
their respective obligations hereunder and thereunder (including but not
limited to the making of the Total Commitment) and consummation of the
transactions contemplated hereby and thereby, (iv) breach of any
representation or warranty, or (v) any claim, litigation, investigation or
proceedings relating to any of the foregoing, whether or not the Agent,
NatWest, any Lender or any such person is a party thereto; provided,
however, that such indemnity shall not, as to the Agent, NatWest or any
Lender, apply to any such losses, claims, damages, liabilities or related
expenses to the extent that they result from the gross negligence, bad
faith or willful misconduct of the Agent, NatWest or any Lender.
(c) Each Borrower indemnifies, and agrees to defend and hold
harmless the Agent, NatWest and the Lenders and their respective officers,
directors, shareholders, agents and employees (collectively, the
"Indemnitees") from and against any loss, cost, damage, liability, lien,
deficiency, fine, penalty or expense (including, without limitation,
reasonable attorneys' fees and reasonable expenses for investigation,
removal, cleanup and remedial costs and modification costs incurred to
permit, continue or resume normal operations of any property or assets or
business of any Borrower or any subsidiary thereof) arising from a
violation of, or failure to comply with any Environmental Law and to remove
any Lien arising therefrom except to the extent caused by the gross
negligence, bad faith or willful misconduct of any Indemnitee, which any of
the Indemnitees may incur or which may be claimed or recorded against any
of the Indemnitees by any person.
(d) The provisions of this Section 11.04 shall remain operative
and in full force and effect regardless of the expiration of the term of
this Agreement, the consummation of the transactions contemplated hereby,
the repayment of any of the Loans, the invalidity or unenforceability of
any term or provision of this Agreement or the Notes, or any investigation
made by or on behalf of the Agent, NatWest or any Lender. All amounts due
under this Section 11.04 shall be payable on written demand therefor.
SECTION 11.05. Applicable Law. THIS AGREEMENT AND THE NOTES
SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAW OF THE STATE
OF NEW YORK (OTHER THAN THE CONFLICTS OF LAWS PRINCIPLES THEREOF).
SECTION 11.06. Right of Setoff. If an Event of Default shall
have occurred and be continuing, upon the request of the Required Lenders
each Lender and NatWest shall and is hereby authorized at any time and from
time to time, to the fullest extent permitted by law, to set off and apply
any and all deposits (general or special, time or demand, provisional or
final) at any time held and other indebtedness at any time owing by such
Lender or NatWest to or for the credit or the account of the Parent or any
subsidiary thereof against any and all of the Obligations, the Notes held
by such Lender or any other Loan Document, irrespective of whether or not
such Lender or NatWest shall have made any demand under this Agreement, the
Notes or such other Loan Document and although such obligations may be
unmatured. Each Lender agrees to notify promptly the Agent and the
Borrowers after any such setoff and application made by such Lender, but
the failure to give such notice shall not affect the validity of such
setoff and application. The rights of each Lender and NatWest under this
Section are in addition to other rights and remedies (including, without
limitation, other rights of setoff) which may be available to such Lender
or NatWest.
SECTION 11.07. Payments on Business Days. (a) Should the
principal of or interest on the Notes or any fee or other amount payable
hereunder become due and payable on other than a Business Day, payment in
respect thereof may be made on the next succeeding Business Day (except as
otherwise specified in the definition of "Interest Period"), and such
extension of time shall in such case be included in computing interest, if
any, in connection with such payment.
(b) All payments by any Borrower and any Guarantor hereunder and
all Loans made by the Lenders hereunder shall be made in lawful money of
the United States of America in immediately available funds at the office
of the Agent set forth in Section 11.01 hereof.
SECTION 11.08. Waivers; Amendments; Final Maturity Date. (a)
No failure or delay of the Agent, any Lender or NatWest in exercising any
power or right hereunder or under any other Loan Document shall operate as
a waiver thereof, nor shall any single or partial exercise of any such
right or power, or any abandonment or discontinuance of steps to enforce
such right or power, preclude any other or further exercise thereof or the
exercise of any other right or power. The rights and remedies of the
Agent, the Lenders and NatWest hereunder or under any other Loan Document
are cumulative and not exclusive of any rights or remedies which they may
otherwise have. No waiver of any provision of this Agreement or the Notes
nor consent to any departure by the Parent, any Borrower or any Guarantor
therefrom shall in any event be effective unless the same shall be author-
ized as provided in paragraph (b) below, and then such waiver or consent
shall be effective only in the specific instance and for the purpose for
which given. No notice to or demand on the Parent, any Borrower or any
Guarantor in any case shall entitle it to any other or further notice or
demand in similar or other circumstances. Each holder of any of the Notes
shall be bound by any amendment, modification, waiver or consent authorized
as provided herein, whether or not such Note shall have been marked to
indicate such amendment, modification, waiver or consent.
(b) Neither this Agreement nor any provision hereof may be
waived, amended or modified except pursuant to an agreement or agreements
in writing entered into by the Borrowers and the Required Lenders;
provided, however, (i) that no such agreement shall (A) change the
principal amount of, or extend or advance the maturity of or the dates for
the payment of principal of or interest on, any Note or fees payable
hereunder or reduce the rate of interest on any Note or fees payable
hereunder, without the consent of each holder affected thereby, (B) change
the Commitment of any Lender or amend or modify the provisions of this
Section 11.08, Section 2.01, Section 2.06, Section 2.11, Section 6.16,
Section 11.04 or Section 2A.06 hereof or the definition of "Required
Lenders," or (C) release any substantial portion of the Collateral, in each
case without the prior written consent of each Lender affected thereby
except that the Agent may, without the prior written consent of any Lender,
release Collateral permitted to be sold pursuant to the terms of
Sections 7.02 and 7.05 hereof and (ii) that no such agreement shall amend,
modify or otherwise affect the rights or duties of the Agent or NatWest
under this Agreement or the other Loan Documents without the written
consent of the Agent. Each Lender and holder of any Note shall be bound by
any modification or amendment authorized by this Section regardless of
whether its Notes shall be marked to make reference thereto, and any
consent by any Lender or holder of a Note pursuant to this Section shall
bind any person subsequently acquiring a Note from it, whether or not such
Note shall be so marked.
(c) The Final Maturity Date shall be extended for successive
one-year periods, with the prior written consent of the Borrowers and all
of the Lenders for each such one-year extension (the Parent hereby agreeing
to give the Agent and the Lenders no more than ninety (90), and no less
than sixty (60), days' prior written notice of any request for extension).
Notwithstanding that this Agreement may not be extended, the Obligations
shall continue in full force and effect, and the duties, covenants and
other liabilities of the Borrowers hereunder and under the other Loan
Documents shall continue in full force and effect until all Obligations
have been paid in full.
SECTION 11.09. Severability. In the event any one or more of
the provisions contained in this Agreement or in the Notes should be held
invalid, illegal or unenforceable in any respect, the validity, legality
and enforceability of the remaining provisions contained herein or therein
shall not in any way be affected or impaired thereby. The parties shall
endeavor in good-faith negotiations to replace the invalid, illegal or
unenforceable provisions with valid provisions the economic effect of which
comes as close as possible to that of the invalid, illegal or unenforceable
provisions.
SECTION 11.10. Entire Agreement; Waiver of Jury Trial, etc. (a)
This Agreement, the Notes, the Fee Letter and the other Loan Documents
constitute the entire contract between the parties hereto relative to the
subject matter hereof. Any previous agreement among the parties hereto
with respect to the Transactions is superseded by this Agreement, the
Notes, the Fee Letter and the other Loan Documents. Except as expressly
provided herein or in the Notes, the Fee Letter or the Loan Documents
(other than this Agreement), nothing in this Agreement, the Notes, the Fee
Letter or in the other Loan Documents, expressed or implied, is intended to
confer upon any party, other than the parties hereto, any rights, remedies,
obligations or liabilities under or by reason of this Agreement, the Notes
or the other Loan Documents.
(b) EXCEPT AS PROHIBITED BY LAW, EACH PARTY HERETO HEREBY WAIVES
ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION
DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS
AGREEMENT, THE NOTES, ANY OF THE OTHER LOAN DOCUMENTS OR THE TRANSACTIONS.
(c) Except as prohibited by law, each party hereto hereby waives
any right it may have to claim or recover in any litigation referred to in
paragraph (b) of this Section 11.10 any special, exemplary, punitive or
consequential damages or any damages other than, or in addition to, actual
damages.
(d) Each party hereto (i) certifies that no representative,
agent or attorney of any Lender has represented, expressly or otherwise,
that such Lender would not, in the event of litigation, seek to enforce the
foregoing waivers and (ii) acknowledges that it has been induced to enter
into this Agreement, the Notes or the other Loan Documents, as applicable,
by, among other things, the mutual waivers and certifications herein.
SECTION 11.11. Confidentiality. The Agent and the Lenders agree
to keep confidential (and to cause their respective officers, directors,
employees, agents, advisors, consultants and representatives to keep
confidential) all information, materials and documents furnished by or on
behalf of the Parent or any of its subsidiaries to the Agent or any Lender
(the "Information"). Notwithstanding the foregoing, the Agent and each
Lender shall be permitted to disclose Information (i) to such of its
officers, counsel, directors, employees, agents, advisors, consultants and
representatives as need to know such Information in connection with its
participation in any of the Transactions or the administration of this
Agreement or the other Loan Documents with instructions to maintain the
confidentiality thereof; (ii) to the extent required by applicable laws and
regulations or by any subpoena or similar legal process, or requested by
any governmental agency or authority (the Agent and each Lender receiving
such subpoena or similar legal process agrees to use reasonable efforts to
promptly furnish the Borrowers with a copy thereof); (iii) to the extent
such Information (A) becomes publicly available other than as a result of a
breach of this Agreement, (B) becomes available to the Agent or such Lender
on a non-confidential basis from a source other than the Parent, any
Borrower, any Guarantor, any Grantor or any of their respective
subsidiaries or (C) was available to the Agent or such Lender on a
non-confidential basis prior to its disclosure to the Agent or such Lender
by the Parent, any Borrower, any Guarantor, any Grantor or any of their
respective subsidiaries; (iv) to the extent the Parent, any Borrower, any
Guarantor or any of their respective subsidiaries shall have consented to
such disclosure in writing; (v) in connection with the sale of any
Collateral pursuant to the provisions of any of the other Loan Documents;
or (vi) pursuant to Section 11.03(g) hereof.
SECTION 11.12. Submission to Jurisdiction. (a) Any legal
action or proceeding with respect to this Agreement or the Notes or any
other Loan Document may be brought in state courts located in the City of
New York or of the United States of America for the Southern District of
New York, and, by execution and delivery of this Agreement, the Parent,
each Borrower and each of the Guarantors hereby accept for themselves and
in respect of their property, generally and unconditionally, the
jurisdiction of the aforesaid courts.
(b) The Parent, each Borrower and each of the Guarantors hereby
irrevocably waive, in connection with any such action or proceeding, any
objection, including, without limitation, any objection to the laying of
venue or based on the grounds of forum non conveniens, which they may now
or hereafter have to the bringing of any such action or proceeding in such
respective jurisdictions.
(c) The Parent, each Borrower and each of the Guarantors hereby
irrevocably consent to the service of process of any of the aforementioned
courts in any such action or proceeding by the mailing of copies thereof by
registered or certified mail, postage prepaid, to each such person, as the
case may be, at its address set forth in Section 11.01 hereof.
(d) Nothing herein shall affect the right of the Agent or any
Lender to serve process in any other manner permitted by law or to commence
legal proceedings or otherwise proceed against the Parent, any Borrower or
any Guarantor in any other jurisdiction.
SECTION 11.13. Counterparts; Facsimile Signature. This
Agreement may be executed in counterparts, each of which shall constitute
an original but all of which when taken together shall constitute but one
contract, and shall become effective when copies hereof which, when taken
together, bear the signatures of each of the parties hereto shall be
delivered to the Agent. Delivery of an executed counterpart of a signature
page to this Agreement by telecopier shall be effective as delivery of a
manually executed signature page hereto.
SECTION 11.14. Headings. Article and Section headings and the
Table of Contents used herein are for convenience of reference only and are
not to affect the construction of, or to be taken into consideration in
interpreting, this Agreement.
SECTION 11.15. Defaulting Lender. (a) Notwithstanding anything
to the contrary contained herein, in the event that any Lender (x) refuses
(which refusal constitutes a breach by such Lender of its obligations under
this Agreement and which has not been retracted) to make available its
portion of any Loan or (y) notifies the Agent and/or the Borrower that it
does not intend to make available its portion of any Loan (if the actual
refusal would constitute a breach by such Lender of its obligations under
this Agreement and which has not been retracted) (each, a "Lender
Default"), all rights and obligations hereunder of the Lender (a
"Defaulting Lender") as to which a Lender Default is in effect and of the
other parties hereto shall be modified to the extent of express provisions
of this Section 11.15 while such Lender Default remains in effect.
(b) Loans shall be incurred pro rata from the Lenders (the "Non-
Defaulting Lenders") which are not Defaulting Lenders based on their
respective Revolving Commitments, and no Revolving Commitment of any Lender
or any pro rata share of any Loans required to be advanced by any Lender
shall be increased as a result of such Lender Default. Amounts received in
respect of principal of the Loans shall be applied to reduce the Loans of
each of the Lenders pro rata based on the aggregate of the outstanding
Loans of all of the Lenders at the time of such application; provided that,
such amount shall not be applied to any Loan of a Defaulting Lender at any
time when, and to the extent that, the aggregate amount of Loans of any
Non-Defaulting Lender exceeds such Non-Defaulting Lenders' pro rata share
of all Loans then outstanding.
(c) The Lenders shall participate in Letters of Credit on the
basis of their respective pro rata shares, and no participation or
reimbursement obligation of any Lender shall be increased as a result of a
failure of any Defaulting Lender to reimburse the Agent on NatWest's behalf
with respect to any amounts drawn on or otherwise payable with respect to
any Letters of Credit (the amount that any such Defaulting Lender has
failed to reimburse is hereinafter referred to as such Defaulting Lender's
"Unreimbursed Amount"). Until such Defaulting Lender has reimbursed the
Agent on NatWest's behalf for any Unreimbursed Amount owed by it, all
payments and other amounts received from any source with respect to the
Obligations or otherwise under or in connection with the Agreement
(including any letter of credit fees) which would otherwise be payable to
such Defaulting Lender will instead be paid to the Agent for the benefit of
NatWest for application to such Unreimbursed Amount until such Unreimbursed
Amount has been paid in full. A Defaulting Lender shall not be entitled to
receive any portion of the Commitment Fee, the letter of credit fees or any
other fees payable in connection with this Agreement, or any indemnity
arising from its commitment to make Loans and/or participate in Letters of
Credit.
(d) A Defaulting Lender shall not be entitled to give
instructions to the Agent or to approve, disapprove, consent to or vote on
any matters relating to this Agreement and the Loan Documents. All
amendments, waivers and other modifications of this Agreement and the Loan
Documents may be made without regard to a Defaulting Lender and, for
purposes of the definition of "Required Lenders", a Defaulting Lender shall
be deemed not to be a Lender, not to have a Revolving Commitment, not to
have a Term Commitment and not to have Loans outstanding.
(e) Other than as expressly set forth in this Section 11.15, the
rights and obligations of a Defaulting Lender (including the obligation to
indemnify the Agent) and the other parties hereto shall remain unchanged.
Nothing in this Section 11.15 shall be deemed to release any Defaulting
Lender from its Revolving Commitment hereunder, shall alter such Revolving
Commitment, shall operate as a waiver of any default by such Defaulting
Lender hereunder, or shall prejudice any rights which the Borrowers, the
Agent or any Lender may have against any Defaulting Lender as a result of
any default by such Defaulting Lender hereunder.
(f) In the event the Defaulting Lender is able to retroactively
cure to the satisfaction of the Agent and with the consent of the Borrowers
(which shall not be unreasonably withheld) the breach which caused a Lender
to become a Defaulting Lender, such Defaulting Lender shall upon notice to
Borrowers, no longer be a Defaulting Lender and shall be treated as a
Lender hereunder.
XII. GUARANTEES
Each Guarantor unconditionally guarantees, as a primary obligor
and not merely as a surety, jointly and severally with each other
Guarantor, the due and punctual payment of the principal of and interest on
each of the Notes, when and as due, whether at maturity, by acceleration,
by notice of prepayment or otherwise, and the due and punctual performance
of all other Obligations. Each Guarantor further agrees that the
Obligations may be extended and renewed, in whole or in part, without
notice to or further assent from it, and that it will remain bound upon its
guarantee notwithstanding any extension or renewal of any Obligations.
Each Guarantor waives presentment to, demand of payment from and
protest to the Borrowers of any of the Obligations, and also waives notice
of acceptance of its guarantee and notice of protest for nonpayment. The
obligations of a Guarantor hereunder shall not be affected by (a) the
failure of any Lender, NatWest or the Agent to assert any claim or demand
or to enforce any right or remedy against the Borrowers or any other
Guarantor under the provisions of this Agreement, the Notes or any of the
other Loan Documents or otherwise; (b) any rescission, waiver, amendment or
modification of any of the terms or provisions of this Agreement, the
Notes, any of the other Loan Documents, any guarantee or any other
agreement; (c) the release of any security held by the Agent for the
Obligations or any of them; or (d) the failure of any Lender, the Agent or
NatWest to exercise any right or remedy against any other Guarantor of the
Obligations.
Each Guarantor further agrees that its guarantee constitutes a
guarantee of payment when due and not of collection, and waives any right
to require that any resort be had by any Lender, the Agent or NatWest to
any security (including, without limitation, any Collateral) held for
payment of the Obligations or to any balance of any deposit account or
credit on the books of any Lender, the Agent or NatWest in favor of any
Borrower or any other person.
The obligations of each Guarantor hereunder shall not be subject
to any reduction, limitation, impairment or termination for any reason,
including, without limitation, any claim of waiver, release, surrender,
alteration or compromise, and shall not be subject to any defense or
setoff, counterclaim, recoupment or termination whatsoever by reason of the
invalidity, illegality or unenforceability of the Obligations or otherwise.
Without limiting the generality of the foregoing, the obligations of each
Guarantor hereunder shall not be discharged or impaired or otherwise
affected by the failure of the Agent, NatWest or any Lender to assert any
claim or demand or to enforce any remedy under this Agreement, the Notes or
under any other Loan Document, any guarantee or any other agreement, by any
waiver or modification of any provision thereof, by any default, failure or
delay, willful or otherwise, in the performance of the Obligations, or by
any other act or omission which may or might in any manner or to any extent
vary the risk of such Guarantor or otherwise operate as a discharge of such
Guarantor as a matter of law or equity.
Each Guarantor further agrees that its guarantee shall continue
to be effective or be reinstated, as the case may be, if at any time
payment, or any part thereof, of principal of or interest on any Obligation
is rescinded or must otherwise be returned by the Agent, NatWest or any
Lender upon the bankruptcy or reorganization of any Borrower or otherwise.
Each Guarantor hereby subordinates to the prior payment in full
in cash of all Obligations hereunder, all rights of subrogation against any
Borrower and its property and all rights of indemnification, contribution
and reimbursement from any Borrower and its property, in each case in
connection with this guarantee and any payments made hereunder, and
regardless of whether such rights arise by operation of law, pursuant to
contract or otherwise. IN WITNESS WHEREOF, the Parent, the Borrowers, the
Guarantors, the Agent and the Lenders have caused this Agreement to be duly
executed by their respective authorized officers as of the day and year first
above written.
