SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
Annual Report pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
For the fiscal year ended Commission file number
October 30, 1999 1-5745
FOODARAMA SUPERMARKETS, INC.
(Exact name of Registrant as specified in its charter)
New Jersey 21-0717108
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
Building 6, Suite 1, 922 Hwy. 33, Freehold, New Jersey 07728
(Address of principal executive offices)
Registrant's telephone number, including area code: (732) 462-4700
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange on
Title of each class which registered
Common Stock American Stock Exchange
Par Value $1.00 per share
Securities registered pursuant to Section 12(g) of the Act:
NONE
(Title of Class)
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months and (2) has been subject to such filing
requirements for the past 90 days.
Yes x No
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]
The aggregate market value of voting stock held by non-affiliates of the
Registrant was approximately $10,577,000. Computation is based on the closing
sales price of $20.25 per share of such stock on the American Stock Exchange on
January 14, 2000.
As of January 14, 2000, the number of shares outstanding of Registrant's
Common Stock was 1,117,150.
DOCUMENTS INCORPORATED BY REFERENCE
Information contained in the 2000 definitive Proxy Statement to be filed
with the Commission and to be delivered to security holders in connection with
the Annual Meeting is incorporated by reference into this Form 10-K at Part III.
<PAGE>
PART I
Disclosure Concerning Forward-Looking Statements
All statements, other than statements of historical fact, included in this Form
10-K, including without limitation the statements under "Management's Discussion
and Analysis of Financial Condition and Results of Operations" and "Business",
are, or may be deemed to be, "forward-looking statements" within the meaning of
Section 27A of the Securities Act of 1933, as amended (the "Securities Act"),
and Section 21E of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"). Such forward-looking statements involve assumptions, known and
unknown risks, uncertainties and other factors which may cause the actual
results, performance or achievements of the Company to be materially different
from any future results, performance or achievements expressed or implied by
such forward-looking statements contained in this Form 10-K. Such potential
risks and uncertainties, include without limitation, competitive pressures from
other supermarket operators and warehouse club stores, economic conditions in
the Company's primary markets, consumer spending patterns, availability of
capital, cost of labor, cost of goods sold, and other risk factors detailed
herein and in other of the Company's Securities and Exchange Commission filings.
The forward- looking statements are made as of the date of this Form 10-K and
the Company assumes no obligation to update the forward-looking statements or to
update the reasons actual results could differ from those projected in such
forward-looking statements.
Item 1. Business
General
Foodarama Supermarkets, Inc. (the Company, which may be referred to as we, us or
our), a New Jersey corporation formed in 1958, operates a chain of twenty-one
supermarkets located in Central New Jersey, as well as two liquor stores and two
garden centers, all licensed as ShopRite. We also operate a central food
processing facility to supply our stores with meat, various prepared salads,
prepared foods and other items, and a central baking facility which supplies our
stores with bakery products. The Company is a member of Wakefern Food
Corporation ("Wakefern"), the largest retailer owned food cooperative warehouse
in the United States and owner of the ShopRite name.
The Company has incorporated the concept of "World Class" supermarkets into its
operations. "World Class" supermarkets are significantly larger than
conventional supermarkets and feature fresh fish-on-ice, prime meat service
butcher departments, in-store bakeries, international foods including Chinese,
sushi and kosher sections, salad bars, snack bars, bulk foods and pharmacies. We
have also introduced many of these features into our conventionally sized
supermarkets through extensive renovations; these stores are considered
"Mini-World Class" supermarkets. Currently, fifteen of our stores are "World
Class", four are "Mini-World Class" and two are conventional supermarkets.
2
<PAGE>
The following table sets forth certain data relating to the Company's business
for the periods indicated:
Fiscal Year Ended
Oct. 30, Oct. 31, Nov. 1, Nov. 2, Oct. 28,
1999 1998 1997 1996 ** 1995
Average annual sales per store
(in millions)* ..................... $ 38.1 $ 35.8 $ 31.8 $ 31.8 $ 30.9
Same store sales increase
from prior year .................... 8.01% 4.79% 1.67% 2.63% 1.62%
Total store area in square feet
(in thousands) ..................... 1,195 1,195 1,080 1,080 954
Total store selling area in square
feet (in thousands) ................ 895 895 808 807 710
Average total square feet per store
(in thousands) ..................... 57 57 54 54 53
Average square feet of selling area
per store (in thousands) ........... 43 43 40 40 39
Annual sales per square foot of
selling area* ...................... $ 893 $ 832 $ 788 $ 789 $ 784
Number of stores:
Stores remodeled (over $500,000) 1 1 0 1 0
New stores opened ................ 0 1 0 1 0
Stores replaced/expanded ......... 0 2 0 1 0
Stores closed/divested ........... 0 0 0 0 2
Number of stores by size (total store area):
30,000 to 39,000 sq.ft ........... 4 4 4 4 4
40,000 to 49,900 sq.ft ........... 3 3 4 4 4
Greater than 50,000 sq.ft ........ 14 14 12 12 10
Total stores open at period end .... 21 21 20 20 18
* Sales for stores open less than 52 weeks have been annualized.