FOODARAMA SUPERMARKETS, INC., as
Parent and as Guarantor
By:_____________________________
Name:
Title:
NEW LINDEN PRICE RITE, INC., as
Borrower and as Guarantor
By:_____________________________
Name:
Title:
SHOP RITE OF READING, INC., as
Borrower and as Guarantor
By:_____________________________
Name:
Title:
SHOP RITE OF MALVERNE, INC., as
Guarantor
By:_____________________________
Name:
Title:
NATWEST BANK N.A. (formerly
National Westminster Bank
USA), as Agent
By:_____________________________
Name:
Title:
NATWEST BANK N.A. (formerly
National Westminster Bank USA),
as Lender
By:_____________________________
Name:
Title:
CHEMICAL BANK, as Lender
By:_____________________________
Name:
Title:
IBJ SCHRODER BANK AND TRUST
COMPANY, as Lender
By:_____________________________
Name:
Title:
EXHIBIT A
FORM OF REVOLVING NOTE
New York, New York
_________ __, 199_
FOR VALUE RECEIVED, the undersigned, NEW LINDEN PRICE RITE, INC.,
a New Jersey corporation ("New Linden"), and SHOP RITE OF READING, INC., a
Pennsylvania corporation ("Reading", and together with New Linden, each a
"Maker" and collectively, the "Makers"), jointly and severally, hereby
promise to pay to the order of _____________________________ (the
"Lender"), at the office of NATWEST BANK N.A. (the "Agent"), 175 Water
Street, New York, New York 10038, on the Termination Date as defined in the
Revolving Credit and Term Loan Agreement dated as of ___________ ___, 1995,
among the Makers, Foodarama Supermarkets, Inc., a New Jersey corporation,
the Guarantors named therein, the Lenders named therein and the Agent (as
the same may be amended, restated, modified or supplemented from time to
time in accordance with its terms, the "Credit Agreement") or earlier as
provided for in the Credit Agreement, the lesser of the principal sum of
___________________ DOLLARS AND __________ CENTS ($_____________) or the
aggregate unpaid principal amount of all Revolving Loans from the Lender
pursuant to the terms of the Credit Agreement, in lawful money of the
United States of America in immediately available funds, and to pay
interest from the date thereof on the principal amount hereof from time to
time outstanding, in like funds, at said office, at a rate or rates per
annum and payable on such dates as determined pursuant to the terms of the
Credit Agreement.
The Makers promise to pay interest, on demand, on any overdue
principal and fees and, to the extent permitted by law, overdue interest
from their due dates at a rate or rates determined as set forth in the
Credit Agreement.
The Makers hereby waive diligence, presentment, demand, protest
and notice of any kind whatsoever. The non-exercise by the holder of any
of its rights hereunder in any particular instance shall not constitute a
waiver thereof in that or any subsequent instance.
All borrowings evidenced by this Revolving Note and all payments
and prepayments of the principal hereof and interest hereon and the
respective dates thereof shall be endorsed by the holder hereof on the
schedule attached hereto and made a part hereof, or on a continuation
thereof which shall be attached hereto and made a part hereof, or otherwise
recorded by such holder in its internal records; provided, however, that
the failure of the holder hereof to make such a notation or any error in
such a notation shall not in any manner affect the obligations of the
Makers to make payments of principal and interest in accordance with the
terms of this Revolving Note and the Credit Agreement.
This Revolving Note is one of the Notes referred to in the Credit
Agreement, which, among other things, contains provisions for the
acceleration of the maturity hereof upon the happening of certain events,
for optional and mandatory prepayment of the principal hereof prior to the
maturity hereof and for the amendment or waiver of certain provisions of
the Credit Agreement, all upon the terms and conditions therein specified.
THIS NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF
THE STATE OF NEW YORK AND ANY APPLICABLE LAWS OF THE UNITED STATES OF
AMERICA.
NEW LINDEN PRICE RITE, INC.
By: _________________________
Name:
Title:
SHOP RITE OF READING, INC.
By: _________________________
Name:
Title: Loans and Payment
Unpaid
Principal Name of
Amount and Payments Balance of Person Making
Date Type of Loan Principal Interest Note Notation
EXHIBIT B-1
FORM OF TERM NOTE A
New York, New York
_________ __, 199_
FOR VALUE RECEIVED, the undersigned, NEW
LINDEN PRICE RITE, INC., a New Jersey corporation ("New Linden"), and SHOP
RITE OF READING, INC., a Pennsylvania corporation ("Reading", and together
with New Linden, each a "Maker" and collectively, the "Makers"), jointly
and severally, hereby promise to pay to the order of
_____________________________ (the "Lender"), at the office of NATWEST BANK
N.A. (the "Agent"), at 175 Water Street, New York, New York 10038, on
_______________, 199_ or earlier as provided in the Revolving Credit and
Term Loan Agreement dated as of ___________ ___, 1995, among the Makers,
Foodarama Supermarkets, Inc., a New Jersey corporation, the Guarantors
named therein, the Lenders named therein and the Agent (as the same may be
amended, restated, modified or supplemented from time to time in accordance
with its terms, the "Credit Agreement"), the principal sum of
___________________ DOLLARS AND __________ CENTS ($_____________) (or such
lesser amount as shall be the unpaid principal balance of the Term Loan A
loaned by the Lender under the Credit Agreement), in lawful money of the
United States of America in immediately available funds, and to pay
interest from the date hereof on the principal amount hereof from time to
time outstanding, in like funds, at said office, at a rate or rates per
annum and payable on such dates as determined pursuant to the terms of the
Credit Agreement.
The Makers promise to pay interest, on demand,
on any overdue principal and fees and, to the extent permitted by law,
overdue interest from their due dates at a rate or rates determined as set
forth in the Credit Agreement.
The Makers hereby waive diligence,
presentment, demand, protest and notice of any kind whatsoever. The
non-exercise by the holder of any of its rights hereunder in any particular
instance shall not constitute a waiver thereof in that or any subsequent
instance.
All borrowings evidenced by this Term Note and
all payments and prepayments of the principal hereof and interest hereon
and the respective dates thereof shall be endorsed by the holder hereof on
the schedule attached hereto and made a part hereof, or on a continuation
thereof which shall be attached hereto and made a part hereof, or otherwise
recorded by such holder in its internal records; provided, however, that
the failure of the holder hereof to make such a notation or any error in
such a notation shall not in any manner affect the obligations of the
Makers to make payments of principal and interest in accordance with the
terms of this Term Note and the Credit Agreement.
This Term Note is one of the Notes referred to in the Credit Agreement,
which, among other things, contains provisions for the acceleration of the
maturity hereof upon the happening of certain events, for optional and
mandatory prepayment of the principal hereof prior to the maturity hereof
and for the amendment or waiver of certain provisions of the Credit
Agreement, all upon the terms and conditions therein specified. THIS NOTE
SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE
OF NEW YORK AND ANY APPLICABLE LAWS OF THE UNITED STATES OF AMERICA.
NEW LINDEN PRICE RITE, INC.
By:_______________________
Name:
Title:
SHOP RITE OF READING, INC.
By:_________________________
Name:
Title:<PAGE>
Loans and Payment
Unpaid
Principal Name of
Amount and Payments Balance of Person
Making
Date Type of Loan Principal Interest Note Notation
<PAGE>
EXHIBIT B-2
FORM OF TERM NOTE B
$_________ New York, New York
_________ __, 199_
FOR VALUE RECEIVED, the undersigned, NEW LINDEN PRICE RITE, INC., a New
Jersey corporation ("New Linden"), and SHOP RITE OF READING, INC., a
Pennsylvania corporation ("Reading", and together with New Linden, each a
"Maker" and collectively, the "Makers"), jointly and severally, hereby
promise to pay to the order of _____________________________ (the
"Lender"), at the office of NATWEST BANK N.A. (the "Agent"), at 175 Water
Street, New York, New York 10038, on __________, 1995 or earlier as
provided in the Revolving Credit and Term Loan Agreement dated as of
___________ ___, 199_, among the Makers, Foodarama Supermarkets, Inc., a
New Jersey corporation, the Guarantors named therein, the Lenders named
therein and the Agent (as the same may be amended, restated, modified or
supplemented from time to time in accordance with its terms, the "Credit
Agreement") the principal sum of ___________________ DOLLARS AND __________
CENTS ($_____________) (or such lesser amount as shall be the unpaid
principal balance of the Term Loan B loaned by the Lender under the Credit
Agreement), in lawful money of the United States of America in immediately
available funds, and to pay interest from the date hereof on the principal
amount hereof from time to time outstanding, in like funds, at said office,
at a rate or rates per annum and payable on such dates as determined
pursuant to the terms of the Credit Agreement.
The Makers promise to pay interest, on demand, on any overdue principal and
fees and, to the extent permitted by law, overdue interest from their due
dates at a rate or rates determined as set forth in the Credit Agreement.
The Makers hereby waive diligence, presentment, demand, protest and notice
of any kind whatsoever. The non-exercise by the holder of any of its
rights hereunder in any particular instance shall not constitute a waiver
thereof in that or any subsequent instance.
All borrowings evidenced by this Term Note and all payments and prepayments
of the principal hereof and interest hereon and the respective dates
thereof shall be endorsed by the holder hereof on the schedule attached
hereto and made a part hereof, or on a continuation thereof which shall be
attached hereto and made a part hereof, or otherwise recorded by such
holder in its internal records; provided, however, that the failure of the
holder hereof to make such a notation or any error in such a notation shall
not in any manner affect the obligations of the Makers to make payments of
principal and interest in accordance with the terms of this Term Note and
the Credit Agreement.
This Term Note is one of the Notes referred to in the Credit Agreement,
which, among other things, contains provisions for the acceleration of the
maturity hereof upon the happening of certain events, for optional and
mandatory prepayment of the principal hereof prior to the maturity hereof
and for the amendment or waiver of certain provisions of the Credit
Agreement, all upon the terms and conditions therein specified. THIS NOTE
SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE
OF NEW YORK AND ANY APPLICABLE LAWS OF THE UNITED STATES OF AMERICA.
NEW LINDEN PRICE RITE, INC.
By:_________________________
Name:
Title:
SHOP RITE OF READING, INC.
By:_________________________
Name:
Title:<PAGE>
Loans and Payment
Unpaid
Principal Name of
Amount and Payments Balance of Person
Making
Date Type of Loan Principal Interest Note Notation
<PAGE>
EXHIBIT B-3
FORM OF TERM NOTE C
$_____________ New York,
New York
_________
__, 199_
FOR VALUE RECEIVED, the undersigned, NEW LINDEN PRICE RITE, INC., a New
Jersey corporation ("New Linden"), and SHOP RITE OF READING, INC., a
Pennsylvania corporation ("Reading", and together with New Linden, each a
"Maker" and collectively, the "Makers"), jointly and severally, hereby
promise to pay to the order of _____________________________ (the
"Lender"), at the office of NATWEST BANK N.A. (the "Agent"), at 175 Water
Street, New York, New York 10038, in installments and as otherwise provided
in Section 2.04 of the Revolving Credit and Term Loan Agreement dated as of
___________ ___, 1995, among the Makers, Foodarama Supermarkets, Inc., a
New Jersey corporation, the Guarantors named therein, the Lenders named
therein and the Agent (as the same may be amended, restated, modified or
supplemented from time to time in accordance with its terms, the "Credit
Agreement") or earlier as provided for in the Credit Agreement, the lesser
of the principal sum of ___________________ DOLLARS AND __________ CENTS
($_____________) or the unpaid principal balance of the Term Loan C loaned
by the Lender under the Credit Agreement, in lawful money of the United
States of America in immediately available funds, and to pay interest from
the date thereof on the principal amount hereof from time to time
outstanding, in like funds, at said office, at a rate or rates per annum
and payable on such dates as determined pursuant to the terms of the Credit
Agreement.
The Makers promise to pay interest, on demand, on any overdue principal and
fees and, to the extent permitted by law, overdue interest from their due
dates at a rate or rates determined as set forth in the Credit Agreement.
The Makers hereby waive diligence, presentment, demand, protest and notice
of any kind whatsoever. The non-exercise by the holder of any of its
rights hereunder in any particular instance shall not constitute a waiver
thereof in that or any subsequent instance.
All borrowings evidenced by this Term Note and all payments and prepayments
of the principal hereof and interest hereon and the respective dates
thereof shall be endorsed by the holder hereof on the schedule attached
hereto and made a part hereof, or on a continuation thereof which shall be
attached hereto and made a part hereof, or otherwise recorded by such
holder in its internal records; provided, however, that the failure of the
holder hereof to make such a notation or any error in such a notation shall
not in any manner affect the obligations of the Makers to make payments of
principal and interest in accordance with the terms of this Term Note and
the Credit Agreement.
This Term Note is one of the Notes referred to in the Credit Agreement,
which, among other things, contains provisions for the acceleration of the
maturity hereof upon the happening of certain events, for optional and
mandatory prepayment of the principal hereof prior to the maturity hereof
and for the amendment or waiver of certain provisions of the Credit
Agreement, all upon the terms and conditions therein specified. THIS NOTE
SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE
OF NEW YORK AND ANY APPLICABLE LAWS OF THE UNITED STATES OF AMERICA.
NEW LINDEN PRICE RITE, INC.
By:_________________________
Name:
Title:
SHOP RITE OF READING, INC.
By:_________________________
Name:
Title:<PAGE>
Loans and Payment
Unpaid
Principal Name of
Amount and Payments Balance of Person
Making
Date Type of Loan Principal Interest Note Notation
<PAGE>
EXHIBIT C
February 15, 1995
To each of the Lenders party to the Revolving Credit and Term Loan
Agreement dated as of February 15, 1995 among Foodarama Supermarkets, Inc.,
New Linden Price Rite, Inc., Shop Rite of Reading, Inc., Shop Rite of
Malverne, Inc., said Lenders and NatWest Bank N.A., as Agent (the "Agent")
for itself and said Lenders, and to the Agent
Gentlemen:
This opinion is furnished to you pursuant to Section 5.02(a) of
the Revolving Credit and Term Loan Agreement, dated as of February 15,
1995, including the Exhibits and Schedules thereto (together, the "Credit
Acfreement"), among Foodarama Supermarkets, Inc., a New Jersey corporation
(the "Parent"), New Linden Price Rite, Inc., a New Jersey corporation (
ItNew Linden"), Shop Rite of Reading, Inc., a Pennsylvania corporation
("Reading"), Shop Rite of Malverne, Inc., a New York corporation
("Malverne"), the Lenders named in Schedule 2.01 thereto (the "Lenders"),
and NatWest Bank N.A., as Agent for itself and the Lenders (the "Agent").
Except as otherwise defined herein, terms defined in the Credit Agreement
are used herein as therein defined.
We have acted as counsel for the Parent, the Borrowers and the
Guarantors (the Parent, the Borrowers and the Guarantors are each sometimes
referred to herein as a "Loan Party" and, collectively, as the "Loan
Parties") in connection with the execution and delivery of the following
documents, each of which is also dated the date hereof (collectively, the
"Loan Documents"):
(1) the Credit Agreement,
(2) the Notes,
(3) the Pledge Agreement,
(4) the Security Agreement,
(5) the Mortgages,
NatWest Bank N.A., as Agent
February 15, 1995
Page 2
(6) the Lease Amendments described on Schedule 1 hereto and
hereto, and
(7) the Security Agreement (Partnership Interests).
In connection with the opinions hereinafter set forth, we have
examined the originals of the Loan Documents, and originals, or certified,
conformed or reproduction copies, of the certificates of incorporation of
the Loan Parties, the Uniform Commercial Code Financing Statements listed
on Schedule 2 hereto (the IIUCC Financing Statements"), such of the
corporate and partnership records, certificates of public officials of
pertinent states, certificates of officers of corporations, certificates of
general partners and such other instruments and documents as we have deemed
necessary as a basis for such opinions. As to questions of fact, we have,
to the extent that such facts were not independently established by us,
relied upon such documents. We have assumed the genuineness of all
signatures on original documents, the authenticity of all documents
submitted to us as originals and the conformity to the originals of all
documents submitted to us as certified, conformed or reproduction copies
and the authenticity of the originals of such copies. As to factual
matters underlying the opinions hereinafter set forth, we have also relied
upon, and assumed without independent investigation the accuracy of, the
representations and warranties made in the Loan Documents. We have also
assumed the legal capacity of natural persons and that each of the parties
to the Loan Documents (other than the Loan Parties) has the corporate or
other power and authority to enter into and perform each of the Loan
Documents to which it is a party and that each of the Loan Documents has
been duly authorized, executed and delivered by, and is the legal, valid
and binding obligation of, each such party (other than the Loan Parties).
The opinions hereinafter set forth are subject to the
following qualifications:
(a) our opinions set forth in paragraph 2 hereof with respect to
enforceability are subject to the effect of applicable bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium or similar
laws affecting creditors' rights and remedies generally and by general
principles of equity (regardless of whether considered in a proceeding in
equity or at law). In addition, (i) certain provisions of the Loan
Documents may be unenforceable in whole or in part, but (subject to the
other qualifications set forth herein), the inclusion of such
NatWest Bank N.A., as Agent
February 15, 1995
Page 3
provisions does not render the Loan Documents invalid when taken as a whole
and the Loan Documents when taken as a whole contain, in our judgment,
adequate provisions for the practical realization by the Lenders and tl---
Agent of the rights and benefits intended to be provided thereby, except
for the economic consequences of any delay that might arise from such
unenforceability, and (ii) rights to indemnification and contribution under
the Loan Documents may be limited by public policy. In applying principles
of equity referred to in the first sentence of this paragraph (a), a court,
among other things, might not allow a creditor to accelerate the maturity
of a debt upon the occurrence of a breach or default deemed by such court
to be immaterial. In addition, the provisions of the Loan Documents that
permit the Lenders or the Agent to take action, exercise discretion or make
determinations, or to benefit from indemnities and similar undertakings of
any obligor, may be subject to a requirement that such action be taken,
such discretion be exercised or such determinations be made, and that any
action or inaction by the Lenders or the Agent that may give rise to a
request for payment under any such undertaking be taken or not taken, on a
commercially reasonable basis and in good faith.
(b) We express no opinion (i) as to, or as to the effect of, the
compliance or non-compliance by any of the Lenders or the Agent with any
law, rule or regulation applicable because of the legal or regulatory
status or the specific nature of the business of any of the Lenders or the
Agent, or (ii) regarding any law, rule or regulation to which any Loan
Party or any affiliate of a Loan Party may be subject or any approval any
Loan Party or any affiliate of a Loan Party may be required to obtain
because of the legal or regulatory status of any of the Lenders or the
Agent or because of any facts specifically pertaining to any of the Lenders
or the Agent.
(c) We express no opinion as to the effect of Section 548 of the
Bankruptcy Code or any comparable provisions of state law, nor as to the
Perishable Agricultural Commodities Act, 7 USCA Sec. 499A, et gM.
(d) We express no opinion as to any person's actual rights in or
status of title to any Collateral.
(e) We express no opinion with respect to any tax consequences of
the transactions contemplated by the Loan Documents.