** Calculated on a 53 week basis. A like 52 week comparison would be $31.2
million in average sales per store and $781 in annual sales per square foot of
selling area.
3
<PAGE>
Store Expansion and Remodeling
We believe that significant capital investment is critical to our operating
strategy and we are continuing our program to upgrade our existing stores,
replace outdated locations and open new "World Class" supermarkets within our
core market area of Central New Jersey.
In fiscal year 1998, one replacement and one new store were opened in East
Windsor and Bound Brook, New Jersey, respectively. Over the next three years the
Company plans to open five replacement and one new store and expand two existing
locations. The remodeling of one location in West Long Branch, New Jersey is
substantially complete and construction has started on two replacement stores in
Wall Township and North Brunswick and one new location in Branchburg. All of
these stores are in Central New Jersey and will be World Class operations.
Technology
Automation and computerization are important to the Company's operations and
competitive position. All stores utilize IBM 4690 software for the scanning
checkout systems. Presently point of sale ("POS") hardware is being replaced in
one half of our stores. This POS upgrade will bring all of our stores to a state
of the art level with increased processing speed and enhanced marketing
capabilities. These systems improve pricing accuracy, enhance productivity and
reduce checkout time for customers. Additionally, all stores have IBM RS/6000
processors, which were replaced with the current version of this equipment in
1999, and satellite communications. The use of these systems allows the Company
to offer its customers debit and credit card payment options as well as
participation in Price Plus, ShopRite's preferred customer program, and the
ShopRite co-branded Master Card. By presenting the scannable Price Plus card or
the ShopRite co-branded card, customers can be given electronic discounts,
receive credit for the value of ShopRite in-ad Clip Less coupons and cash
personal checks. Also, customers receive a 1% future rebate when paying with the
ShopRite Master Card. We also offer Internet shopping capability through a
Wakefern affiliation with Priceline.com.
We are also using other in store computer systems. Computer generated ordering
is installed in all stores. This system is designed to reduce inventory levels
and out of stock positions, enhance shelf space utilization and reduce labor
costs. In all stores, meat, seafood and delicatessen prices are maintained on
department computers for automatic weighing and pricing. Additionally, all
stores have computerized time and attendance systems which are used for, among
other things, automated labor scheduling, and most stores have computerized
energy management systems. We also utilize a direct store delivery receiving and
pricing system for most items not purchased through Wakefern in order to provide
cost and retail price control over these products, and computerized pharmacy
systems which provide customer profiles, retail price control and third-party
billing. The Company has also installed computer based training systems in all
stores. The system is presently being used to train all new checkout personnel
and will be used in the future to train employees in other store level
positions.
In addition, all field merchandisers and operations supervisors are equipped
with laptop personal computers. This provides field personnel with current labor
and product information to facilitate making accurate and timely decisions.
4
<PAGE>
Year 2000
The Company and Wakefern did not experience any material adverse effect on store
or warehouse operations as the result of the impact of year 2000 ("Y2K") issues
on our computer based systems and applications. In preparation for the new
millennium all critical systems were made Y2K compliant. The costs related to
the Y2K project were included in the normal operating results and capital
expenditures of both the Company's and Wakefern's Information Technology
Departments and did not have any material effect on the Company's operating
results. The Company does not currently expect any Y2K problems to be
encountered for the remainder of the year 2000 that would have a material effect
on the operating results of the Company.
Industry Segment and Principal Products
The Company is engaged in one industry segment. For the last three fiscal years,
our sales were divided among the categories listed below:
Fiscal Year Ended
Product Categories 10/30/99 10/31/98 11/01/97
Groceries 39.9% 40.0% 40.6%
Dairy & Frozen 16.7 16.5 16.4
Meats, Seafood & Poultry 10.4 10.9 11.1
Non-Foods 10.6 10.1 9.9
Produce 8.3 8.5 8.3
Appetizers & Prepared Foods 6.2 6.0 5.8
Pharmacy 4.2 4.0 3.8
Bakery 1.9 2.1 2.2
Liquor, Floral & Garden Centers 1.8 1.9 1.9
100.0% 100.0% 100.0%
Gross profit derived by the Company from each product category is not
necessarily consistent with the percentage of total sales represented by such
product category.
Wakefern Food Corporation
The Company owns a 12.3% interest in Wakefern, a New Jersey corporation
organized in 1946, which provides purchasing, warehousing and distribution
services on a cooperative basis to its shareholder members, including the
Company, who are operators of ShopRite or alternate format supermarkets. As
required by the Wakefern By-Laws, repayment of the Company's obligations to
Wakefern is personally guaranteed by Joseph J. Saker and Richard J. Saker. These
personal guarantees are required of any 5% shareholder of the Company who is
active in the operation of the Company. Wakefern and its shareholder members
operate approximately 200 supermarkets of which Wakefern owns and operates 16
locations. Products bearing the ShopRite label accounted for approximately 15%
of total sales for the fiscal year ended October 30, 1999. Wakefern maintains
warehouses in Elizabeth and South Brunswick, New Jersey which handle a full line
of groceries, meats, frozen foods, produce, bakery, dairy and delicatessen
products and health and beauty aids, as well as a number of non-food items.
Wakefern also operates a grocery and perishable
5
<PAGE>
products warehouse in Wallkill, New York.
Wakefern's professional advertising staff and its advertising agency develop and
place most of the Company's advertising on television, radio and in major
newspapers. We are charged for these services based on various formulas which
account for the estimated proportional benefits we receive. In addition,
Wakefern charges us for, and provides the Company with, product and support
services in numerous administrative functions. These include insurance,
supplies, technical support for communications and electronic payment systems,
equipment purchasing and the coordination of coupon processing. Additionally, we
sublease two supermarkets from Wakefern. See Item 2. Properties.
Wakefern distributes, as a patronage dividend to each of its members, a share of
its net earnings in proportion to the dollar volume of business transacted by
each member with Wakefern during each fiscal year.
Although Wakefern has a significant in house professional staff, it operates as
a member cooperative and senior executives of the Company spend a substantial
amount of their time working on Wakefern committees overseeing and directing
Wakefern purchasing, merchandising and various other programs.
Wakefern licenses the ShopRite name to its shareholder members and provides a
substantial and extensive merchandising program for the ShopRite label. Except
for the license to use the name "ShopRite", we do not believe that the ownership
of or rights in patents, trademarks, licenses, franchises and concessions is
material to its business. The locations at which we may open new supermarkets
under the name ShopRite are subject to the approval of Wakefern's Site
Development Committee. Under circumstances specified in its By-Laws, Wakefern
may refuse to sell merchandise to, and may repurchase the Wakefern stock of, any
shareholder member. Such circumstances include certain unapproved transfers by a
shareholder member of its supermarket business or its capital stock in Wakefern,
unapproved acquisition by a shareholder member of certain supermarket or grocery
wholesale supply businesses, the conduct of a business in a manner contrary to
the policies of Wakefern, the material breach of any provision of Wakefern
By-Laws or any agreement with Wakefern or a determination by Wakefern that the
continued supplying of merchandise or services to such shareholder member would
adversely affect Wakefern.
Wakefern requires each shareholder to invest in Wakefern's capital stock to a
maximum of $500,000 for each store operated by such shareholder member. The
precise amount of the investment is computed according to a formula based on the
volume of each store's purchases from Wakefern.
Under its By-Laws, all bills for merchandise and other indebtedness are due and
payable to Wakefern weekly and, if these bills are not paid in full, an
additional 1% service charge is due on the unpaid portion. Wakefern requires its
shareholder members to pledge their Wakefern stock as collateral for payment of
their obligations to Wakefern. The Company's investment in Wakefern was
$10,163,000 and $8,877,000 as of October 30, 1999 and October 31, 1998,
respectively. We also have an investment in another company affiliated with
Wakefern which was $829,000 at both October 30, 1999 and October 31, 1998. See
Note 4 of Notes to Consolidated Financial Statements.