NatWest Bank N.A., as Agent
February 15, 1995
Page 4
(f) We express no opinion with respect to any matter that,
pursuant to Section 9-103 of the Uniform Commercial Code of the State of
New York (the IIUCCII), would not be governed by the internal laws of the
State of New York.
(g) We express no opinion as to the laws of any jurisdiction
other than the federal laws of the United States and the laws of the State
of New York. To the extent that the laws of the States of New Jersey and
Pennsylvania govern the opinions set forth in paragraph 2 hereof, we have,
with your permission, relied solely upon the opinions of Howard J. Snowiss,
Esq. and Pepper, Hamilton & Scheetz, respectively, of even date herewith.
. (h) We express no opinion as to: (i) the perfection of any
security interest in any Collateral except as expressly set forth in
paragraphs 6(a) and 6(b) hereof; (ii) the priority of the security interest
in any Collateral; or (iii) the validity or perfection of (A) any security
interest in any Collateral as it relates to the creation or transfer of an
interest in or Lien on real estate, including a lease or rents thereunder,
or as it relates to goods which are or which become fixtures (regardless of
location); (B) any security interests, liens, transfers, sales or rights
listed in Section 9-104 of the UCC; (C) any security interest in any
license or permit issued by any governmental authority; or (D) any security
interest in any goods for which a negotiable document of title has been
issued.
The opinions hereinafter set forth are given on the date hereof,
and we shall have no obligation or undertaking to amend, modify or amplify
such opinions hereafter. The opinions hereinafter set forth are furnished
only to you and may not be used, circulated, quoted or otherwise referred
to or relied upon by you for any purpose other than the purpose for which
furnished or by any other person for any purpose, without our prior written
consent (provided that this opinion letter may be disclosed to the
regulators of the Agent or any Lender or as required by law). When used
herein, the terms "to the extent of our knowledge," and "known to us," or
similar formulations, are limited solely to the actual knowledge of those
attorneys in our office who have signed this opinion letter, or have had
active involvement in negotiating the transactions contemplated by the Loan
Documents, preparing the Loan Documents or preparing this opinion letter
and to the facts which could reasonably be ascertained by the review by
such attorneys of the documents and correspondence in our files.
In rendering the opinions set forth in paragraph 1
hereof relating to corporate existence and good standing, we have
NatWest Bank N.A., as Agent
February 15, 1995
Page 5
relied solely on the certificates, telegrams and other documents delivered
to you and we have also assumed that any such certificate, telegram or
other document which was given or dated earlier than the date of this
opinion letter has remained accurate as far as relevant to such opinions,
from such earlier date through and including the date of this opinion
letter.
In rendering the opinions set forth in paragraphs 3 and 5 hereof,
we have relied upon (i) a certificate of an officer of each Loan Party and
(ii) copies of all agreements, documents and instruments attached to or
included with any filings by the Parent with the Securities and Exchange
Commission.
Based upon the foregoing and subject to the limitations,
qualifications, exceptions and assumptions set forth herein, we are of the
opinion that:
1. Malverne has been validly formed and is validly existing and
in good standing as a corporation under the laws of the State of New York.
Malverne has the requisite corporate power to own its assets and conduct
its businesses as currently owned and conducted, and to enter into and
perform its obligations under each Loan Document to which it is a party.
2. Malverne has taken all requisite corporate action to authorize
the execution, delivery and performance by it of the Loan Documents to
which it is a party. Each Loan Document to which any Loan Party is a
signatory has been duly authorized, executed and delivered by such Loan
Party and constitutes the legal, valid and binding obligation of such Loan
Party, enforceable against such Loan Party in accordance with its
respective terms.
3. Neither the execution and delivery of the Loan Documents by
the Loan Parties, nor compliance with any of the provisions thereof, will
violate any State of New York or federal law or regulation (including,
without limitation, Regulations G, T, U and X of the Board of Governors of
the Federal Reserve System) or any order or decree, in each case known to
us, of any court or governmental instrumentality, or will result in the
breach of, or constitute a default under, any indenture, mortgage, deed of
trust, agreement or other instrument (known to us) to which any Loan Party
is a signatory or by which any of them might be bound, or result in the
creation or imposition of any Lien on any of the property of any Loan Party
(except in favor of the Agent), or violate any provision of the certificate
of incorporation or bylaws of any Loan Party.
NatWest Bank N.A., as Agent
February 15, 1995
Page 6
4. Except as set forth in the Credit Agreement, to our knowledge,
there are no actions, suits or proceedings pending or threatened against or
affecting any Loan Party before any court, arbitrator or governmental or
administrative body or agency which might have a Material Adverse Effect.
5. Except for the filings of the UCC Financing Statements, no
action of, or filing with, any State of New York or federal governmental or
public body or authority is required to authorize, or is otherwise required
in connection with, the execution, delivery and performance of the Loan
Documents.
6. (a) The Agent's security interest in each item of Collateral
located in the State of New York (other than the Pledged Stock) constitutes
a valid and enforceable security interest in such item of Collateral, the
creation of a security interest in which is governed by Article 9 of the
UCC. When the UCC Financing Statements relating to such Collateral located
in the State of New York have been duly filed in the filing offices
indicated thereon pursuant to the Uniform Commercial Code, such security
interest will be perfected to the extent that the filing of UCC financing
statements will perfect a security interest under the UCC.
The opinions expressed above are subject to the
following assumptions, limitations and qualifications:
(i) The applicable Loan Party has rights in the Collateral;
(ii) None of the Collateral consists or will consist of consumer
goods, farm products, equipment used in farming operations, crops, timber,
minerals and the like (including oil and gas) or accounts or general
intangibles resulting from the sale of any of the foregoing, or beneficial
interests in a trust or a decedent's estate, or items which are subject to
(x) a statute or treaty of the United States which provides for a national
or international registration or a national or international certificate of
title for the perfection of a security interest therein or which specifies
a place of filing different from that specified in the UCC for filing to
perfect such security interest or (y) a certificate of title statute of a
jurisdiction other than the State of New York;
(iii) In the case of motor vehicles for which certificates of title
have been issued and for which the exclusive manner of perfecting a
security interest is by noting the Agent's security interest on the
certificate of title in accordance with the laws
NatWest Bank N.A., as Agent
February 1.5, 1995
Page 7
of the State of New York,.the Agent's security interest therein cannot be
perfected by the filing of the UCC Financing Statements but will be
perfected if the Agent's security interest is so noted;
(iv) In the case of property which becomes Collateral after the date
hereof, (x) perfection will not occur before the applicable Loan Party
obtains rights in such Collateral; and (y) Section 552 of the Bankruptcy
Code limits the extent to which property acquired by a debtor after the
commencement of a case under the Bankruptcy Code may be subject to a
security interest arising from a security agreement entered into by the
debtor before the commencement of such case;
(v) In the case of proceeds, continuation of perfection of the
security interest of the Agent therein is limited to the extent set forth
in Section 9-306 of the UCC; and
(vi) The UCC requires the filing of continuation statements within the
period of six months prior to the expiration of five years from the date of
the filing of the original UCC Financial Statements, and within the period
of six months prior to the expiration of each fifth anniversary of the date
of such original filing thereafter, in order to maintain the effectiveness
of the filings referred to above.
We call to your attention that the perfection of the above security
interest in the Collateral located in the State of New York will be
terminated (I) as to any such Collateral acquired by any Loan Party more
than four months after the applicable Loan Party so changes its name,
identity or corporate structure as to make the UCC Financing Statements
seriously misleading, unless new appropriate financing statements
indicating the new name, identity or corporate structure of the applicable
Loan Party are properly filed before the expiration of such four months;
(II) as against buyers of items of Collateral consisting of goods from any
Loan Party in the ordinary course of business; (III) as against buyers of
items of Collateral consisting of goods from any Loan Party other than in
the ordinary course of business to the extent that the Agent's security
interest secures future advances made-after the Agent acquires knowledge of
the purchase or more than 45 days after such purchases by such buyers,
whichever first occurs, unless made pursuant to a commitment entered into
without knowledge of the purchase and before expiration of such 45-day
period; and (IV) as to Collateral otherwise disposed of by any Loan Party
if such disposition is authorized by the Agent in the Loan Documents or
otherwise (but in such event such security interest will continue in
NatWest Bank N.A., as Agent
February 15, 1995
Page 8
identifiable proceeds to the extent and as provided in Section 9306 of the
UCC).
(b) Subject to clauses (i), (ii) and (iii), of this
paragraph 6 and upon written notification of the pledge signed by the
Parent (in the form attached hereto as Exhibit A) and delivered to IBJ
Schroder Bank & Trust Company ("Schroder"), who we are advised is in
possession of the Pledged Stock represented by certificates, the Agent will
have a valid, perfected and enforceable security interest under the UCC in
all Pledged Stock to the extent represented by certificated securities,
which are in the possession of Schroder.
(i) In the case of such of the Pledged Stock now
existing and constituting "certificated securities" within the meaning of
the UCC, such security interest is perfected by the Agent or its designee
(in this instance Schroder) acquiring and retaining possession in good
faith without knowledge of outstanding claims against such securities, in
the State of New York, of the certificates representing such Collateral
accompanied by endorsements or stock powers, as appropriate, executed in
blank by the pledgor of such Pledged Stock.
(ii) In the case of such of the Collateral now existing
and constituting "uncertificated securities" within the meaning of the UCC,
such security interest will be perfected by the registration of the pledge
thereof on the books of the issuer of said Collateral.
(iii) In the case of the issuance of additional shares
in respect of any of the Pledged Stock, the security interest of the Agent
or its designee (as described in Paragraph 6(b)) therein shall be perfected
only if possession thereof is obtained in accordance with the provisions of
the UCC.
7. None of the Loan Parties is (a) an "investment company" or a
company "controlled" by an "investment company" as such terms are defined
in the Investment Company Act of 1940, as amended, or (b) a "holding
company," an "affiliate" of a "holding
NatWest Bank N.A., as Agent
February 15, 1995
Page 9
company" or a "subsidiary company" within the meaning of the
Public Utility Holding Company Act of 1935, as amended.
Very truly yours,
ROSENMAN & COXIIN
By:________________
A Partner
<PAGE>
EXHIBIT D
PLEDGE AGREEMENT
PLEDGE AGREEMENT dated as of _____________ __, 1995 between
FOODARAMA SUPERMARKETS, INC., a New Jersey corporation (the "Parent"), New
Linden Price Rite, Inc., a New Jersey corporation ("New Linden"), Shop Rite
of Reading, Inc., a Pennsylvania corporation ("Reading") and Shop Rite of
Malverne, Inc., a New York corporation ("Malverne," and together with
Parent, New Linden and Reading, each a "Grantor" and collectively, the
Grantors"), and NATWEST BANK N.A., as agent (the "Agent") for itself and
each of the lenders (the "Lenders") named in Schedule 2.01 of the Revolving
Credit And Term Loan Agreement dated as of ___________ __, 1995, among New
Linden, Reading (individually, each a "Borrower" and collectively, the
"Borrowers"), Parent, the Guarantors, the Lenders and the Agent (as
amended, restated, modified or supplemented from time to time in accordance
with its terms, the "Credit Agreement").
A. The Lenders have agreed to extend Loans to, and open or cause
to be opened Letters of Credit for the account of, the Borrowers pursuant
to, and subject to the terms and conditions of, the Credit Agreement. The
obligation of the Lenders to extend such financial accommodations under the
Credit Agreement is conditioned on, inter alia, the execution and delivery
by the Grantors of a pledge agreement in the form hereof to secure the due
and punctual payment and performance of all Obligations (including, without
limitation, principal of and interest on the Loans, when and as due,
whether at maturity, by acceleration, upon one or more dates set for
prepayment or otherwise, and the due and punctual payment and performance
of all obligations of the Grantors under this Pledge Agreement and of the
Grantors under the Letters of Credit, the Credit Agreement and any of the
other Loan Documents).
B. Capitalized terms used herein and not defined herein shall
have the respective meanings assigned to such terms in the Credit
Agreement.
Accordingly, the Grantors hereby jointly and severally agree
with the Agent as follows:
1. Pledge. As security for the payment and performance in full
of the Obligations, the Grantors hereby transfer, grant, bargain, sell,
convey, hypothecate, pledge, set over and deliver unto the Agent, and grant
to the Agent, for the benefit of the Lenders, a security interest in, (a)
the shares of capital stock listed in Schedule I annexed hereto and any
additional shares of common stock of the issuers listed in Schedule I
annexed hereto (collectively, the "Issuers") obtained in the future by any
of the Grantors (the "Pledged Stock"), and (b) all other property which may
be delivered to and held by the Agent pursuant to the terms hereof, and (c)
all proceeds of the Pledged Stock and of such other property, including,
without limitation, all cash, securities or other property at any time and
from time to time receivable or otherwise distributed in respect of or in
exchange for any of or all such stock or other property (the items referred
to in clauses (a) through (c) being collectively called the "Collateral").
Upon delivery to the Agent, any securities now or hereafter included in the
Collateral (the "Pledged Securities") shall be accompanied by undated stock
powers duly executed in blank or other instruments of transfer satisfactory
to the Agent and by such other instruments and documents as the Agent may
reasonably request. Each delivery of Pledged Securities shall be
accompanied by a schedule showing a description of the securities
theretofore and then being pledged hereunder, which schedule shall be
attached hereto as Schedule I and made a part hereof. Each schedule so
delivered shall supersede any prior schedules so delivered.
2. Delivery of Collateral. The Grantors agree promptly to
deliver or cause to be delivered to the Agent any and all Pledged
Securities, and any and all certificates or other instruments or documents
representing any of the Collateral.
3. Representations, Warranties and Covenants. Each Grantor
hereby represents, warrants and covenants to and with the Agent that:
(a) except for the security interest granted to the Agent, such
Grantor (i) is and will at all times continue to be the direct owner,
beneficially and of record, of the Pledged Securities that it is pledging
hereunder, (ii) holds the Collateral that it is pledging hereunder free and
clear of all liens, charges, encumbrances and security interests of every
kind and nature, (iii) will make no assignment, pledge, hypothecation or
transfer of, or create any security interest in, the Collateral that it is
pledging hereunder, and (iv) subject to Section 5 below, will cause any and
all Collateral, whether for value paid by the Grantor or otherwise, to be
forthwith deposited with the Agent and pledged or assigned hereunder;
(b) such Grantor (i) has good right and legal authority to
pledge the Collateral it is pledging hereunder in the manner hereby done or
contemplated and (ii) will defend its title or interest thereto or therein
against any and all attachments, liens, claims, encumbrances, security
interests or other impediments of any nature, however arising, of all
persons whomsoever;
(c) no consent or approval of any governmental body or
regulatory authority or any securities exchange is necessary to the
validity of the pledge effected hereby;
(d) by virtue of the execution and delivery by the Grantors of
this Agreement, when the certificates, instruments or other documents
representing or evidencing the Collateral are delivered to the Agent in
accordance with this Agreement, the Agent will obtain a valid and perfected
first lien upon and security interest in such Collateral as security for
the repayment of the Obligations, prior to all other liens and encumbrances
thereon and security interests therein;
(e) the pledge effected hereby is effective to vest in the Agent
the rights of the Agent in the Collateral as set forth herein; and
(f) at the date hereof, the Pledged Stock constitutes all of the
issued and outstanding shares of capital stock of the entities listed on
Schedule I.
All representations, warranties and covenants of the Grantors contained in
this Agreement shall survive the execution, delivery and performance of
this Agreement until the termination of this Agreement pursuant to Section
14 hereof.
4. Registration in Nominee Name; Denominations. Upon the
occurrence and during the continuance of an Event of Default, the Agent
shall have the right (in its sole and absolute discre- tion) to transfer to
or to register the Pledged Securities in its own name or the name of its
nominee. In addition, the Agent shall at all times have the right to
exchange the certificates repre- senting Pledged Securities for
certificates of smaller or larger denominations for any purpose consistent
with this Agreement.
5. Voting Rights; Dividends; etc. (a) Unless and until an
Event of Default hereunder shall have occurred and be continuing:
(i) The Grantors shall be entitled to exercise any and all
voting and/or consensual rights and powers accruing to an owner of Pledged
Securities or any part thereof for any purpose not inconsistent with the
terms of this Agreement and the Credit Agreement provided that such action
would not materially and adversely affect the rights inuring to the Agent
or the Lenders under this Agreement or the Credit Agreement or materially
and adversely affect the rights and remedies of the Agent or the Lenders
under this Agreement or the Credit Agreement or the ability of the Agent or
the Lenders to exercise the same.
(ii) The Agent shall execute and deliver to the Grantors,
or cause to be executed and delivered to the Grantors, all such proxies,
powers of attorney, and other instruments as the Grantors may reasonably
request for the purpose of enabling the Grantors to exercise the voting
and/or consensual rights and powers which they are entitled to exercise
pursuant to subparagraph (i) above.
(iii) The Grantors shall be entitled to receive and retain
any and all cash dividends paid on the Pledged Securities only to the
extent that such cash dividends are permitted by, and otherwise paid in
accordance with the terms and conditions of, the Credit Agreement and
applicable laws. Any and all
a. noncash dividends,
b. stock or dividends paid or payable in cash or otherwise in
connection with a partial or total liquidation or dissolution, and
c. instruments, securities, other distributions in property,
return of capital, capital surplus or paid-in surplus or other
distributions made on or in respect of Pledged Securities (other than
dividends and distributions permitted by Section 7.04 of the Credit
Agreement), whether paid or payable in cash or otherwise, whether resulting
from a subdivision, combination or reclassification of the outstanding
capital stock of the issuer of any Pledged Securities or received in
exchange for Pledged Securities or any part thereof, or in redemption
thereof, as a result of any merger, consolidation, acquisition or other
exchange of assets to which such issuer may be a party or otherwise, shall
be and become part of the Collateral, and, if received by any of the
Grantors, shall not be commingled by such Grantor with any of its other
funds or property but shall be held separate and apart therefrom, shall be
held in trust for the benefit of the Agent and the Lenders and shall be
forthwith delivered to the Agent in the same form as so received (with any
necessary endorsement).
(b) Upon the occurrence and during the continuance of an Event
of Default, all rights of the Grantors to receive any dividends which the
Grantors are authorized to receive pursuant to paragraph (a)(iii) of this
Section 5 shall cease, and the Agent shall have the sole and exclusive
right and authority to receive and hold such dividends, such dividends to
apply to the Obligations or to be held as Collateral as permitted under the
Loan Documents. All dividends which are received by the Grantors contrary
to the provisions of this Section 5(b) shall be received in trust for the
benefit of the Agent, shall be segregated from other property or funds of
such Grantor and shall be forthwith delivered to the Agent as Collateral in
the same form as so received (with any necessary endorsement). Any and all
money and other property paid over to or received by the Agent pursuant to
the provisions of this Section 5 shall be held by the Agent in an account
to be established by the Agent upon receipt of such money or other property
and shall be applied in accordance with the provisions of Section 8 hereof.
(c) Upon the occurrence and during the continuance of an Event
of Default, all rights of the Grantors to exercise the voting and
consensual rights and powers which each is entitled to exercise pursuant to
Section 5(a)(i) shall cease, and all such rights shall thereupon become
vested in the Agent, which shall have the sole and exclusive right and
authority to exercise such voting and consensual rights and powers.
6. Issuance of Additional Stock. The Grantors agree that,
they will cause each of the Issuers not to issue any stock or other
securities, whether in addition to, by stock dividend or other distribution
upon, or in substitution for, the Pledged Securities or otherwise, unless
such shares are pledged hereunder.