Since September 18, 1987, the Company has had an agreement, amended in 1992,
with Wakefern and all other shareholders of Wakefern, which provides for certain
commitments by, and restrictions on, all shareholders of Wakefern. Under the
agreement, each shareholder, including the Company, agreed to
6
<PAGE>
purchase at least 85% of its merchandise in certain defined product categories
from Wakefern. The Company fulfilled this obligation during the 52 week period
ended October 30, 1999. If any shareholder fails to meet these purchase
requirements, it must make payments to Wakefern (the "Compensatory Payments")
based on a formula designed to compensate Wakefern for the profit lost by it by
virtue of its lost warehouse volume. Similar payments are due if Wakefern loses
volume by reason of the sale of one or more of a shareholder's stores, any
shareholder's merger with another entity or the transfer of a controlling
interest in the shareholder. Subject to a right of first refusal granted to
Wakefern, sales of certain under facilitated stores are permitted free of the
restrictions of the agreement. Also, the restrictions of the agreement do not
apply if volume lost by a shareholder by the sale of a store is made up by such
shareholder by increased volume of new or existing stores and, in any event, the
Compensatory Payments otherwise required to be made by the shareholder to
Wakefern are not required if the sale is made to Wakefern, another shareholder
of Wakefern or to a purchaser which is neither an owner or operator of a chain
of 25 or more supermarkets in the United States, excluding any ShopRite
supermarkets in any area in which Wakefern operates. The agreement extends for
an indefinite term and is subject to termination ten years after the approval by
a vote of 75% of the outstanding voting stock of Wakefern.
The loss of, or material change in, our relationship with Wakefern (neither of
which is considered likely) could have a significant adverse impact on the
Company's business. The failure of Wakefern to fulfill its obligations or
another member's insolvency or withdrawal from Wakefern could result in
additional costs to the remaining members.
We also purchase products and items sold in our supermarkets from a variety of
sources other than Wakefern. Neither the Company nor, to the best of our
knowledge, Wakefern has experienced or anticipates experiencing any unique
material difficulties in procuring products and items in adequate quantities.
Competition
The supermarket business is highly competitive. The Company competes directly
with a number of national and regional chains, including A&P, Pathmark, Grand
Union, Acme, Edwards and Foodtown, as well as various local chains and numerous
single-unit stores. We also compete with warehouse club stores which charge a
membership fee, are non-unionized and operate larger units. Additional
competition comes from drug stores, discount general merchandise stores, fast
food chains and convenience stores. See Management's Discussion and
Analysis-Results of Operations.
Many of the Company's competitors have greater financial resources and sales. As
most of our competitors offer substantially the same type of products,
competition is based primarily upon price, and particularly in the case of meat,
produce, bakery, delicatessen, and prepared foods, on quality. Competition is
also based on service, the location and appearance of stores and on promotion
and advertising. The Company believes that its membership in Wakefern and the
ShopRite brand name allow it to maintain a low-price image while providing
quality products and the availability of a wide variety of merchandise including
numerous private label products under the ShopRite brand name. We also provide
clean, well maintained stores, courteous and quick service to the customer and
flexibility in tailoring the products offered in each store to the demographics
of the communities we service. The supermarket business is characterized by
narrow profit margins, and accordingly, our viability depends primarily on our
ability to maintain
7
<PAGE>
a relatively greater sales volume and more efficient operations than our
competitors.
Regulatory and Environmental Matters
Our stores and facilities, in common with those of the industry in general, are
subject to numerous existing and proposed Federal, State and Local regulations
which regulate the discharge of materials into the environment or otherwise
protect the environment, establish occupational safety and health standards and
cover other matters, including the licensing of the Company's pharmacies and two
liquor stores. We believe our operations are in compliance with such existing
regulations and are of the opinion that compliance with the regulations has not
had and will not have any material adverse effect on our capital expenditures,
earnings or competitive position.
Employees
As of December 31, 1999, the Company employed approximately 4,550 persons, of
whom approximately 4,100 are covered by collective bargaining agreements. 72% of
the employees are part time and almost all of these employees are covered by the
collective bargaining agreements. Although the Company has historically
maintained favorable relations with its unionized employees, it could be
affected by labor disputes. Most of our competitors are similarly unionized. The
Company is a party to six collective bargaining agreements expiring on various
dates from October 2000 to April 2003. The bargaining agreement with the United
Food and Commercial Workers Local 1360 expired in February 1999 and has been
renegotiated. The new contract expires February 2002.
By virtue of the nature of the Company's supermarket operations, information
concerning backlog, seasonality, major customers, government contracts, research
and development activities and foreign operations and export sales is not
relevant.
Item 2. Properties
The Company's twenty one supermarkets, all of which are leased, range in size
from 31,000 to 101,000 square feet with sales area averaging 75 percent of the
total area. All stores are air-conditioned, have modern fixtures and equipment,
have their own ample parking facilities and are located in suburban areas.
Leases for 19 of the Company's 21 existing supermarkets expire on various dates
from 2000 through 2022. Two of our supermarkets are subleased from Wakefern and
these subleases expire in 2006 and 2008, respectively. Upon expiration of these
subleases, the underlying leases for these supermarkets will be assigned to and
assumed by us if certain conditions, which include the absence of defaults by
the Company in its obligations to Wakefern and our lenders, and the maintenance
of a specified level of net worth, are satisfied. The terms of these leases
expire in 2021 and 2018, respectively. Except for the two subleases with
Wakefern and one lease which expires in 2004, all leases contain renewal options
ranging from 5 to 25 years. Seven leases require, in addition to a fixed rental,
a further rental payment based on a percentage of the annual sales in excess of
a stipulated minimum. The minimum has been exceeded in two of the seven
locations in the last fiscal year. Most leases also require us to pay for
insurance, common area maintenance and real estate taxes. Five additional leases
have been signed for supermarket locations, four of which will be replacements
for existing stores. The terms of these leases are substantially similar to the
terms of the leases for our existing supermarkets. The Company has experienced
delays
8
<PAGE>
in the opening of certain new stores because of extensive governmental approvals
required to develop new retail properties in New Jersey.
Also, we are subject to a lease covering our executive and principal
administrative offices containing approximately 18,000 square feet in Howell,
New Jersey. The Company also leases 57,000 square feet of space used for its
bakery operations and storage in Howell, New Jersey, and 50,000 square feet of
space used for storage in Lakewood, New Jersey. The Company owns meat and
prepared foods processing facilities in Linden, New Jersey, which is the only
real property owned by us. We sold in 1997 our limited partnership interest in
two real estate partnerships and financed the facility in Linden, New Jersey. In
addition, we are a party to an additional nine leases for locations where we no
longer conduct supermarket operations; eight of these locations have been sublet
to non-affiliated persons. In most instances these stores have been sublet at
terms at least substantially equivalent to the Company's obligations under its
prime lease. See Management's Discussion and Analysis-Financial Condition and
Liquidity. See Notes 11 and 15 of Notes to Consolidated Financial Statements.
Item 3. Legal Proceedings
In the ordinary course of our business, we are party to various legal actions
not covered by insurance. Although a possible range of loss cannot be estimated,
it is the opinion of management, that settlement or resolution of these
proceedings will not, in the aggregate, have a material adverse impact on the
financial condition or results of operations of the Company.
Item 4. Submission of Matters to a Vote of Security Holders
Not applicable.
9
<PAGE>
Part II
Item 5. Market for Registrant's Common Stock and Security Holder Matters
(a) The Company's Common Stock is traded on the American Stock Exchange.
The following table sets forth the high and low sales prices for the Common
Stock as reported on the American Stock Exchange for the fiscal years ended
October 31, 1998 and October 30, 1999.
Fiscal Quarter Ended High Low
January 31, 1998 24 18 3/4
May 2, 1998 43 23 5/8
August 1, 1998 37 33 1/2
October 31, 1998 34 5/8 31 1/2
January 30, 1999 32 5/8 31 1/8
May 1, 1999 32 1/4 26 1/2
July 31, 1999 30 3/8 27
October 30, 1999 31 27 1/2
(b) The approximate number of record holders of the Company's Common
Stock was 370 as of January 14, 2000.
(c) No dividends have been declared or paid with respect to the
Company's Common Stock since October 1979. We are prohibited from paying
dividends on our Common Stock by the Second Amended and Restated Revolving
Credit and Term Loan Agreement between the Company and three financial
institutions. See Management's Discussion and Analysis-Financial Condition and
Liquidity. The Company has no intention of paying dividends on its Common Stock
in the foreseeable future.
Item 6. Selected Financial Data
The selected financial data set forth below is derived from the Company's
consolidated financial statements and should be read in conjunction with the
consolidated financial statements and related notes included elsewhere in this
Annual Report. See Management's Discussion and Analysis-Financial Condition and
Liquidity and Results of Operations.