7. Remedies upon Default. If an Event of Default shall have
occurred and be continuing, the Agent may sell or otherwise dispose of all
or any part of the Collateral, at public or private sale or at any broker's
board or on any securities exchange, for cash, upon credit or for future
delivery as the Agent shall deem appropriate. Each such purchaser at any
such sale shall hold the property sold absolutely, free from any claim or
right on the part of the Grantors, and the Grantors hereby waive (to the
extent permitted by law) all rights of redemption, stay and appraisal which
the Grantors now have or may at any time in the future have under any rule
of law or statute now existing or hereafter enacted.
The Agent shall give the Grantors at least 10 days' written
notice (which the Grantors agree is reasonable notice within the meaning of
Section 9-504(3) of the Uniform Commercial Code as in effect in New York)
of the Agent's intention to make any sale of Collateral. Such notice, in
the case of a public sale, shall state the time and place for such sale
and, in the case of a sale at a broker's board or on a securities exchange,
shall state the board or exchange at which such sale is to be made and the
day on which the Collateral, or portion thereof, will first be offered for
sale at such board or exchange. Any such public sale shall be held at such
time or times within ordinary business hours and at such place or places as
the Agent may fix and state in the notice (if any) of such sale. At any
such sale, the Collateral, or portion thereof, to be sold may be sold in
one lot as an entirety or in separate parcels, as the Agent may (in its
sole and absolute discretion) determine. The Agent shall not be obligated
to make any sale of any Collateral if it shall determine not to do so,
regardless of the fact that notice of sale of such Collateral shall have
been given. The Agent may, without notice or publication, adjourn any
public or private sale or cause the same to be adjourned from time to time
by announcement at the time and place fixed for sale, and such sale may,
without further notice, be made at the time and place to which the same was
so adjourned. In case any sale of all or any part of the Collateral is
made on credit or for future delivery, the Collateral so sold may be
retained by the Agent until the sale price is paid by the purchaser or
purchasers thereof, but the Agent shall not incur any liability in case any
such purchaser or purchasers shall fail to take up and pay for the
Collateral so sold and, in case of any such failure, such Collateral may be
sold again upon like notice. At any public sale made pursuant to this
Section 7, if permitted by law, any Lender may bid for and purchase, free
(to the extent permitted by law) from any right of redemption, stay or
appraisal on the part of the Grantors (all said rights being also hereby
waived and released to the extent permitted by law), the Collateral or any
part thereof offered for sale and may make payment on account thereof by
using any claim then due and payable to such Lender from the Grantors as a
credit against the purchase price, and such Lender may, upon compliance
with the terms of sale, hold, retain and dispose of such property without
further accountability to the Grantors therefor. For purposes hereof, a
written agreement to purchase the Collateral or any portion thereof shall
be treated as a sale thereof; the Agent shall be free to carry out such
sale and purchase pursuant to such agreement, and the Grantors shall not be
entitled to the return of the Collateral or any portion thereof subject
thereto, notwithstanding the fact that after the Agent shall have entered
into such an agreement all Events of Default shall have been remedied and
the Obligations paid in full. As an alternative to exercising the power of
sale herein conferred upon it, the Agent may proceed by a suit or suits at
law or in equity to foreclose this Agreement and to sell the Collateral or
any portion thereof pursuant to a judgment or decree of a court or courts
having competent jurisdiction or pursuant to a proceeding by a
court-appointed receiver.
8. Application of Proceeds of Sale. The proceeds of any sale
of Collateral pursuant to Section 7 hereof, as well as any Collateral
consisting of cash, shall be applied by the Agent as set forth in Article
VIII of the Credit Agreement.
9. Care of Pledged Securities. The Agent shall have no duty
as to the collection or protection of the Pledged Securities or any income
thereon or as to the preservation of any rights pertaining thereto, beyond
the safe custody of any thereof actually in its possession. With respect
to any maturities, calls, conversions, exchanges, redemptions, offers,
tenders or similar matters relating to any of the Pledged Securities
(herein called "events"), except to the extent required by law, the Agent's
duty shall be fully satisfied if (i) the Agent exercises reasonable care to
ascertain the occurrence and to give reasonable notice to the Grantors of
any events applicable to any Pledged Securities which are registered and
held in the name of the Agent or its nominee, (ii) the Agent gives the
Grantors reasonable notice of the occurrence of any events, of which the
Agent has received actual knowledge, as to any securities which are in
bearer form or are not registered and held in the name of the Agent or its
nominee (the Grantors agreeing to give the Agent reasonable notice of the
occurrence of any events applicable to any securities in the possession of
the Agent of which any Grantor has received knowledge), and (iii) in the
exercise of its sole discretion (a) the Agent endeavors to take such action
with respect to any of the events as the Grantors may reasonably and
specifically request in writing in sufficient time for such action to be
evaluated and taken or (b) if the Agent determines that the action
requested might adversely affect the value of the Pledged Securities as
collateral, the collection of the Obligations, or otherwise prejudice the
interests of the Agent, the Agent gives reasonable notice to the Grantors
that any such requested action will not be taken and if the Agent makes
such determination or if the Grantors fail to make such timely request, the
Agent takes such other action as it deems advisable in the circumstances.
Except as hereinabove specifically set forth, the Agent shall have no
further obligation to ascertain the occurrence of, or to notify the
Grantors with respect to, any events and shall not be deemed to assume any
such further obligation as a result of the establishment by the Agent of
any internal procedures with respect to any securities in its possession.
Except for any claims, causes of action or demands arising out of the
Agent's failure to perform its agreements set forth in this Section, the
Grantors release the Agent from any claims, causes of action and demands at
any time arising out of or with respect to this Agreement, the Pledged
Securities and/or any actions taken or omitted to be taken by the Agent
with respect thereto, and the Grantors hereby agree to hold the Agent
harmless from and with respect to any and all such claims, causes of action
and demands.
10. Agent Appointed Attorney-in-Fact. Each Grantor hereby
appoints the Agent its attorney-in-fact for the purpose of carrying out the
provisions of this Agreement and taking any action and executing any
instrument which the Agent may deem necessary or advisable to accomplish
the purposes hereof, which appointment is irrevocable and coupled with an
interest. Without limiting the generality of the foregoing, the Agent
shall have the right, with full power of substitution either in the Agent's
name or in the name of such Grantor, (i) upon the occurrence and during the
continuance of an Event of Default, to ask for, demand, sue for, collect,
receive receipt and give acquittance for any and all moneys due or to
become due and under and by virtue of any Collateral, (ii) to endorse
checks, drafts, orders and other instruments for the payment of money
payable to such Grantor representing any interest or dividend, or other
distribution payable in respect of the Collateral or any part thereof or on
account thereof and (iii) upon the occurrence and during the continuance of
an Event of Default, to give full discharge for the same, to settle,
compromise, prosecute or defend any action, claim or proceeding with
respect thereto, and to sell, assign, endorse, pledge, transfer and make
any agreement respecting, or otherwise deal with, the same; provided,
however, that nothing herein contained shall be construed as requiring or
obligating the Agent or the Lenders to make any commitment or to make any
inquiry as to the nature or sufficiency of any payment received by the
Agent or the Lenders, or to present or file any claim or notice, or to take
any action with respect to the Collateral or any part thereof or the moneys
due or to become due in respect thereof or any property covered thereby,
and no action taken by the Agent or the Lenders or omitted to be taken with
respect to the Collateral or any part thereof shall give rise to any
defense, counterclaim or offset in favor of any Grantor or to any claim or
action against the Agent or the Lenders in the absence of the bad faith,
gross negligence or wilful misconduct of the Agent or the Lenders.
11. No Waiver. No failure on the part of the Agent to
exercise, and no delay in exercising, any right, power or remedy hereunder
shall operate as a waiver thereof, nor shall any single or partial exercise
of any such right, power or remedy by the Agent preclude any other or
further exercise thereof or the exercise of any other right, power or
remedy. All remedies hereunder are cumulative and are not exclusive of any
other remedies provided by law. The Agent and the Lenders shall not be
deemed to have waived any rights hereunder unless such waiver shall be in
writing and signed by such parties.
12. Security Interest Absolute. All rights of the Agent
hereunder, the grant of a security interest in the Collateral and all
obligations of the Grantors hereunder, shall be absolute and unconditional
irrespective of (i) any lack of validity or enforceability of the Credit
Agreement, any other Loan Document, any agreement with respect to any of
the Obligations or any other agreement or instrument relating to any of the
foregoing, (ii) any change in time, manner or place of payment of, or in
any other term of, all or any of the Obligations, or any other amendment or
waiver of or any consent to any departure from the Credit Agreement, any
other Loan Document or any other agreement or instrument, (iii) any
exchange, release or nonperfection of any other collateral, or any release
or amendment or waiver of or consent to or departure from any guarantee,
for all or any of the Obligations or (iv) any other circumstance which
might otherwise constitute a defense available to, or a discharge of, the
Grantors in respect of the Obligations or in respect of this Agreement.
13. Agent's Fees and Expenses. The Grantors will upon demand
pay to the Agent the amount of any and all reasonable expenses, including
the reasonable fees and expenses of its counsel and of any experts or
agents which the Agent may incur in connection with (i) the administration
of this Agreement, (ii) the custody or preservation of, or the sale of,
collection from, or other realization upon, any of the Collateral, (iii)
the exercise or enforcement of any of the rights of the Agent hereunder or
(iv) the failure by the Grantors to perform or observe any of the
provisions hereof. In addition, the Grantors will indemnify the Agent and
hold the Agent harmless from and against any and all liability incurred by
the Agent hereunder or in connection herewith, unless such liability shall
be due to the gross negligence, bad faith or wilful misconduct of the
Agent. Any such amounts payable as provided hereunder or thereunder shall
be additional Obligations secured hereby and by the Security Documents.
14. Termination. This Agreement shall terminate when all
Obligations have been paid fully and indefeasibly in cash or in a manner
otherwise satisfactory to the Agent and the Lenders have no further
commitment to make Loans or open or cause to be opened Letters of Credit
under the Credit Agreement, at which time the Agent shall reassign and
deliver to the Grantors, or to such person or persons as the Grantors shall
designate, against receipt, such of the Collateral (if any) as shall not
have been sold or otherwise still be held by it hereunder, together with
appropriate instruments of reassignment and release; provided, however,
that all indemnities of the Grantors contained in this Agreement shall
survive, and remain operative and in full force and effect regardless of,
the termination of this Agreement. Upon any such termination, the Agent
will, at the Grantors' expense, execute and deliver to the Grantors such
documents as the Grantors shall reasonably request to evidence such
termination, such execution and delivery to be without recourse to or
warranty by the Agent.
15. Notices. All communications and notices hereunder shall
be in writing and given as provided in the Credit Agreement.
16. Further Assurances. Each Grantor agrees to do such
further acts and things, and to execute and deliver such additional
conveyances, assignments, agreements and instruments, as the Agent may at
any time reasonably request in connection with the administration and
enforcement of this Agreement or with respect to the Collateral or any part
thereof or in order better to assure and confirm unto the Agent its rights
and remedies hereunder.
17. Binding Agreement; Assignments. This Agreement, and the
terms, covenants and conditions hereof, shall be binding upon and inure to
the benefit of the parties hereto and their respective successors and
assigns, except that the Grantors shall not be permitted to assign this
Agreement or any interest herein or in the Collateral, or any part thereof,
or otherwise pledge, encumber or grant any option with respect to the
Collateral, or any part thereof, or any cash or property held by the Agent
as Collateral under this Agreement.
18. GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK, EXCEPT
TO THE EXTENT THAT THE VALIDITY OR PERFECTION OF THE SECURITY INTEREST
HEREUNDER, OR REMEDIES HEREUNDER, IN RESPECT OF ANY PARTICULAR COLLATERAL
ARE GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN THE STATE OF NEW
YORK.
19. Severability. In case any one or more of the provisions
contained in this Agreement should be invalid, illegal or unenforceable in
any respect, the validity, legality and enforceability of the remaining
provisions contained herein shall not in any way be affected or impaired.
20. Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall constitute an original, but all of
which, when taken together, shall constitute but one instrument. This
Agreement shall be effective when counterparts which bear the signature of
each Grantor shall have been delivered to the Agent.
21. Section Headings. Section headings used herein are for
convenience only and are not to affect the construction of, or be taken
into consideration in interpreting, this Agreement.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first above written.
FOODARAMA SUPERMARKETS, INC.
By____________________________
Name:
Title:
NEW LINDEN PRICE RITE, INC.
By____________________________
Name:
Title:
SHOP RITE OF READING, INC.
By____________________________
Name:
Title:
SHOP RITE OF MALVERNE, INC.
By:___________________________
Name:
Title:
NATWEST BANK N.A., as Agent
By_____________________________
Name:
Title:
SCHEDULE I
to Pledge Agreement
Percentage Stock of Certificate Number Outstanding
Grantor Stock Issuer Class of Stock No(s). Par Value of Shares Shares
Foodarama Shop Rite Common 3---1000% Super-of Malverne, markets,Inc.
Inc.
Foodarama New Linden Common 7---100 100% Super-Price Rite, markets,Inc.
Inc.
Foodarama Shop Rite Common 4 $100 3100% Super-of Reading, markets,Inc.
Inc.
EXHIBIT E
SECURITY AGREEMENT
SECURITY AGREEMENT dated as of ________ __, 1995,
among Foodarama Supermarkets, Inc., a New Jersey corporation ("Parent"),
New Linden Price Rite, Inc., a New Jersey corporation ("New Linden"), Shop
Rite of Reading, Inc., a Pennsylvania corporation ("Reading"), Shop Rite of
Malverne, Inc., a New York corporation ("Malverne", and together with
Parent, New Linden and Reading, each a "Grantor" and collectively, the
"Grantors"), and NatWest Bank N.A., as agent ("Agent") for itself and each
of the Lenders (the "Lenders") named in Schedule 2.01 of the Revolving
Credit and Term Loan Agreement dated as of ________ __, 1995 among the
Grantors, the Guarantors named therein, the Agent and the Lenders (as
amended, restated, modified or supplemented from time to time in accordance
with its terms, the "Credit Agreement").
The Lenders have agreed to extend Loans
to New Linden and Reading (individually, each a "Borrower" and
collectively, the "Borrowers") pursuant to, and subject to the terms and
conditions of, the Credit Agreement. The obligation of the Lenders to
extend such Loans under the Credit Agreement is conditioned, inter alia, on
the execution and delivery by the Grantors of a security agreement in the
form hereof to secure the due and punctual payment and performance of all
Obligations (including, without limitation, principal of and interest on
the Loans, when and as due, whether at maturity, by acceleration, upon one
or more dates set for prepayment or otherwise, the due and punctual payment
and performance of all obligations of the Grantors under this Agreement and
the due and punctual payment and performance of all obligations of the
Grantors under the Letters of Credit, the Credit Agreement and any of the
other Loan Documents).
Accordingly, the Grantors hereby
jointly and severally agree with the Agent as follows:
1. Definitions of Terms Used
Herein. All capitalized terms used herein but not defined herein shall
have the meanings set forth in the Credit Agreement. As used herein, the
following terms shall have the following meanings:
(a) "Accounts Receivable"
shall mean (i) all of any Grantor's present and
future accounts, general intangibles, chattel paper and instruments, as such
terms are defined in the Uniform Commercial Code as in effect in the State of
New York ("NYUCC"), (ii) all moneys, securities and other property and the
proceeds thereof, now or hereafter held or received by, or in transit to,
the Agent from or for any Grantor, whether for safekeeping, pledge,
custody, transmission, collection or otherwise, and all of the deposits
(general or special) of any Grantor, balances, sums and credits with, and
all of any Grantor's claims against the Agent at any time existing,
(iii) all of any Grantor's right, title and interest, and all of any
Grantor's rights, remedies, security and Liens, in, to and in respect of
any accounts receivable, including, without limitation, rights of stoppage
in transit, replevin, repossession and reclamation and other rights and
remedies of an unpaid vendor, lienor or secured party, guaranties or other
contracts of suretyship with respect to accounts receivable, deposits or
other security for the obligation of any account debtor, and credit and
other insurance, and (iv) all of any Grantor's right, title and interest
in, to and in respect of all goods relating to, or which by sale have
resulted in, accounts receivable, including, without limitation, all goods
described in invoices or other documents or instruments with respect to, or
otherwise representing or evidencing, any account receivable, and all
returned, reclaimed or repossessed goods.
(b) "Collateral"
shall mean all (i) Accounts Receivable, (ii) Documents,
(iii) Equipment, (iv) General Intangibles, (v) Inventory, and (vi) Proceeds.
(c) "Documents"
shall mean all instruments, files, records, ledger sheets
and documents covering or relating to any of the Collateral.
(d) "Equipment"
shall mean all of any Grantor's entire right, title and interest in and to
machinery, equipment, vehicles, furniture and fixtures and all attachments,
accessories and equipment now or hereafter owned or acquired in any
Grantor's businesses or used in connection therewith, and all substitutions
and replacements thereof, wherever located, whether now owned or hereafter
acquired by any Grantor.
(e) "General
Intangibles" shall mean all of any Grantor's present and future general
intangibles of every kind and description, including (without limitation)
patents, patent applications, trade names and trademarks and the goodwill
of the business symbolized thereby, Federal, State and local tax refund
claims of all kinds.
(f) "Inventory"
shall mean all of any Grantor's raw materials, work in process, finished
goods and all other inventory (as such term is defined in the NYUCC),
whether now owned or hereafter acquired, and all wrapping, packaging,
advertising and shipping materials, and any documents relating thereto.
(g) "Proceeds" shall
mean any consideration received from the sale, exchange, lease or other
disposition of any asset or property which constitutes Collateral, any
other value received as a consequence of the possession of any Collateral
and any payment received from any insurer or other person or entity as a
result of the destruction, loss, theft or other involuntary conversion of
whatever nature of any asset or property that constitutes Collateral, and
shall include, without limitation, all cash and negotiable instruments
received or held by the Agent and/or any of the Lenders pursuant to any
lockbox or similar arrangement relating to the payment of Accounts
Receivable.
2. Security Interests. As
security for the payment or performance, as the case may be, of the
Obligations, each Grantor hereby creates and grants to the Agent, its suc-
cessors and its assigns, for the pro rata benefit of the Lenders, their
successors and their assigns, a security interest in the Collateral (the
"Security Interest"). Without limiting the foregoing, the Agent is hereby
authorized to file one or more financing statements, continuation
statements or other documents for the purpose of perfecting, confirming,
continuing, enforcing or protecting the Security Interest, naming the
Grantors as debtors and the Agent as secured party.
The Grantors agree at all times to keep in all material respects accurate
and complete accounting records with respect to the Collateral, including,
but not limited to, a reasonable record of all payments and Proceeds
received.
3. Further Assurances. Each Grantor agrees, at its expense, to execute,
acknowledge, deliver and cause to be duly filed all such further
instruments and documents and take all such actions as the Agent may from
time to time reasonably request for the assuring and preserving of the
Security Interest and the rights and remedies created hereby, including,
without limitation, the payment of any fees and taxes required in
connection with the execution and delivery of this Agreement, the granting
of the Security Interest and the filing of any financing statements or
other documents in connection herewith. If any amount payable under or in
connection with any of the Collateral shall be or become evidenced by any
promissory note or other instrument, such note or instrument shall be
promptly pledged and delivered to the Agent, duly endorsed in a manner
satisfactory to the Agent. Each Grantor agrees to notify promptly the
Agent of any change in its corporate name or in the location of its chief
executive office, its chief place of business or the office where it keeps
its records relating to the Accounts Receivable owned by it and the
location of any Equipment. Each Grantor agrees promptly to notify the
Agent if any material portion of the Collateral is damaged or destroyed.