10
<PAGE>
Year Ended
Oct. 30, Oct. 31, Nov. 1, Nov. 2, Oct. 28,
1999 1998 (1) 1997 1996 (2) 1995 (3)
(Dollars in thousands, except per share amounts)
Income statement
data:
Sales ......................$ 799,693 $ 697,358 $ 636,731 $ 601,143 $586,477
Net income (loss) ..........$ 1,945 $ 1,780 $ 1,064 $ 1,396 $ (191)
Income (loss) per
common share ...............$ 1.74 $ 1.59 $ .90 $ 1.13 $ (.29)
Cash dividends
per common share ........... -- -- -- -- --
Balance sheet data (at year end):
Working capital ............$ 2,507 $ (2,725) $ 3,532 $ 3,056 $ (4,451)
Total assets ...............$ 156,186 $ 149,567 $ 121,500 $ 124,181 $110,984
Long-term debt
(excluding current
portion) ...................$ 59,604 $ 50,656 $ 35,918 $ 41,243 $ 28,334
Common share-
holders' equity ............$ 35,040 $ 33,014 $ 31,315 $ 30,315 $ 28,672
Book value per
common share .............. $ 31.37 $ 29.55 $ 28.03 $ 27.11 $ 25.64
Tangible book value
per common share .......... $ 27.93 $ 25.47 $ 23.47 $ 22.22 $ 20.24
(1) The Company opened one replacement and one new location in February and
August 1998, respectively. See Management's Discussion and Analysis - Results of
Operations - Sales.
(2) 53 week period. The Company opened two new locations in June and July, 1996.
(3) The period presented includes the results of operations of the two
Pennsylvania stores for the 30 weeks prior to their sale on May 23, 1995. The
net sales of these two stores for the 30 weeks of fiscal 1995 during which they
were owned by the Company were $29.2 million.
11
<PAGE>
Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations
FINANCIAL CONDITION AND LIQUIDITY
The Company was a party to a Loan Agreement (the "Credit Agreement") with one
financial institution which would have terminated on February 15, 2000. On
January 7, 2000 the Credit Agreement was assigned to a lending group and amended
and restated (the "Amended Credit Agreement"). The Amended Credit Agreement is
secured by substantially all of the Company's assets and provides for a total
commitment of up to $55,000,000 including a revolving credit facility ("the
Revolving Note") of up to $25,000,000, a term loan (the "Term Loan") of
$10,000,000 and a capital expenditures facility (the "Capex Facility") of up to
$20,000,000. The Amended Credit Agreement contains certain affirmative and
negative covenants which, among other matters will (i) restrict capital
expenditures, (ii) require the maintenance of certain levels of earnings before
interest, taxes, depreciation and amortization less rent payments for
capitalized lease locations ("Adjusted EBITDA") and (iii) require debt service
coverage and leverage ratios to be maintained.
The Amended Credit Agreement (a) increases the total amount available to the
Company under the Revolving Note from $20,000,000 to $25,000,000, subject to the
borrowing base limitation of 65% (previously 60%) of eligible inventory; (b)
increases the Term Loan facility by $9,500,000; (c) eliminates the Stock
Redemption Loan ($1,020,000) and the Expansion Loan ($1,175,000) which were part
of the Credit Agreement; (d) extends the term of the Amended Credit Agreement to
December 31, 2004; (e) provides for repayment of the Term Loan in quarterly
installments of $500,000 each, commencing April 1, 2000 and ending on December
31, 2004; (f) provides for the payment of interest only on the outstanding
balance of the Capex Loan, and an unused facility fee of .50% for the first two
years of the term of this loan and fixed quarterly principal payments thereafter
based on a seven year amortization schedule with a balloon payment due December
31, 2004; (g) provides for three additional financial covenants; (h) amends
certain definitions; (i) increases the interest rate on the Revolving Note by
.25% to the Base Rate (defined below) plus .50%; (j) changes the Term Loan to a
floating rate loan at the Base Rate plus .75%; (k) provides for the Capex Loan
to be a floating rate loan at the Base Rate plus .75%; and (l) provides for
certain additional borrowing limitations over the term of the Amended Credit
Agreement. Other terms and conditions of the Credit Agreement previously
reported on by the Company have not been modified. The Base Rate is the rate
which is the greater of (i) the bank prime loan rate as published by the Board
of Governors of the Federal Reserve System, or (ii) the Federal Funds rate, plus
.50%. Additionally, the Company may elect to use the London Interbank Offered
Rate ("LIBOR") plus 2.50% to determine the interest rate on the revolving credit
facility and LIBOR plus 2.75% to determine the interest rate on the Term Loan
and Capex Facility.
The Company's compliance with the major financial covenant under the Credit
Agreement was as follows as of October 30, 1999:
Actual
Financial Credit (As defined in the
Covenant Agreement Credit Agreement)
Debt Service Coverage
Ratio Not less than 1.00 to 1.00 1.04 to 1.00
12
<PAGE>
On March 30, 1999 the Company financed the purchase of $520,000 of computer
equipment for all operating locations. The financing bears interest at 5.79% and
is payable in monthly installments over its three year term.
On April 2, 1998 the Company financed the purchase of $3,000,000 of equipment
for the new store location in East Windsor, New Jersey. The note bears interest
at 7.44% and is payable in monthly installments over its seven year term.