4.Inspection and Verification. Upon reasonable notice (which may be
telephonic), the Agent shall have the right to at all reasonable times,
during normal business hours, and as often as the Agent may reasonably
request, permit any authorized representative designated by the Agent to
visit and inspect the properties and financial records of the Grantors and
to make extracts from such financial records and copies from such financial
records at the Grantors' expense, and permit any authorized representative
designated by the Agent to discuss the affairs, finances and condition of
any Grantor with the appropriate Financial Officer and such other officers
as the Agent shall deem appropriate and such Grantor's independent public
accountants, as applicable. The Agent agrees that it shall schedule any
meeting with any such independent public accountant through such Grantor
and a Responsible Officer of such Grantor shall have the right to be
present at any such meeting. An authorized representative of each of the
Lenders may accompany the Agent on such visits and inspections. The Agent
shall have the right to audit, as often as it may reasonably request, the
existence and condition of the Accounts Receivable, inventory, books and
records of any Grantor and to review its compliance with the terms and
conditions of this Agreement and the other Loan Documents. The Grantors
shall pay Agent's customary per diem rates, all out-of-pocket expenses of
Agent's auditors and all costs of Agent with respect to third-party
examiners. Notwithstanding the foregoing, prior to a Default or Event of
Default, the Borrower shall not be obligated, under this Security Agreement
and the Credit Agreement, to reimburse Agent for a total of more than four
(4) visits each calendar year. Subject to the provisions of Section 11.11
of the Credit Agreement, the Agent shall have the absolute right to share
any information it gains from such inspection or verification with any or
all of the Lenders.
5. Taxes; Encumbrances. At its option, the Agent may (after providing the
Grantors with fifteen (15) days written notice and an opportunity to cure,
discharge, or settle) discharge past due taxes, liens, security interests
or other encumbrances at any time levied or placed on the Collateral and
not permitted under the Credit Agreement, and may pay for the maintenance
and preservation of the Collateral to the extent a Grantor fails to do so
as required by the Credit Agreement, and each Grantor agrees to reimburse
the Agent on demand for any payment made or any expense incurred by it pur-
suant to the foregoing authorization; provided, however, that nothing in
this Section 5 shall be interpreted as excusing a Grantor from the
performance of any covenants or other promises with respect to taxes,
liens, security interests or other encumbrances and maintenances as set
forth herein or in the Credit Agreement.
6. Assignment of Security Interest. If at any time a Grantor shall take
and perfect a security interest in any property of an account debtor or any
other person to secure payment and performance of an Account Receivable,
such Grantor shall promptly assign such security interest to the Agent.
Such assignment need not be filed of public record unless necessary to
continue the perfected status of the security interest against creditors of
and transferees from the account debtor or other person granting the
security interest.
7. Representations and Warranties. Each Grantor represents and warrants
to the Agent that:
(a)Title and Authority. Subject to exceptions specifically set forth in
this Security Agreement and the Credit Agreement, it has (i) rights in and
good title to the Collateral in which it is granting a security interest
hereunder and (ii) the requisite power and authority to grant to the Agent
the Security Interest in such Collateral pursuant hereto and to execute,
deliver and perform its obligations in accordance with the terms of this
Agreement, without the consent or approval of any other person other than
any consent or approval which has been obtained.
(b) Filing. Fully executed Uniform Commercial Code ("UCC") financing
statements containing a description of the Collateral shall have been, or
shall be delivered to the Agent in a form such that they can be, filed of
record in every governmental, municipal or other office in every
jurisdiction in which any portion of the Collateral is located necessary to
publish notice of and protect the validity of and to establish a valid,
legal and perfected security interest in favor of the Agent in respect of
the Collateral in which a security interest may be perfected by filing in
the United States and its territories and possessions, and no further or
subsequent filing, refiling, recording, rerecording, registration or
reregistration is necessary in any such jurisdiction, except as provided
under applicable law with respect to the filing of Uniform Commercial Code
continuation statements.
(c) Validity of Security Interest. Upon filing of UCC financing
statements in the locations referred to on Schedule I hereto, the Security
Interest will constitute a valid, legal and perfected first priority
security interest in all of the Collateral for payment and performance of
the Obligations, except as otherwise permitted under the Credit Agreement.
(d) Information Regarding Names. It has disclosed in writing on Schedule
I hereto any trade names used to identify it in its business or in the
ownership of its properties within five (5) years of the Closing Date.
(e) Absence of Other Liens. The Collateral is owned by it free and clear
of any Lien of any nature whatsoever, except as granted pursuant to this
Agreement and as permitted by the Credit Agreement, and, except as provided
by paragraph (b) of this Section 7, no financing statement has been filed,
under the UCC as in effect in any state or otherwise, covering any
Collateral except as indicated on Schedule 7.01 to the Credit Agreement.
(f) Additional Representations for Accounts Receivable. (i) All accounts
(as defined in the NYUCC) owned by the Grantors on the Closing Date
constitute bona fide receivables arising in the ordinary course of
business, the amount of which is actually owing and payable to the Grantors
in the ordinary course of business, subject to no defense, claim of
disability, counterclaim or offset with respect thereto. All such
accounts, net of a bad debt reserve determined in accordance with generally
accepted accounting principles, are collectible in accordance with their
terms.
(ii) Each account (as defined in the NYUCC) arising after the Closing Date
shall be on the date of its creation a good and valid account representing
a bona fide indebtedness incurred or an amount owed by the account debtor
therein named, for a fixed sum as set forth in the invoice relating
thereto, with respect to an absolute sale and delivery upon the specified
terms of goods sold by the Grantors, or work, labor and/or services
theretofore rendered by the Grantors; no Account Receivable is subject to
any defense, offset, counterclaim, discount or allowance (as of the time of
its creation) except as may be stated in the invoice relating thereto or
discounts and allowances as may be customary in a Grantor's business; none
of the transactions underlying or giving rise to any Account Receivable
shall violate any applicable state or federal laws or regulations, and all
documents relating to any Account Receivable shall be legally sufficient
under such laws or regulations and are legally enforceable in accordance
with their terms; all documents and agreements relating to Accounts
Receivable are true and correct and in all respects what they purport to
be; to the best of the Grantors' knowledge, all signatures and endorsements
that appear on all documents and agreements relating to such accounts are
genuine and all signatories and endorsers shall have full capacity to
contract; it will immediately notify the Agent if any accounts arise out of
contracts with the United States or any department, agency or
instrumentality thereof, and will execute any instruments and take any
steps reasonably required by the Agent in order that all monies due or to
become due under any such contract shall be assigned to the Agent and
notice thereof given to the United States Government under the Federal
Assignment of Claims Act; if any amount payable under or in connection with
any Account Receivable is evidenced by a promissory note or other
instrument, as such terms are defined in the UCC, such promissory note or
instrument shall be immediately pledged, endorsed, assigned and delivered
to the Agent as additional collateral.
(g) Survival of Representations and Warranties. All representations and
warranties of the Grantors contained in this Agreement shall survive the
execution, delivery and performance of this Agreement until the termination
of this Agreement pursuant to Section 27.
8. Records of Accounts Receivable. Each Grantor shall keep or cause to be
kept records of its Accounts Receivable which are accurate in all material
respects. In addition, each Grantor will provide the Agent with such
further schedules and/or information respecting each Account Receivable as
the Agent may reasonably require.
9. Protection of Security. Each Grantor shall, at its own cost and
expense, take any and all actions reasonably necessary to defend title to
the Collateral owned by it against all persons and to defend the Security
Interest of the Agent in such Collateral, and the priority thereof, against
any adverse Lien, except for Liens permitted pursuant to Section 7.01 of
the Credit Agreement.
10. Continuing Obligations of the Grantors. Each Grantor shall remain
liable to observe and perform all the conditions and obligations to be
observed and performed by it under each contract, agreement, interest or
obligation relating to the Collateral, all in accordance with the terms and
conditions thereof, and shall indemnify and hold harmless the Agent and the
Lenders from any and all such liabilities.
11. Use and Disposition of Collateral. Except as set forth in Section
7.01 of the Credit Agreement, no Grantor shall make or permit to be made
any assignment, pledge or hypothecation of the Collateral, or grant any
security interest in the Collateral. No Grantor shall make or permit to be
made any transfer of any Collateral, except Inventory in the ordinary
course of business, or except as may be permitted under the terms of the
Credit Agreement, and each Grantor shall remain at all times in possession
of the Collateral owned by it other than transfers to the Agent pursuant to
the provisions hereof and as otherwise expressly provided in this Agreement
or the Credit Agreement.
12. Limitation on Modifications of Accounts Receivable. No Grantor will,
without the Agent's prior written consent, grant any extension of the time
of payment of any of its Accounts Receivable, compromise, compound or
settle the same for less than the full amount thereof, release, wholly or
partly, any person liable for the payment thereof, or allow any credit or
discount whatsoever thereon other than extensions, credits, discounts,
compromises or settlements granted or made in the ordinary course of
business. No Grantor will sell, assign, discount, or otherwise dispose of
any Accounts Receivable except for the purpose of collection or settlement
in the ordinary course of business or the sale of any such accounts to the
Agent.
13. Power of Attorney. The Agent shall have the right, as the true and
lawful agent of the Grantors, with power of substitution for the Grantors
and in the applicable Grantor's name, the Agent's name or otherwise, for
the use and benefit of the Agent and the Lenders (i) to receive, endorse,
assign and/or deliver any and all notes, acceptances, checks, drafts, money
orders or other evidences of payment relating to the Collateral or any part
thereof; (ii) upon the occurrence and continuance of an Event of Default,
to demand, collect, receive payment of, give receipt for and give
discharges and releases of all or any of the Collateral; (iii) to sign the
name of the applicable Grantor on any invoice or bill of lading relating to
any of the Collateral; (iv) upon the occurrence and continuance of an Event
of Default, to send verifications of Accounts Receivable to any customer;
(v) upon the occurrence and continuance of an Event of Default, to commence
and prosecute any and all suits, actions or proceedings at law or in equity
in any court of competent jurisdiction to collect or otherwise realize on
all or any of the Collateral or to enforce any rights in respect of any
Collateral; (vi) upon the occurrence and continuance of an Event of
Default, to settle, compromise, compound, adjust or defend any actions,
suits or proceedings relating to or pertaining to all or any of the
Collateral; (vii) upon the occurrence and continuance of an Event of
Default, to notify, or to require the applicable Grantor to notify, the
account debtors obligated on any or all of the Accounts Receivable to make
payment thereof directly to the Agent; and (viii) to use, sell, assign,
transfer, pledge, make any agreement with respect to or otherwise deal with
all or any of the Collateral, and to do all other acts and things necessary
to carry out the purposes of this Agreement, as fully and completely as
though the Agent were the absolute owner of the Collateral for all
purposes; provided, however, that nothing herein contained shall be
construed as requiring or obligating the Agent or any Lender to make any
commitment or to make any inquiry as to the nature or sufficiency of any
payment received by the Agent or such Lender or to present or file any
claim or notice, or to take any action with respect to the Collateral or
any part thereof or the moneys due or to become due in respect thereof or
any property covered thereby, and no action taken by the Agent or any
Lender or omitted to be taken with respect to the Collateral or any part
thereof shall give rise to any defense, counterclaim or offset in favor of
any Grantor or to any claim or action against the Agent or any Lender in
the absence of the bad faith or willful misconduct of the Agent or such
Lender. It is understood and agreed that the appointment of the Agent as
the agent of the Grantors for the purposes set forth above in this Section
13 is coupled with an interest and is irrevocable. The provisions of this
Section 13 shall in no event relieve any Grantor of any of its obligations
hereunder or under the Credit Agreement with respect to the Collateral or
any part thereof or impose any obligation on the Agent or any Lender to
proceed in any particular manner with respect to the Collateral or any part
thereof, or in any way limit the exercise by the Agent or any Lender of any
other or further right which it may have on the date of this Agreement or
hereafter, whether hereunder or by law or otherwise.
In the case of any inconsistency between this Section 13 with Article 10 of
the Credit Agreement, the provisions of the Credit Agreement shall prevail.
14. Remedies upon Default. Subject to the restrictions expressly set
forth in the Credit Agreement, upon the occurrence and during the
continuance of an Event of Default, each Grantor agrees to deliver each
item of Collateral to the Agent on demand, and it is agreed that the Agent
shall have the right to take any or all of the following actions at the
same or different times: with or without legal process and with or without
previous notice or demand for performance, to take possession of the
Collateral and to enter any premises where the Collateral may be located
for the purpose of taking possession of or removing the Collateral and,
generally, to exercise any and all rights afforded to a secured party
under, and subject to its obligations contained in, the Uniform Commercial
Code as in effect in any state or other applicable law. Without limiting
the generality of the foregoing, each Grantor agrees that the Agent shall
have the right, subject to the mandatory requirements of applicable law, to
sell or otherwise dispose of all or any part of the Collateral, at public
or private sale or at any broker's board or on any securities exchange, for
cash, upon credit or for future delivery as the Agent shall deem
appropriate. Each such purchaser at any such sale shall hold the property
sold absolutely free from any claim or right on the part of the applicable
Grantor, and such Grantor hereby waives (to the extent permitted by law)
all rights of redemption, stay and appraisal which such Grantor now has or
may at any time in the future have under any rule of law or statute now
existing or hereafter enacted.
The Agent shall give the applicable Grantor 10 days' written notice (which
each Grantor agrees is reasonable notice within the meaning of Section
9-504(3) of the NYUCC) of the Agent's intention to make any sale of
Collateral. Such notice, in the case of a public sale, shall state the
time and place for such sale and, in the case of a sale at a broker's board
or on a securities exchange, shall state the board or exchange at which
such sale is to be made and the day on which the Collateral, or portion
thereof, will first be offered for sale at such board or exchange. Any
such public sale shall be held at such time or times within ordinary
business hours and at such place or places as the Agent may fix and state
in the notice (if any) of such sale. At any such sale, the Collateral, or
portion thereof, to be sold may be sold in one lot as an entirety or in
separate parcels, as the Agent may (in its sole and absolute discretion)
determine. The Agent shall not be obligated to make any sale of any
Collateral if it shall determine not to do so, regardless of the fact that
notice of sale of such Collateral shall have been given. The Agent may,
without notice or publication, adjourn any public or private sale or cause
the same to be adjourned from time to time by announcement at the time and
place fixed for sale, and such sale may, without further notice, be made at
the time and place to which the same was so adjourned. In case any sale of
all or any part of the Collateral is made on credit or for future delivery,
the Collateral so sold may be retained by the Agent until the sale price is
paid by the purchaser or purchasers thereof, but the Agent shall not incur
any liability in case any such purchaser or purchasers shall fail to take
up and pay for the Collateral so sold and, in case of any such failure,
such Collateral may be sold again upon like notice. At any public sale
made pursuant to this Section 14, the Agent or any Lender may bid for and
purchase, free (to the extent permitted by law) from any right of
redemption, stay or appraisal on the part of any Grantor (all said rights
being also hereby waived and released to the extent permitted by law), with
respect to the Collateral or any part thereof offered for sale and the
Agent or any such Lender may make payment on account thereof by using any
claim then due and payable to the Agent or any such Lender from any Grantor
as a credit against the purchase price, and the Agent or any such Lender
may, upon compliance with the terms of sale, hold, retain and dispose of
such property without further accountability to the Grantors therefor. For
purposes hereof, a written agreement to purchase the Collateral or any
portion thereof shall be treated as a sale thereof; the Agent shall be free
to carry out such sale and purchase pursuant to such agreement, and no
Grantor shall be entitled to the return of the Collateral or any portion
thereof subject thereto, notwithstanding the fact that after the Agent
shall have entered into such an agreement all Events of Default shall have
been remedied and the Obligations paid in full. As an alternative to exer-
cising the power of sale herein conferred upon it, the Agent may proceed by
a suit or suits at law or in equity to foreclose this Agreement and to sell
the Collateral or any portion thereof pursuant to a judgment or decree of a
court or courts having competent jurisdiction or pursuant to a proceeding
by a court-appointed receiver.
Upon any sale of the Collateral by the Agent (including, without
limitation, pursuant to a power of sale granted by statute or under a
judicial proceeding), the receipt of the Agent or of the officer making the
sale shall be a sufficient discharge to the purchaser or purchasers of the
Collateral so sold and such purchaser or purchasers shall not be obligated
to see to the application of any part of the purchase money paid over to
the Agent or such officer or be answerable in any way for the
misapplication thereof.
15. Application of Proceeds. The proceeds of any collection or sale of
Collateral, as well as any Collateral consisting of cash, shall be applied
by the Agent as set forth in Article VIII of the Credit Agreement.
16. Locations of Collateral; Place of Business. (a) Each Grantor hereby
represents and warrants that all the Collateral is located at the locations
listed on Schedule I hereto. Each Grantor agrees not to establish, or
permit to be established, any other location for Collateral unless (i) such
Grantor has given the Agent at least thirty (30) days' prior written notice
of such change, has executed such documents and taken such other actions as
the Agent has requested to perfect and protect the Security Interest and
(ii) such new location is in the continental United States of America.
(b) Each Grantor confirms that its chief executive office is located as
indicated on Schedule I hereto. Each Grantor agrees not to change, or
permit to be changed, the location of its chief executive office unless (i)
such Grantor has given the Agent at least thirty (30) days' prior written
notice of such change, has executed such documents and taken such other
actions as the Agent has requested to perfect and protect the Security
Interest and (ii) such new location is in the continental United States of
America.
17. Security Interest Absolute. All rights of the Agent hereunder, the
Security Interest, and all obligations of the Grantors hereunder, shall be
absolute and unconditional irrespective of (i) any lack of validity or
enforceability of the Credit Agreement, any other Loan Document, any other
agreement with respect to any of the Obligations or any other agreement or
instrument relating to any of the foregoing, (ii) any change in the time,
manner or place of payment of, or in any other term of, all or any of the
Obligations, or any other amendment or waiver of or consent to any
departure from the Credit Agreement, any other Loan Document, or any other
agreement or instrument relating to the foregoing, (iii) any exchange,
release or nonperfection of any other Collateral, or any release or
amendment or waiver of or consent to or departure from any guarantee, for
all or any of the Obligations, or (iv) any other circumstance which might
otherwise constitute a defense available to, or discharge of, the Grantors,
or any other obligor in respect of the Obligations or in respect of this
Agreement.
18. No Waiver. No failure on the part of the Agent to exercise, and no
delay in exercising, any right, power or remedy hereunder shall operate as
a waiver thereof, nor shall any single or partial exercise of any such
right, power or remedy by the Agent preclude any other or further exercise
thereof or the exercise of any other right, power or remedy. All remedies
hereunder are cumulative and are not exclusive of any other remedies pro-
vided by law. The Agent and the Lenders shall not be deemed to have waived
any rights hereunder unless such waiver shall be in writing and signed by
such parties.
19. Agent Appointed Attorney-in-Fact. Each Grantor hereby appoints the
Agent the attorney-in-fact of such Grantor for the purpose of carrying out
the provisions of this Agreement and taking any action and executing any
instrument which the Agent may deem necessary or advisable to accomplish
the purposes hereof, which appointment is irrevocable and coupled with an
interest.
20. Agent's Fees and Expenses. The Grantors shall be obligated to, upon
demand, pay to the Agent the amount of any and all reasonable expenses,
including the reasonable fees and expenses of its counsel and of any
experts or agents which the Agent may incur in connection with (i) the
administration of this Agreement, (ii) the custody or preservation of, or
the sale of, collection from, or other realization upon, any of the
Collateral, (iii) the exercise or enforcement of any of the rights of the
Agent hereunder, or (iv) the failure by any Grantor to perform or observe
any of the provisions hereof. In addition, the Grantors shall indemnify
and hold the Agent and the Lenders harmless from and against any and all
liability incurred by the Agent or the Lenders hereunder or in connection
herewith, unless such liability shall be due to the bad faith, willful
misconduct or gross negligence of the Agent or the Lenders, as the case may
be. Any such amounts payable as provided hereunder or thereunder shall be
additional Obligations secured hereby and by the other Security Documents.
21. Binding Agreement; Assignments. This Agreement, and the terms,
covenants and conditions hereof, shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and assigns,
except that the Grantors shall not be permitted to assign this Agreement or
any interest herein or in the Collateral, or any part thereof, or any cash
or property held by the Agent as Collateral under this Agreement, except as
contemplated by this Agreement or the Credit Agreement.
22. Governing Law. THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH
AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK, EXCEPT TO THE EXTENT
THAT THE VALIDITY OR PERFECTION OF THE SECURITY INTEREST HEREUNDER, OR
REMEDIES HEREUNDER, IN RESPECT OF ANY PARTICULAR COLLATERAL ARE GOVERNED BY
THE LAWS OF A JURISDICTION OTHER THAN THE STATE OF NEW YORK.
23. Notices. All communications and notices hereunder shall be in writing
and given as provided in the Credit Agreement.
24. Severability. In case any one or more of the provisions contained in
this Agreement should be invalid, illegal or unenforceable the remaining
provisions contained herein shall not in any way be affected or impaired.
25. Section Headings. Section headings used herein are for convenience
only and are not to affect the construction of, or to be taken into
consideration in interpreting, this Agreement.
26. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall constitute an original, but all of which,
when taken together, shall constitute but one instrument. This Agreement
shall be effective when counterparts which bear the signature of each
Grantor shall have been delivered to the Agent.
27. Termination. This Agreement and the Security Interest shall terminate
when all the Obligations have been fully and indefeasibly paid in cash or
in a manner otherwise satisfactory to the Agent and when the Lenders have
no further commitment to make any Loans or open or cause to be opened
Letters of Credit under the Credit Agreement, at which time the Agent shall
forthwith assign, transfer and deliver to the Grantors such Collateral as
shall not have been sold, transferred or otherwise applied or disposed of
pursuant to the terms hereof, such assignment, transfer or delivery to be
without any representations or warranties of any kind, and shall execute
and deliver to the Grantors all Uniform Commercial Code termination
statements and similar documents which the Grantors shall reasonably
request to evidence such termination; provided, however, that all
indemnities of the Grantors contained in this Agreement shall survive, and
remain operative and in full force and effect regardless of the termination
of this Agreement.
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as
of the day and year first above written.
FOODARAMA SUPERMARKETS, INC.
By____________________________
Name:
Title:
NEW LINDEN PRICE RITE, INC.
By____________________________
Name:
Title:
SHOPRITE OF READING, INC.
By____________________________
Name:
Title:
SHOPRITE OF MALVERNE, INC.
By____________________________
Name:
Title:
NATWEST BANK N.A., as Agent
By_____________________________
Name:
Title:
Schedule I to the
Security Agreement
LOCATIONS OF COLLATERAL OF EACH GRANTOR
I. Foodarama Supermarkets, Inc.
II. New Linden Price Rite, Inc.
III. Shop Rite of Reading, Inc.
IV. Shop Rite of Malverne, Inc.
CHIEF EXECUTIVE OFFICE OF EACH GRANTOR
I. Foodarama Supermarkets, Inc.
II. New Linden Price Rite, Inc.
III. Shop Rite of Reading, Inc.
IV. Shop Rite of Malverne, Inc.
<PAGE>
TRADENAMES OF EACH GRANTOR
I. Foodarama Supermarkets, Inc.
None
II. New Linden Price Rite, Inc.
None
III. Shop Rite of Reading, Inc.
None
IV. Shop Rite of Malverne, Inc.
None
EXHIBIT F
FORM OF ASSIGNMENT AND ACCEPTANCE
Dated _______________, 199_
Reference is made to the Revolving Credit and Term Loan Agreement, dated as
of __________ ___, 1995 (as amended, restated, modified or supplemented
from time to time in accordance with its terms, the "Credit Agreement"),
among New Linden Price Rite, a New Jersey corporation, Shop Rite of
Reading, Inc., a Pennsylvania corporation (individually, each a "Borrower,"
collectively, the "Borrowers"), Foodarama Supermarkets, Inc., a New Jersey
corporation, the Guarantors, named therein, the lenders named therein
(collectively, the "Lenders"), and NatWest Bank N.A., as agent for itself
and each of the Lenders (in such capacity, the "Agent"). Capitalized terms
used herein and not otherwise defined herein shall have the meanings
assigned to such terms in the Credit Agreement.
____________________________ (the "Assignor") and
____________________________ (the "Assignee") agree as follows:
1. The Assignor hereby sells and assigns to the Assignee, and
the Assignee hereby purchases and assumes from the Assignor, ___% interest
in and to all the Assignor's rights and obligations under the Credit
Agreement as of the Effective Date (as defined below) (including, without
limitation, such percentage interest in the Revolving Commitment and in the
Term Commitment of the Assignor on the Effective Date and/or such
percentage interest in the Revolving Loans and the Term Loan owing to the
Assignor outstanding on the Effective Date, together with such percentage
interest in all unpaid interest, Commitment Fees and other fees accrued to
the Effective Date and such percentage interest in the Notes held by the
Assignor, as defined herein).
2. The Assignor (i) represents that as of the date hereof,
its Revolving Commitment (without giving effect to assignments thereof
which have not yet become effective) is $____________, the outstanding
balance of its Revolving Loans (unreduced by any assignments thereof which
have not yet become effective) is $________________, and the outstanding
balance of its Term Loan (unreduced by any payments thereof which have not
yet become effective) is $______________; (ii) makes no representation or
warranty and assumes no responsibility with respect to any statements,
warranties or representations made in or in connection with the Credit
Agreement or the execution, legality, validity, enforceability, perfection,
genuineness, sufficiency or value of the Credit Agreement, the Security
Documents, any other Loan Document, any Collateral or any instrument or
document furnished pursuant thereto, other than that it is the legal and
beneficial owner of the interest being assigned by it hereunder and that
such interest is free and clear of any adverse claim; (iii) makes no
representation or warranty and assumes no responsibility with respect to
the financial condition of the Borrower or any Guarantor or Grantor or the
performance or observance by the Borrower or any Guarantor or Grantor, of
its obligations under the Credit Agreement, any of the Security Documents,
any other Loan Document or any other instrument or document furnished pur-
suant thereto; and (iv) attaches the Notes referred to in paragraph l above
and requests that the Agent exchange such Notes for new Notes [payable to
Assignee] [payable to Assignor] in principal amounts equal to __________
[_________, and _________, respectively].
3. The Assignee (i) represents and warrants that it is
legally authorized to enter into this Assignment and Acceptance and the
other documents executed and delivered in connection herewith; (ii)
confirms that it has received a copy of the Credit Agreement and the other
Loan Documents, together with copies of such financial statements and such
other documents and information as it has deemed appropriate to make its
own credit analysis and decision to enter into this Assignment and
Acceptance; (iii) agrees that it will, independently and without reliance
upon the Agent, the Assignor or any other Lender and based on such
documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking action
under the Credit Agreement; (iv) appoints and authorizes the Agent to take
such action as agent on its behalf and to exercise such powers under the
Credit Agreement as are delegated to the Agent by the terms thereof,
together with such powers as are reasonably incidental thereto; (v) agrees
that it will perform in accordance with their terms all of the obligations
which by the terms of the Credit Agreement are required to be performed by
it as a Lender; and (vi) agrees that it will keep confidential all
information with respect to the Borrower and any Guarantor or Grantor
furnished to it by the Borrower, any Guarantor or Grantor or the Assignor
(other than information generally available to the public or otherwise
available to the Assignor on a nonconfidential basis). [; and (vii)
attaches the forms prescribed by the Internal Revenue Service of the United
States certifying as to the Assignee's exemption from United States
withholding taxes with respect to all payments to be made to the Assignee
under the Credit Agreement or such other documents as are necessary to
indicate that all such payments are subject to such tax at a rate reduced
by an applicable tax treaty.
4. The effective date for this
Assignment and Acceptance shall be _________________ (the "Effective
Date").] Following the execution of this Assignment and Acceptance, it
will be delivered to the Agent for acceptance and recording by the Agent.
5. Upon such acceptance and recording, from and after the Effective Date,
(i) the Assignee shall be a party to the Credit Agreement and, to the
extent provided in this Assignment and Acceptance, have the rights and
obligations of a Lender thereunder and (ii) the Assignor shall, to the
extent provided in this Assignment and Acceptance, relinquish its rights
and be released from its obligations under the Credit Agreement.
6. Upon such acceptance and recording, from and after the Effective Date,
the Agent shall make all payments in respect of the interest assigned
hereby (including payments of principal, interest, fees and other amounts)
to the Assignee. The Assignor and Assignee shall make all appropriate
adjustments in payments for periods prior to the Effective Date by the
Agent or with respect to the making of this assignment directly between
themselves.
7. THIS ASSIGNMENT AND ACCEPTANCE
SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE
STATE OF NEW YORK.
[NAME OF ASSIGNOR]
By:_________________________________
Name:
Title:
[NAME OF ASSIGNEE]
By:_________________________________
Name:
Title:
Accepted this _____ day
of ______________, 199_
NATWEST BANK N.A., as Agent
By:_________________________
Name:
Title:
EXHIBIT H
SECURITY AGREEMENT
(Partnership Interests)
SECURITY AGREEMENT dated as of ________ ___, 1995, between Foodarama
Supermarkets, Inc., a New Jersey corporation (the "Partner") and NatWest
Bank N.A., having an office at 175 Water Street, New York, New York 10038
(together with its successors and assigns, the "Agent"), as agent for
itself and each of the Lenders named in Schedule 2.01 to the Credit
Agreement (as hereinafter defined)(the Agent in such capacity is herein
referred to as the "Secured Party").
It is agreed as follows:
1. In consideration of one or more loans, advances, or other financial
accommodations at any time before, at or after the date hereof made or
extended by the Secured Party and/or the Lenders to New Linden Price Rite,
Inc., a New Jersey corporation ("New Linden") and/or Shop Rite of Reading,
Inc., a Pennsylvania corporation ("Reading", and together with New Linden,
each a "Borrower" and collectively, the "Borrowers"), the Partner hereby
grants to the Secured Party a security interest in and a continuing lien
upon, and the Partner hereby assigns as collateral to the Secured Party,
the Collateral described in Paragraph 2 hereof, to secure the payment,
performance and observance of all Obligations (as such term is defined in
the Revolving Credit and Term Loan Agreement dated as of ________ __, 1995
among the Partner, New Linden, Reading, the Guarantors named therein, the
Secured Party and the Lenders named therein (as the same may be amended,
supplemented or otherwise modified in accordance with its terms, the
"Credit Agreement")).
2. The Collateral is described as follows and on any separate schedule at
any time furnished by the Partner to the Secured Party (which schedules are
hereby deemed part of this Security Agreement):
(a) all right, title and interest of the Partner in and to, and all
present and future interests and rights and all monies due or to become due
with respect to the Partnerships (as hereinafter defined) and distributions
therefrom, which such Partner may now or hereafter have as a general or
limited partner, in and to the partnerships listed on Schedule I hereto
(each individually, a "Partnership", and collectively, the "Partnerships")
existing under the partnership agreements listed on Schedule I hereto as
the same may from time to time be modified or amended (each individually a
"Partnership Agreement", and collectively, the "Partnership Agreements");
and
(b) all proceeds of and distributions from the foregoing (including but
not limited to all proceeds of dissolution or liquidation), together with
any and all monies, securities, drafts, notes, items and other property and
the proceeds thereof, constituting any such proceeds or distributions.
3. The Partner warrants, represents and covenants that:
(a) the chief executive office of the Partner and the Partner's books and
records are located at the address set forth below its signatures hereto
and the Partner will not change any of the same, or change its name,
without thirty (30) days prior written notice to the Secured Party;
(b) the address of the Partner and the location of its books and records
relating to the Partnership Agreements and the Collateral are set out below
its signatures hereto, and it will not change said addresses or locations
without thirty (30) days prior written notice to the Secured Party;
(c) the Partner has, and will have at all times so long as any Obligations
remain outstanding and any Commitment to lend has not been terminated under
the Credit Agreement, good title to the Collateral, free and clear of all
claims, security interests, liens and encumbrances of every nature
whatsoever except in favor of the Secured Party, and the Partner has full
power and authority to enter into and perform this Security Agreement;
(d) the security interest granted herein in the Collateral is, and at all
times so long as any Obligations remain outstanding and any Commitment to
lend has not been terminated under the Credit Agreement shall be, a first,
perfected, and fully enforceable security interest in the Collateral,
subject to any filings or actions required pursuant to the Uniform
Commercial Code ("UCC");
(e) neither the execution and delivery by the Partner of this Security
Agreement or of any of the instruments or documents to be delivered
pursuant hereto, nor the consummation by the Partner or the Borrowers of
the transactions herein contemplated, or compliance by the Partner with the
provisions hereof or thereof, will violate any law or regulation, or to its
knowledge any order or decree of any court or governmental instrumentality,
or will conflict with, or result in the breach of, or constitute a default
under, any indenture, mortgage, deed of trust, agreement or other
instrument to which the Partner is a party (including without limitation,
any Partnership Agreement) or by which they may be bound, or result in the
creation or imposition of any lien, charge or encumbrance upon any of the
property of the Partner except in favor of the Secured Party, or require
any action of, or filing (other than the filing of financing statements
pursuant to the UCC) with, any governmental or public body or authority to
authorize same;
(f) the Partner will not assign, sell, mortgage, lease, transfer, pledge,
grant a security interest in or lien upon, encumber, or otherwise dispose
of, nor will it suffer or permit any of the same to occur with respect to,
any part or all of the Collateral;
(g) the Partner will, at any time and from time to time, at its expense,
perform all acts and execute all documents reasonably requested by the
Secured Party at any time to evidence, perfect, maintain and enforce the
Secured Party's security interest in the Collateral or otherwise in
furtherance of the provisions of this Security Agreement;
(h) upon request of the Secured Party, the Partner shall, at any time and
from time to time, at its expense, execute and deliver to the Secured Party
one or more financing statements pursuant to the UCC and any other papers,
documents or instruments reasonably requested by the Secured Party in
connection with this Security Agreement, and the Partner hereby authorizes
the Secured Party to execute and file at any time or times, one or more
financing statements with respect to all or any part of the Collateral;
(i) the Partner will promptly pay the Secured Party for any and all sums,
costs, and expenses which the Secured Party may reasonably pay or incur
pursuant to the provisions of this Security Agreement or in reasonably
defending, protecting or enforcing the security interest granted herein or
otherwise in connection with the provisions hereof, including but not
limited to all court costs, collection charges, travel expenses, and
reasonable attorneys' fees, and any such amount shall be deemed an advance
by the Secured Party to the Partner and shall be payable on demand;
(j) the Partner will not, without the prior written consent of the Secured
Party, modify, amend or alter in any respect the terms and conditions of
any Partnership Agreement or execute any document or instrument or take any
action whatsoever which will, in the sole judgment of the Secured Party,
impair the value of the Collateral;
(k) the Partner shall, upon the request of the Secured Party, do and cause
to be done such further acts as may be reasonably necessary or proper in
the opinion of the Secured Party to carry out more effectually the
provisions of this Security Agreement;
(l) under no circumstances whatsoever does the Secured Party, by reason of
this Security Agreement, assume any responsibility for, or obligation with
respect to, any of the terms, covenants, conditions, obligations or
liabilities of the Partner under, or with respect to, any Partnership
Agreement or the Obligations, and the Partner shall hold the Secured Party
harmless with respect to any and all claims arising therefrom or relating
thereto, other than actions taken or omitted to be taken solely through the
willful misconduct or gross negligence of the Secured Party; and
(m) the percentage equity interest owned by the Partner in each
Partnership is set forth on Schedule I hereto.
4. (a) If a Default or an Event of Default shall have occurred and be
continuing, all payments, proceeds, monies, compensation, property, assets,
instruments or rights thereafter paid, issued or distributed in respect of
the Collateral and any other proceeds of the Collateral shall be paid or
delivered to the Secured Party, to be held by it as hereinafter set forth;
provided, however, that prior to the occurrence of any such Default or
Event of Default, the Partner shall be entitled to receive and retain such
payments, proceeds, monies, compensation, property, assets, instruments or
rights (except such as result from a dissolution or liquidation of any
Partnership), free and clear of the security interest of the Secured Party
therein.
(b) If a Default or Event of Default shall have occurred and be
continuing, the Secured Party may, in its sole discretion, at any time and
from time to time, in its name or the name of the Partner, or otherwise,
notify the Borrowers, the Partner or any obligor on, or other person in-
terested in, any of the Collateral, of this Security Agreement and to make
payment or delivery to the Secured Party of the Collateral, and the Secured
Party may, in its sole discretion and at any time, demand, sue for, collect
or receive any money, rights or property at any time payable or receivable
on account of or in exchange for, or make any compromise or settlement
deemed desirable by the Secured Party with respect to, any of the Col-
lateral, and/or extend the time of payment or delivery, arrange for payment
or delivery in installments, or otherwise modify the terms of, or release,
any of the Collateral, all without notice to or consent by the Partner or
any other person and without otherwise discharging or affecting the
Obligations, the Collateral or the security interest granted herein.
(c) Any payments, proceeds, monies, compensation, property, assets,
instruments or rights paid, issued or distributed with respect to the
Partner's interests in any of the Partnerships and any other proceeds of
the Collateral received by the Partner, and required to be paid or
delivered to the Secured Party under paragraph 4(a) or 4(b) hereof, shall
not be commingled with other property of the Partner but shall be
segregated, held by the Partner in trust as the exclusive property of the
Secured Party and the Partner will immediately deliver to the Secured Party
the identical checks, monies, property or other proceeds received, duly
endorsed, transferred or assigned in blank where appropriate to effectuate
the provisions hereof, the same, together with any other cash or property
received by the Secured Party hereunder, to be held by the Secured Party as
additional Collateral hereunder or, at the Secured Party's option, to be
applied by the Secured Party to the payment of any of the Obligations,
whether or not then due and in any order.