On October 22, 1998 the Company financed the purchase of $4,000,000 of equipment
for the new store location in Bound Brook, New Jersey. The note bears interest
at 7.26% and is payable in monthly installments over its six year term.
On November 14, 1997 the Company borrowed $1,500,000 as part of an amendment to
the Credit Agreement (the "Expansion Loan") to purchase a third building for
$606,000 in the Company's meat and prepared foods processing complex, with the
balance of the proceeds used for the remodeling and refurbishment of the
facility. The note bore interest at 9.18% and was payable in monthly
installments over its seven year term ending 2004 based on a ten year
amortization. The Expansion Loan was repaid in full on January 7, 2000.
No cash dividends have been paid on the Common Stock since 1979, and we have no
present intentions or ability to pay any dividends in the near future on our
Common Stock. The Amended Credit Agreement does not permit the payment of any
cash dividends on the Company's Common Stock.
Working Capital:
At October 30, 1999, the Company had working capital of $2,507,000 compared to a
deficiency of $2,725,000 at October 31, 1998 and working capital of $3,532,000
at November 1, 1997. Working capital in fiscal 1999 increased primarily due to
increases in inventory and receivables and decreases in the current portion of
long term debt partially offset by increases in accounts payable. These
increases were primarily due to increased sales and the impact of double
coupons. Accounts receivable consist primarily of returned checks due the
Company, coupon receivables, third party pharmacy insurance claims and
organization charge accounts. The terms of most receivables are 30 days or less.
The allowance for uncollectible accounts is large in comparison to the amount of
accounts receivable because the allowance consists primarily of a reserve for
returned checks which are not written off until all collection efforts are
exhausted. The Company normally requires small amounts of working capital since
inventory is generally sold at approximately the same time that payments to
Wakefern and other suppliers are due and most sales are for cash or cash
equivalents.
Working capital in fiscal 1998 decreased primarily due to increases in accounts
payable and the current portion of long term debt partially offset by increases
in inventory and receivables. These increases were primarily due to increased
sales from two new locations and the impact of double coupons.
Working capital in fiscal 1997 remained at approximately the same level as the
prior year.
Working capital ratios were as follows:
October 30, 1999 1.05 to 1.00
October 31, 1998 .95 to 1.00
November 1, 1997 1.08 to 1.00
13
<PAGE>
Cash flows (in millions) were as follows:
1999 1998 1997
From operations..................... $12.2 $14.9 $ 9.7
Investing activities................ ( 8.2) (17.0) .5
Financing activities................ ( 3.8) 2.3 (9.6)
Totals $ .2 $ .2 $ .6
Fiscal 1999 capital expenditures totaled $8,261,000 with depreciation of
$10,838,000 compared to $17,625,000 and $8,273,000, respectively for fiscal 1998
and $3,620,000 and $8,104,000, respectively for fiscal 1997. In fiscal 1999
long-term debt increased $3,858,000 due to the modification of a capitalized
real estate lease for the expansion of the West Long Branch, New Jersey store,
the financing of computer equipment purchased and financing obtained under the
revolving credit facility. These increases were partially offset by cash
generated by operations used to pay down existing debt.
In fiscal 1998 long-term debt increased $16,246,000 due to the capitalization of
a real estate lease for the Bound Brook, New Jersey store, the financing of
equipment for the two new locations in East Windsor and Bound Brook, New Jersey,
the financing of the acquisition and refurbishing of the meat and prepared foods
processing facility in Linden, New Jersey and financing obtained under the
revolving credit facility. These increases were partially offset by cash
generated by operations used to pay down existing debt.
In fiscal 1997 long-term debt decreased $3,981,000, using proceeds from the sale
of assets under an asset redeployment program and cash generated by operations
which was partially offset by financing obtained under the Stock Redemption
Loan, and the capitalization of a real estate lease for the Aberdeen, New Jersey
store.
The Company had $7,170,000 of available credit, at October 30, 1999, under its
revolving credit facility. On January 7, 2000 the Company completed the
renegotiation of the terms and conditions of the Credit Agreement. The Amended
Credit Agreement will adequately meet our operating needs, scheduled capital
expenditures and debt service for fiscal 2000.
RESULTS OF OPERATIONS
Sales:
The Company's sales were $799.7 million, $697.4 million and $636.7 million,
respectively in fiscal 1999, 1998 and 1997. This represents an increase of 14.7
percent in 1999 and an increase of 9.5 percent in 1998. These changes in sales
levels were the result of the full year of operations in fiscal 1999 of two
locations opened in February and August 1998 and the impact of significantly
increased promotional activities and expenditures. Comparable store sales
increased 8.0% in fiscal 1999 and 4.8% in fiscal 1998. A significant increase in
promotional activities, including a variety of incentive programs and double
couponing, contributed to these increases.