5. Upon the occurrence and during the continuance of any Default or Event
of Default, in addition to the rights described in paragraph 4 hereof, the
Secured Party shall have the following rights and remedies (to the extent
permitted by applicable law) in addition to all rights and remedies of a
secured party under the UCC, or of the Secured Party under the Obligations,
all such rights and remedies being cumulative, not exclusive and
enforceable alternatively, successively or concurrently: the Secured Party
may at any time and from time to time sell, resell, assign and deliver,
grant options for or otherwise dispose of any or all of the Collateral at
public or private sale or by legal proceedings or otherwise, by one or more
contracts, in one or more parts, at the same or different times, for cash
and/or credit, and upon any terms, at such places and times and to such
persons or entities as the Secured Party deems best, all without demand for
performance or any notice or advertisement whatsoever except that where an
applicable statute requires reasonable notice of sale or other disposition,
the Partner agrees that the sending of ten (10) days notice by ordinary
mail, postage prepaid, to its address set forth below its signature hereto
of the place and time of any public sale or of the time after which any
private sale or other intended disposition is to be made, shall be deemed
reasonable notice thereof. If any of the Collateral is sold by the Secured
Party upon credit or for future delivery, the Secured Party shall not be
liable for the failure of the purchaser to pay for the same, and in such
event the Secured Party may resell such Collateral. The Secured Party may
apply the cash proceeds actually received from any sale or other
disposition to the reasonable expenses of holding or selling the
Collateral, to reasonable attorneys' fees and all legal, travel and other
out-of-pocket expenses which may be incurred by the Secured Party in
attempting to collect the Obligations or enforce this Security Agreement or
in the prosecution or defense of any action or proceeding related to the
subject matter of this Security Agreement, and then to the Obligations in
such order and as to principal or interest as Secured Party may desire; and
subject to and in accordance with the terms of the Credit Agreement, the
Borrowers and the Partner shall remain liable and will pay the Secured
Party on demand any deficiency remaining, with any surplus after payment in
full of all Obligations to be paid to the Partner as its interests may
appear, subject to any duty of the Secured Party imposed by law to the
holder of any subordinate security interest in the Collateral known to the
Secured Party.
6. To effectuate the terms and provisions hereof, the Partner hereby
designates and appoints the Secured Party and its designees or agents as
attorney-in-fact of the Partner, irrevocably and with power of
substitution, at any time upon the occurrence of a Default and from time to
time thereafter, with authority to endorse the name of the Partner on any
notes, acceptances, checks, drafts, money orders, instruments or other evi-
dences of payment or proceeds of the Collateral that may come into the
Secured Party's possession or control; to sign the name of the Partner on
any statements, documents, drafts against and notices to obligors with
respect to the Collateral; to execute proofs of claim and loss; to execute
any endorsements, assignments, or other instruments of conveyance or
transfer; to execute releases; and to do all other acts and things
necessary and advisable in the sole discretion of the Secured Party to
carry out and enforce this Security Agreement, and to obtain the benefits
hereof. All acts of said attorney or designee are hereby ratified and
approved and said attorney-in-fact or designee shall not be liable for any
acts of commission or omission, nor for any error of judgment or mistake of
fact or law. This power of attorney, being coupled with an interest, is
irrevocable while any of the Obligations shall remain outstanding.
7. The Partner hereby agrees that, without notice or further assent,
before, at or after the maturity of the Obligations, expressed or declared,
(a) the liability of the Partner, the Borrowers or any other party, for or
upon the Obligations, may, from time to time, in whole or in part, be
renewed, extended, modified, prematured, compromised or released by the
Secured Party, in bankruptcy proceedings or otherwise, as the Secured Party
may deem advisable and (b) the Secured Party may, from time to time, in its
discretion, exchange, modify, release or surrender, in whole or in part,
with or to the Partnerships and their representatives, the Borrowers or any
other appropriate party, as the case may be, (i) any Collateral or any
substitutes or additions thereto, or (ii) the surplus net proceeds derived
from the sale or sales or disposition of the Collateral by the Secured
Party pursuant to the terms of this Security Agreement. The Partner hereby
waives any and all notice of the acceptance of this Security Agreement, of
the creation, accrual or maturity (whether by declaration or otherwise) of
any and all of the Obligations, and of the Secured Party's reliance upon
this Security Agreement.
8. No act, failure or delay by the Secured Party shall constitute a waiver
of its rights and remedies hereunder or otherwise. No single or partial
waiver by the Secured Party of any Default or right or remedy which it may
have shall operate as a waiver of any other Default, right or remedy or of
the same Default, right or remedy on a future occasion. The Partner hereby
waives presentment, notice of dishonor and protest of all instruments
included in or evidencing any of the Obligations or the Collateral, and any
and all other notices and demands whatsoever (except as expressly provided
herein). The Partner agrees to pay, on demand, all reasonable
out-of-pocket expenses incurred by the Secured Party in connection with the
negotiation, execution, perfection, consummation and enforcement of this
Security Agreement, the Obligations, and the transactions contemplated
hereunder and thereunder, including but not limited to the fees and
expenses of counsel to the Secured Party. In the event of any litigation
with respect to any matter connected with this Security Agreement, the
Obligations or the Collateral, the Partner hereby waives the right to a
trial by jury and all defenses, rights of set-off (except as applicable
procedural rules require the assertion of a right of set-off under penalty
of losing such right if not asserted) and rights to interpose counterclaims
of any nature. All amounts payable by the Partner hereunder shall bear
interest at the interest rate applicable to the Obligations, except that
such rate shall not exceed the rate of interest permitted to be charged to
the Partner under applicable law. The Partner hereby irrevocably consents
to the non-exclusive jurisdiction of the Courts of the State of New York
and of any Federal Court located in such State in connection with any
action or proceeding arising out of or relating to the Obligations, this
Security Agreement or the Collateral, or any document or instrument
delivered with respect to any of the Obligations. The Partner hereby
waives personal service of any summons, complaint or other process in
connection with any such action or proceeding and agrees that the service
thereof may be made by certified or registered mail directed to the Partner
at the address set forth below, or at such other addresses as the Partner
may designate by written notification by certified or registered mail
directed to and received by the Secured Party at its address set forth
below. In the alternative, in its discretion the Secured Party may effect
service upon the Partner in any other form or manner permitted by law. All
terms herein shall have the meanings as defined in the UCC, unless the
context otherwise requires. No provision hereof shall be modified, altered
or limited except by a written instrument expressly referring to this
Security Agreement and to such provision, and executed by the party to be
charged. The execution and delivery of this Security Agreement has been
authorized by the Board of Directors of the Partner. This Security
Agreement shall be binding upon the heirs, executors, administrators,
successors, and assigns of the Partner, and shall, together with the rights
and remedies of the Secured Party hereunder, inure to the benefit of the
Secured Party, its successors, endorsees and assigns. This Security
Agreement and the Obligations shall be governed in all respects by the laws
of the State of New York. If any term of this Security Agreement shall be
held to be invalid, illegal or unenforceable, the validity of all other
terms hereof shall in no way be affected thereby. The Partner acknowledges
receipt of a copy of this Security Agreement.
9. Capitalized terms used but not defined herein shall have the meaning
assigned thereto in the Credit Agreement.
IN WITNESS WHEREOF, the Partner and the Secured Party have duly executed or
caused this Security Agreement to be duly executed in _________________ as
of the date first above set forth.
THE PARTNER: FOODARAMA
SUPERMARKETS, INC.
By:___________________________
Title:
Address:
SECURED PARTY: NATWEST BANK
N.A., as Agent
By:____________________
Title:
Address:
<PAGE>
CONSENTED TO:
THE PARTNERSHIPS: WESTLO ASSOCIATES
By:___________________________
Title:
Address:
<PAGE>
Schedule I to Security Agreement
(Partnership Interests)
I Partnership:
Westlo Associates, a New Jersey limited partnership
II Partnership Agreements:
Limited Partnership Agreement of Westlo Associates,
Limited Partnership, dated as of April 30, 1987, by
and among Peter J. Saker, Sr., Peter J. Saker, Jr.,
Louis Saker and John Saker, as general partners, and
Foodarama Supermarkets, Inc., as amended
III Percentage Ownership of Each Partnership:
40%
LANDLORD'S WAIVER AND CONSENT dated as of the day of January, 1995
between LANDLORD_UPPERCASE~, having an address at
LANDLORD_STREET_1~LANDLORD_STREET_1~, LANDLORD_STREET_2~, LANDLORD_CITY~,
LANDLORD_STATE~ LANDLORD_ZIP~ (hereinafter called "Landlord"), and NATWEST
BANK, N.A., having an office at 175 Water Street, New York, New York 10038,
as agent ("the Secured Party") for itself and certain other lenders
(collectively, the "Lenders").
WHEREAS, the Lenders have made or are about to make one or more loans,
advances, and/or other financial accommodations to TENANT~ (hereinafter
called "Debtor"), to be secured in whole or in part by security agreements
covering, among other things, the personal property described in Schedule A
attached hereto and made a part hereof (hereinafter called the
"Collateral"); and
WHEREAS, the Collateral is or may be installed or kept at the premises
located at PREMISES_NAME~PREMISES_NAME~, PREMISES_STREET~PREMISES_STREET~,
PREMISES_CITY~, PREMISES_STATE~ which premises are owned by Landlord,
leased to Debtor and more particularly described in Schedule B attached
hereto and made a part hereof.
1. Landlord consents to the installation or location of the Collateral in
said premises, and hereby waives and relinquishes in favor of Secured Party
any right, claim, title, interest or security interest in or lien upon, any
of the Collateral, which it may have or acquire by reason of the
installation in, attachment to or location of the Collateral in said
premises, or otherwise (including without limitation any right of
distraint), whether arising under any agreement, instrument or law now or
hereafter in effect, to the right, claim, title and interest or security
interest or lien upon such Collateral in favor of the Secured Party to the
full extent that the same secures or may hereafter secure any and all
obligations and indebtedness of every kind, now existing or hereafter
arising, of Debtor to the Lenders.
2. Landlord hereby agrees that so long as this waiver and consent is in
effect, Landlord shall not exercise any rights, assert any claim, lien,
title, interest or security interest in, or lien upon, or take any action
or institute any proceedings, with respect to the Collateral.
3. The Secured Party and its agents and representatives may, upon notice
to, but without the consent of, the Landlord enter said premises and remove
and take possession of the Collateral at any time in accordance with said
security agreements, and Secured Party shall repair at its expense any
physical damage to said premises which it directly causes in removing the
Collateral.
4. The provisions hereof shall be irrevocable and remain in full force and
effect until Debtor has fully paid and performed all of its obligations to
the Lenders and Secured Party under all agreements, instruments and
documents evidencing such obligations, and under all security agreements,
present and future, and any extensions, modifications and renewals thereof
at any time made, and until all obligations, if any, of the Lenders to
extend loans or financial accommodations to Debtor shall have terminated.
5. This Waiver and Consent shall be binding upon and inure to the benefit
of the parties herein named and their respective assigns and successors in
interest.
IN WITNESS WHEREOF, the undersigned has duly executed this Waiver and
Consent as of the day and year first above written.
LANDLORD:
Attest:
__________________________By:
____________________________Name:
Title: <PAGE>
Schedule A to Landlord's Waiver and Consent between
LANDLORD~ (the "Landlord")
and NatWest Bank, N.A. ("Secured Party"),
with respect to TENANT~ ("Debtor")
As used herein, the term "Collateral" shall mean all (i) Accounts
Receivable, (ii) Documents, (iii) Equipment, (iv) General Intangibles, (v)
Inventory, and (vi) Proceeds.
(a)"Accounts Receivable" shall mean (i) all of the Debtor's present and
future accounts, general intangibles, chattel paper and instruments, as
such terms are defined in the Uniform Commercial Code as in effect in the
State of New York ("NYUCC"), (ii) all moneys, securities and other property
and the proceeds thereof, now or hereafter held or received by, or in
transit to, the Secured Party from or for the Debtor, whether for
safekeeping, pledge, custody, transmission, collection or otherwise, and
all of the deposits (general or special) of the Debtor, balances, sums and
credits with, and all of the Debtor's claims against the Secured Party at
any time existing, (iii) all of the Debtor's right, title and interest, and
all of the Debtor's rights, remedies, security and Liens, in, to and in
respect of any accounts receivable, including, without limitation, rights
of stoppage in transit, replevin, repossession and reclamation and other
rights and remedies of an unpaid vendor, lienor or secured party,
guaranties or other contracts of suretyship with respect to accounts
receivable, deposits or other security for the obligation of any account
debtor, and credit and other insurance, (iv) all of the Debtor's right,
title and interest in, to and in respect of all goods relating to, or which
by sale have resulted in, accounts receivable, including, without
limitation, all goods described in invoices or other documents or
instruments with respect to, or otherwise representing or evidencing, any
account receivable, and all returned, reclaimed or repossessed goods.
(b)"Documents" shall mean all instruments, files, records, ledger sheets
and documents covering or relating to any of the Collateral.
(c)"Equipment" shall mean all of the Debtor's machinery, equipment,
vehicles, furniture and fixtures and all attachments, accessories and
equipment now or hereafter owned or acquired in the Debtor's business or
used in connection therewith, and all substitutions and replacements
thereof, wherever located, whether now owned or hereafter acquired by the
Debtor.
(d)"General Intangibles" shall mean all of the Debtor's present and future
general intangibles of every kind and description, including (without
limitation) patents, patent applications, trade names and trademarks and
the goodwill of the business symbolized thereby, Federal, State and local
tax refund claims of all kinds.
(e)"Inventory" shall mean all of the Debtor's raw materials, work in
process, finished goods and all other inventory (as such term is defined in
the NYUCC), whether now owned or hereafter acquired, and all wrapping,
packaging, advertising and shipping materials, and any documents relating
thereto.
(f)"Proceeds" shall mean any consideration received from the sale,
exchange, lease or other disposition of any asset or property which
constitutes Collateral, any other value received as a consequence of the
possession of any Collateral and any payment received from any insurer or
other person or entity as a result of the destruction, loss, theft or other
involuntary conversion of whatever nature of any asset or property that
constitutes Collateral, and shall include, without limitation, all cash and
negotiable instruments received or held by Secured Party pursuant to any
lockbox or similar arrangement relating to the payment of Accounts
Receivable.
<PAGE>
schedule B to Landlord's Waiver and Consent between
LANDLORD~ (the "Landlord")
and NatWest Bank, N.A. ("Secured Party"),
with respect to TENANT~ ("Debtor")
[PROPERTY DESCRIPTION GOES HERE]
EXHIBIT J
FORM OF SETTLEMENT REPORT
Pursuant to Section 2.15 of the Revolving Credit and Term Loan Agreement,
dated as of __________ ___, 1995 (as amended, restated, modified or
supplemented from time to time in accordance with its terms, the "Credit
Agreement"; capitalized terms used herein and not otherwise defined herein
shall have the meanings assigned to such terms in the Credit Agreement),
among New Linden Price Rite, a New Jersey corporation, Shop Rite of
Reading, Inc., a Pennsylvania corporation (collectively, the "Borrowers"),
Foodarama Supermarkets, Inc., a New Jersey corporation, the Guarantors
named therein, the lenders named therein (collectively, the "Lenders"), and
NatWest Bank N.A., as agent for itself and each of the Lenders (in such
capacity, the "Agent"), the Agent hereby delivers this Report to the
Lenders for the _______________ __, 199_ Settlement Date.
1. Principal amount of Revolving
Loans outstanding as of
Settlement Date (before
settlement)
(a) NatWest
(b) Chemical Bank
(c) IBJ Schroder
(d) Total<PAGE>
$___________________
$___________________
$___________________
$___________________
<PAGE>
2. Principal amount of Revolving
Loans outstanding as of next
preceding Settlement Date
(after settlement on such
date)
(a) NatWest
(b) Chemical Bank
(c) IBJ Schroder
(d) Total<PAGE>
$___________________
$___________________
$___________________
$___________________
<PAGE>
3. Revolving Commitment Amount of
each Lender (line 1(d) x
Revolving Commitment
Percentage)
(a) NatWest
(b) Chemical Bank
(c) IBJ Schroder<PAGE>
$___________________
$___________________
$___________________
<PAGE>
4. Excess (shortfall) of each
Lender's Revolving Commitment
Amount over its outstandings
(a) NatWest (line 3(a)
minus line 1(a))
(b) Chemical Bank
(line 3(b) minus
line 1(b))
(c) IBJ Schroder
(line 3(c) minus
line 1(c))<PAGE>
$___________________
$___________________
$___________________
<PAGE>
5. Each Lender for which an excess (a positive dollar amount) is shown
in item 4 shall pay an amount equal to such excess to the Agent for
payment by the Agent to each Lender for which a shortfall (a
negative dollar amount) is shown in item 4 to the extent of such
shortfall.
NATWEST BANK N.A., as Agent.
<PAGE>
SCHEDULE 2.01(A)
Revolving Loan Commitments
Bank Commitment Percentage
NatWest Bank N.A. $ 7,500,000 50%
Chemical Bank $ 3,750,000 25%
IBJ Schroder Bank & Trust Company $ 3,750,000 25%
SCHEDULE 2.01(B)
Term Loan Commitments
Bank Commitment Percentage
NatWest Bank N.A. $11,500,000 50%
Chemical Bank $ 5,750,000 25%
IBJ Schroder Bank & Trust Company $ 5,750,000 25%
<PAGE>
SCHEDULE 2.02
Domestic Lending Offices
NatWest Bank N.A.
175 Water Street
New York, New York 10038
Chemical Bank
633 Third Avenue
New York, New York 10017
IBJ Schroder Bank & Trust Company
One State Street
New York, New York 10004
<PAGE>
SCHEDULE 3.03
POST - CLOSING MORTGAGES
See letter, dated February 15, 1995, from NatWest Bank N.A., Chemical Bank
and IBJ Schroder Bank & Trust Company to Foodarama Supermarkets, Inc., New
Linden Price Rite, Inc., ShopRite of Reading, Inc. and ShopRite of
Malverne, Inc. (the "Post-Closing Letter").
<PAGE>
SCHEDULE 4.01
QUALIFIED JURISDICTIONS
Foodarama Supermarkets, Inc. New Jersey
New York
ShopRite of Reading, Inc. Pennsylvania
New Linden Price Rite, Inc. New Jersey
ShopRite of Malverne, Inc. New York
<PAGE>
SCHEDULE 4.05
February 15, 1995
William C. Hall, Jr.
NatWest Bank N.A.
175 Water Street
New York, New York 10038-4924
Dear Bill:
The following is a summary of events that have had a Material Adverse
Effect on Foodarama's financial condition since October 30, 1993.
Foodarama's results for the second quarter of Fiscal Year 1994 were driven
by a need to accumulate cash, even at the expense of sales and
profitability. The Company experienced a working capital shortfall
beginning with the fourth quarter of Fiscal Year 1993 which resulted in a
past due balance to Wakefern and a resulting service charge equal to 1% of
the outstanding balance on each Tuesday. This working capital shortfall
can be attributed primarily to the funding of losses in excess of
$13,500,000 (before the extraordinary gain associated with the sale of the
New York division) in the third and fourth quarters of FY 1993 resulting
from the strike of the New Jersey Retail Clerks Union. In addition, the
Company funded the capital expenditures and working capital requirements
associated with the new Neptune store, the new Neptune liquor store and the
Neptune satellites during the last two quarters of FY 1993 and the first
quarter of FY 1994. As a result, cash in the last two quarters of FY 1993
declined by more than $3,000,000 and cash in the first quarter declined by
a further $300,000.
Efforts to improve the cash position of the Company focused on inventory
reduction, including reducing purchases, marking down merchandise in the
stores and returning merchandise to Wakefern. The effects of these efforts
were clearly seen in sales and gross margins. Sales declined by 1.63% from
the second quarter of FY 1993 on a same store basis (although sales in
total declined by 10.2% due to the sale of the New York division at the end
of FY 1993). Gross margins declined by 0.53% from the second quarter of FY
1993 and by 0.73% from the first quarter of FY 1994. The declines in sales
and gross margins can be directly attributed to the inventory reduction
program:
Page 2
* Sales were impacted adversely by the out-of-stock positions
in many items. The out-of-stock problem was exacerbated by
the temporary closing of one of the Wakefern warehouses.
* The Company was unable to "buy into" promotional items,
which under normal circumstances allows the sales impact of
such programs to be extended beyond the sale period.
* Gross margins were impacted in several ways, which manifested
themselves in higher "shrink":
Mark downs on merchandise were taken to raise cash.
The Company's inability to buy into promotional items
reduced the ability to mark up merchandise.
The Company incurred losses on the return of
merchandise to Wakefern.
Also contributing to the decline in gross margin in Fiscal Year 1994 was
the Alternate Product Costing (APC) program at the beginning of the first
quarter of FY 1994. APC was established to replace the markup taken on
merchandise purchased by the members from Wakefern with an assessment based
on the sales of each member. This program was intended to maintain the
gross margins of the Wakefern members at a constant level but, due to
unanticipated product mix differences, had the effect of reducing the
margins of all of the members by an estimated 0.5%. Wakefern has
recognized the adverse impacts of the APC program and has since moved to
increase the profitability of the members.
Operating expenses at store level for the second quarter of FY 1994 fell by
more than 9% from the second quarter of the previous year, after deducting
inter-company interest. However, as a percent of sales, total expenses
before allocation increased by 0.48% due to the low sales in the quarter.
On February 15, 1995 the Company paid the total principal on the senior
secured notes. By prepaying the amounts due, the Company has incurred a
prepayment penalty of $1,270,000. The amount due will be paid over a two
year period, with $400,000 paid at closing and the balance paid in two
equal installments, one and two years from the closing date.
Very Truly Yours,
Michael Shapiro
Senior Vice President
<PAGE>
SCHEDULE 4.06 (A)
LITIGATION
1. Master Environmental Business corporation (Mebco) vs.
Foodarama Supermarkets, Inc. - $46,704.60
2. Michelle Geraud vs. Foodarama Supermarkets, Inc. and
Joseph Gorczyca - Sexual Harassment Claim
<PAGE>
SCHEDULE 4.06 (B)
COMPLIANCE WITH LAWS
The Company filed its Annual Report on Form 10-K for the year ended October
29, 1994 on February 14, 1995, one day late, pursuant to an extension filed
on Form 12b-25. Said Report on Form 10-K contained unaudited financial
statements.
<PAGE>
Schedule 4.10
Borrower is the sponsor of the following Pension Plans:
- Foodarama Supermarkets, Incorporated Pension Plan
- Foodarama Local 1371 Employees' Retirement Plan
Borrower contributes to the following Multiemployer Plans:
- United Food and Commercial Workers Union and
Participating Food Industry Employers Tri-State Pension
Fund (the "Tri-State Pension Fund")
- UFCW Local 1262 and Employers Pension Fund
- (Local 56 Pension Fund)*
- (Local 464 Pension Fund)*
Borrower expects to effect a complete withdrawal from the Tri-
State Pension Fund. The withdrawal liability for a complete
withdrawal during calendar year 1994 was estimated to be
$731,000.
The Foodarama Supermarkets, Incorporated Pension Plan has
unfunded liability in the amount of approximately $1,056,296
as of 10/29/94.
The Foodarama Local 1371 Employees' Retirement Plan has unfunded
liability in the amount of approximately $45,154 as of 10/29/94.
* - We have no information regarding either of these plans.
SCHEDULE 4.14
BANK ACCOUNTS
CORE STATES FIRST FIDELITY
DESCRIPTION ACCOUNT # ACCOUNT #
505 HIGHTSTOWN - DEPOSIT 0200-379-972 00010-97210
513 OAKTREE ROAD - DEPOSIT 0200-554-608 00012-53131
525 WOODBRIDGE - DEPOSIT 0200-554-574 00012-53115
552 PISCATAWAY - DEPOSIT 0200-554-699 00012-60367
553 SAYREVILLE - DEPOSIT 0200-554-707 00012-60375
573 EDISON - DEPOSIT 0200-009-207 00010-74997
575 FRANKLIN PARK - DEPOSIT 0200-554-582 00012-53166
585 EAST BRUNSWICK - DEPOSIT 0200-554-590 00012-53158
602 LAKEWOOD - DEPOSIT 0200-682-458 00019-76702
603 ABERDEEN - DEPOSIT 0200-379-626 00012-79092
607 FREEHOLD - DEPOSIT 0200-439-446 00019-17455
623 WEST LONG BRANCH - DEPOSIT 0200-379-634 00010-06916
625 HAZLET - DEPOSIT 0200-379-642 215-2010523
627 MIDDLETOWN - DEPOSIT 0200-439-461 00019-17471
629 BRIELLE - DEPOSIT 0200-554-848 271-2064259
637 BELMAR - DEPOSIT 0200-439-479 271-2089707
641 BRICKTOWN - DEPOSIT 0200-379-618 00019-16637
735 FREEHOLD LIQUOR - DEPOSIT 0200-616-605 300-6100113
299 NEPTUNE - DEPOSIT 0200-619-609 00012-79106
700 OFFICE - PAYROLL 0200-554-046 -----
700 OFFICE - DISBURSEMENT 200-619-575 00010-44389
700 OFFICE - CONCENTRATION 0200-990-190 00026-00129
712 COMMISSARY - DEPOSIT 0200-379-691 -----
PAGE 2 SCHEDULE 4.14 (BANK ACCOUNTS)
455, 474 - WHITEHALL, BETHLEHEM - DEPOSIT - MERIDIAN BANK # 14140301
700 - OFFICE DISBURSEMENT - CHASE MANHATTAN BANK - #015-10235660
#015-1237872
700 - OFFICE DISBURSEMENT BENEFIT PLANS - CHASE MANHATTAN BANK
#923-2-422304
543 - RARITAN - TENANT SECURITY - FREEHOLD SAVINGS AND LOAN
#01-00-18556
700 - OFFICE - TENANT SECURITY - FIRST FEDERAL S & L OF ROCHESTER -
#511854532
<PAGE>
SCHEDULE 4.15
SUBSIDIARIES
1. ShopRite of Reading, Inc.
2. New Linden Price Rite, Inc.
3. ShopRite of Malverne, Inc.
<PAGE>
SCHEDULE 4.16 (a-1)
OWNED REAL PROPERTY
1. 1930 East Elizabeth Avenue - Meat Commissary
Linden, New Jersey 07036
2. 1931 Pennslyvania Avenue - Vacant
Linden, New Jersey 07036
3. Lloyd Road & Route 34 - Supermarket
Aberdeen, New Jersey 07747
4. 550 Broad Street - Strip Shopping Center - own
Shrewsbury, New Jersey - 70% interest as a limited
partner
5. Routes 36 & 71 - Strip Shopping Center - own
West Long Branch, New Jersey 40% interest as a limited
07740 partner
SCHEDULE 4.16 (a-2)
LEASED REAL ESTATE
OPERATING LOCATIONS
1. 1700 Madison Avenue, Lakewood, New Jersey 08701 - Supermarket
2. South Street & Route 9, Freehold, New Jersey 07728 -
Supermarket
3. South Street & Route 9, Freehold, New Jersey 07728 -
Liquor Store
4. South Street & Route 9, Freehold, New Jersey 07728 -
Garden Center
5. 2200 Highway 66, Neptune, New Jersey 07753 - Supermarket -
Liquor Store
6. Routes 36 & 71, West Long Branch, New Jersey 07740 -
Supermarket
7. 629 Higgins Avenue, Brielle, New Jersey 08730 - Supermarket
8. Route 35, Belmar, New Jersey 07719 - Supermarket
9. Route 70, Chambersbridge Road, Bricktown, New Jersey 08723 -
Supermarket
10. 1665 Oak Tree Road, Edison, New Jersey 08820 - Supermarket
11. 877 St. George Avenue, Woodbridge, New Jersey 07095 -
Supermarket
12. 14-22 Prospect Avenue, East Brunswick, New Jersey 08816 -
Supermarket
13. Route 35, Hazlet, New Jersey 07730 - Supermarket
14. Route 35 & Harmony Road, Middletown, New Jersey 07748 -
Supermarket
15. Route 130, Hightstown, New Jersey 08520 - Supermarket
16. Route 130, Hightstown, New Jersey 08520 - Garden Center
17. 1306 Centennial Avenue, Piscataway, New Jersey 08854 -
Supermarket
18. 2909 Washington Road, Sayreville, New Jersey 08872 -
Supermarket
19. Route 1 & Old Post Road, Edison, New Jersey 08817 -
Supermarket
20. Route 27 & Veronica, Franklin Township, New Jersey 08873 -
Supermarket
21. 3926 Linden Street, Bethlehem, Pa. 18017 - Supermarket
22. 2641 MacArthur Road, Whitehall, Pa. 18052 - Supermarket
23. 1911 Pennsylvania Ave. Linden, New Jersey 07036 -
Meat Commissary
24. Fairfield Industrial Park, Bldg 8, Route 33, Freehold, New
New Jersey 07728 - Bakery Commissary
25. Fairfield Industrial Park, Bldg 6, Route 33, Freehold, New
Jersey 07728 - Office
Page 2 - SCHEDULE 4.16 (a-2)
NON-OPERATING LOCATIONS
1. 3500 5TH Street, Reading, Pa. 19605 - Sublet - Furniture
Store
2. York Road, Warminster, Pa. - Sublet - Distribution Center
3. 1960 Jericho Turnpike, East Northport, N.Y. - Sublet -
Health Club
4. Suffolk & Wheeler Avenue, Central Islip, N.Y. - Sublet -
Supermarket
5. Route 35 & Park Avenue, Oakhurst, N.J. - Vacant
6. Route 130 & Church Street, Cinnaminson, N.J. - Sublet -
Supermarket
7. Route 27 & Raymond Road, Kingston, N.J. 08540 - Vacant
8. Kennedy Bldv., Lakewood, New Jersey 08701 - Vacant
9. 521 Raritan Street, Sayreville, N.J. - Sublet - Supermarket
10. 4585 Sunrise Highway, Bohemia, N.Y. - Sublet - Supermarket
11. 2450 Jerusalem Avenue, North Bellmore, New York - Sublet -
Supermarket
12. Route 109 & Farmingdale Road, West Babylon, N.Y. - Sublet -
Supermarket
13. 496 Hempstead Turnpike & Cherry Valley Road, West Hempstead,
N.Y. - Sublet - Supermarket
14. Lehigh & 29th Street, Allentown, Pa. - Sublet - Supermarket
15. Route 35 & New Monmouth Road, Middletown, N.J. - Sublet -
Furniture Store
16. 510 Inman Avenue, Colonia, New Jersey - Sublet - Supermarket
17. Route 34 & Route 537, Colts Neck, New Jersey - Ground Lease
Does not include 11 locations for which leases have been assigned.
<PAGE>
SCHEDULE 4.19
4.19 (iv) Between 1976 and 1981, the Parent leased property
located at Route 9 and Craig Road in Manalapan, New
Jersey from Vornado/Two Guys. There were two
underground storage tanks at the property, one owned
and operated by Vornado/Two Guys and the other operated
by the Parent. In 1979, there was a spill from one of
the tanks. The Parent and Vornado/Two Guys promptly
remediated the spill to the satisfaction of the New
Jersey Department of Environmental Protection and the
matter was closed.
4.19(vii) Since 1987, the Parent has been a ground lease tenant
at property located at Routes 34 and 537 in Colts Neck,
New Jersey. The Parent has not developed the property
and has never conducted any operations there. The
property was formerly operated as an auto salvage yard.
By:___________________________
Name:_________________________
SCHEDULE 4.20
MATERIAL AGREEMENTS
1. Trademark License Agreement with Wakefern Food Corporation.
2. Union Contracts
Local 198 - Meat, Pennsylvania - 11/1/92 - 11/3/96
Local 1776 - Clerks, Pennsylvania - 2/7/93 - 2/8/97
Local 1371 - Clerks, Hightstown - 10/20/91 - 2/18/95
Local 464A - Meat, New Jersey - 1/1/95 - 12/18/98
Local 465 - Meat Commissary - 4/24/93 - 10/26/96
Local 1262 - Clerks, New Jersey except Hightstown - 4/11/92-4/13/97
Local 1263 - Customer Service, New Jersey except Hightstown -
4/11/92 - 4/13/97
Local 1264 - Porters, New Jersey except Hightstown - 4/11/92 -
4/13/97
Local 1265 - Bakery Commissary - 4/17/94 - 4/18/98
Title:________________________
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SCHEDULE 6.07 (A)
ERISA COVENANT QUALIFICATIONS
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SCHEDULE 7.01
EXISTING LIENS
EXPIRES
October 2000 Met Life Capital
Computer System RISC 6000
Sayreville, N.J.
Aberdeen
Lakewood
Freehold
Neptune
West Long Branch
Bricktown
July 2000 Hightstown, N.J.
Oak Tree Road
Woodbridge
Piscataway
Franklin
East Brunswick
Hazlet
Brielle
October 2000 Bethlehem Township, Pa.
Whitehall
October 2000 Corporate Offices, N.J.
September 1995 C.I.T. Group - Equipment & Fixtures (per
attached)
Kingston, N.J.
Linden Commissary
April 1999 Pitney Bowes Credit Corp. -
Equipment & Fixtures (per attached)
Lakewood, N.J.
April 1995 First Fidelity Bank - Equipment (per attached)
Lakewood, N.J.
December 1997 G.E. Capital - Equipment & Fixtures
Bethlehem Township, Pa. (per attached)
Page 2 schedule 7.01
EXPIRES
January 1995 Phila. National Bank -
Equipment & Fixtures (per attached)
Old Lakewood, N.J.
Freehold, N.J.
Bricktown, N.J.
The attached to this schedule has not been filed. The Registrant does not
consider the attachment material to an understanding of the agreement;
however, upon the request of the Securities and Exchange Commission, the
Registrant agrees to furnish a copy of such attachment.
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SCHEDULE 7.03
EXISTING INDEBTEDNESS
BALANCE
2/10/95
Wakefern Food Corporation (Investment) $ 874,750
Insure-Rite Ltd. (Investment) 88,500
Smutko Consulting Fees 550,926
C.I.T. Group 136,349
Pitney Bowes Credit Corp. 2,000,000
Met Life Capital 778,234
First Fidelity Bank, N.A. 36,667
Capitalized Property Leases 8,494,840
GE Capital 886,356
$13,846,622
SCHEDULE 7.05
ASSETS HELD FOR SALE
1. Schedule A - Asset Redeployment Program.
2. 40% Limited Partnership Interest - Westlo Associates
Owner of West Long Branch Shopping Center
3. Building at 1930 East Elizabeth Avenue, Linden, New Jersey -
Meat Commissary
4. Building at 1931 Pennsylvania Avenue, Linden, New Jersey -
Vacant
NONE
SCHEDULE 7.06
PERMITTED INVESTMENTS
1. Wakefern Food Corporation - 15% of outstanding Capital Stock - owned by
Subsidiaries
2. Insure-Rite, Ltd. - 15% of outstanding Capital Stock - owned
by Foodarama
3. CIGNA - Deposits held by CIGNA for Worker's Compensation
Policies - $5,700,000
4. Massachusetts Mutual Insurance Co. - deposits held for
payments under Employee Benefit Plans - $360,000
5. Certificates of deposit - various New Jersey banks - escrow
funds held for landlord of closed Lakewood store - $511,517
6. State of Israel Bonds - $170,000
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SCHEDULE A
ASSET REDEPLOYMENT PROGRAM
ASSUMPTIONS FOR REFINANCING PROJECTIONS
ASSET GROSS PROCEEDS NET PROCEEDS TIMING PROBABILITY
COMMENTS
Roxborugh $400,000 plus Less: Taxes FY 1994
(1)
- - Sale of 5 year note for of $129,000 Fourth
Leasehold $150,000 Net: $271,000 Quarter
interest
Pennsyl- $5.7 million Less: Lease FY 1995 Very High (2)
vania plus inventory oblig First
stores-Sale $1,100,000 Quarter
as Going Transac Exp
Concern 50,000
Net:
$4,550,000
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Old Neptune $975,000 Less: Taxes FY 1995 Very High (3)
Sale of fee $250,000 First
Interest Transac Exp Quarter
50,000
Net: $675,000
Shrewsbury $500,000 Less: Taxes FY 1995 Low (4)
Sale of plus note $200,000 Fourth
Partnership for $100,000 Net: $300,000 Quarter
payable in one year
Aberdeen $3,000,000 Less: Taxes FY 1995 High (5)
Sale/Lease- $400,000 Third
back Net: Quarter
$2,600,000
Tax Credit $1,100,000 $1,100,000 FY 1995 Very High (6)
Second
Quarter
Neptune $3,000,000 $3,000,000 FY 1995 Very High (7)
Equipment Second
Financing Quarter
Piscataway $1,500,000 $1,500,000 FY 1995 Moderate (8)
Equipment Forth
Financing Quarter
Sayreville $1,500,000 $1,500,000 FY 1995 Moderate (9)
Equipment
Financing
Total: $15,496,000
NOTE: Taxes on gain assumed to be 40% to provide a highly conservative
view of available proceeds. It is likely that some portion of this tax
obligation will be offset by Net Operating Loss Carryforwards and/or
capital losses associated with equipment write-offs.
COMMENTS
(1) Completed
(2) Agreement in principal between Foodarama and Wakefern for sale of
stores. Potential pension liability of $700,000 to be managed through
indemnification of buyer or through long-term payment program.
(3) Written cash offer from buyer, 10% deposit received. Closing
anticipated within 60 days.
(4) Foodarama is seeking offers for its share of this partnership
(5) Significant interest has been expressed by three developers
(6) Tax credit based on amended tax returns for 1989, 1990 and 1991.
Auditors have identified more favorable tax treatment for several items,
including methodologies for handling the Wakefern rebate, vacation
reserves, supplies and pension plan payments.
(7) Financing was in place in October 1993, but could not proceed due to
requirement for waivers of defaults from existing lenders. Although no
further discussions have taken place, management is highly confident that
the financing could be made available again for up to $2.0 million
through a Wakefern subsidized program with below-market interest.
(8) Strong expression of interest has been received from U.S. Leasing to
participate in a sale/leaseback at book value. A written proposal has
been requested.
(9) Strong expression of interest has been received from U.S. Leasing to
participate in a sale/leaseback at book value. A written proposal has
been requested.
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SCHEDULE B
CERTAIN SUBSIDIARIES
NONE
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SCHEDULE C
CERTAIN INTELLECTUAL PROPERTY
The Parent and Borrowers have no trademarks, trademark rights, trade names,
trade name rights, copyrights, patents, patent rights and licenses except for
a trademark license agreement with Wakefern Food Corporation for the right
to use the ShopRite name.