Gross Profit:
Gross profit totaled $208.1 million in fiscal 1999 compared to $176.7 million in
fiscal 1998 and $161.0 million in fiscal 1997. Gross profit as a percent of
sales was 26.0% in fiscal 1999 and 25.3% in each of the fiscal years 1998 and
1997.
14
<PAGE>
In fiscal 1999 gross profit improved as a result of improved product mix,
reduced Wakefern assessment as a percentage of sales and Wakefern incentive
programs for the new locations.
In fiscal 1998 and 1997 gross profit percentage was positively affected by the
continued improvement in product mix and Wakefern incentive programs for the new
locations. However, this improvement was offset by price reductions instituted
to combat increased competitive pressure in our marketing area.
Patronage dividends applied as a reduction of the cost of merchandise sold were
$8,202,000, $7,438,000 and $6,633,000 for the last three fiscal years. This
translates to 1.03%, 1.07% and 1.04% of sales for the respective periods.
Fiscal Years Ended
10/30/99 10/31/98 11/01/97
(in millions)
Sales........................ $799.7 $697.4 $636.7
Gross profit................. 208.1 176.7 161.0
Gross profit percentage...... 26.0% 25.3% 25.3%
Operating, General and Administrative Expenses:
Fiscal 1999 expenses totaled $199.8 million compared to $170.6 million in fiscal
1998 and $155.9 million in fiscal 1997.
Fiscal Years Ended
10/30/99 10/31/98 11/01/97
(in millions)
Sales........................ $799.7 $697.4 $636.7
Operating, General and
Administrative Expenses...... 199.8 170.6 155.9
Percent of Sales............. 25.0% 24.5% 24.5%
Operating, general and administrative expenses increased as a percent of sales
when comparing fiscal 1999 to fiscal 1998. Increases in selling expense,
depreciation and other store expense, which includes debit and credit card
processing fees and Wakefern support services, were partially offset by
decreases in labor and related fringe benefits, supplies, occupancy, pre-opening
costs, corporate administrative expense and an increase in miscellaneous income.
The increase in selling expense was the result of increased promotional
activity, including a variety of incentive programs and double couponing, in our
marketing area. Depreciation expense increased as the result of the increase in
capital expenditures from the two locations opened in fiscal 1998, a capitalized
real estate lease for one of the new locations, the modification of a
capitalized real estate lease for the expansion of a location and the
acceleration of depreciation for several locations which will be replaced by new
stores in fiscal 2000. The increase in miscellaneous income resulted from
increased rental income from sub-tenants within our stores and an increase in
coupon handling income from the additional coupon volume related to double
couponing. The increase in other store expense results primarily from an
increase in the percentage of sales paid for with debit and credit cards and
increased costs related to these types of payments. Decreases in fixed and semi-
variable expenses were the result of the increase in comparable store sales. As
a percentage of sales, selling expense increased 1.25%, depreciation increased
15
<PAGE>
.17% and other store expense increased .09%. These increases were partially
offset by decreases in labor and related fringe benefits of .17%, supplies of
.07%, occupancy of .30%, pre-opening costs of .10%, corporate administrative
expense of .17% and an increase in miscellaneous income of .14%. There were no
pre-opening costs in fiscal 1999.
Operating, general and administrative expenses as a percent of sales remained
the same in fiscal 1998 compared to fiscal 1997. Decreases in general liability
insurance expense, depreciation and amortization and corporate administrative
expense, were offset by increases in selling expense and repairs and maintenance
costs. The decrease in general liability insurance expense was the result of
final prior year premium calls from Insure-Rite, Ltd., a Wakefern affiliate
which provided the Company with liability and property insurance coverage, being
expensed in fiscal 1997. The increase in selling expense was the result of
increased promotional activity, including a variety of incentive programs and
double couponing, in our marketing area. As a percentage of sales, general
liability insurance costs decreased .23%, depreciation and amortization
decreased .12% and corporate administrative expense decreased .06%. These
decreases were offset by increases in selling expense of .31% and repairs and
maintenance expense of .07%. Pre-opening costs were $702,000 in fiscal 1998.
Amortization expense decreased in fiscal 1999 to $972,000 compared to $1,339,000
in fiscal 1998 and $1,956,000 in fiscal 1997. The decrease in fiscal 1999, as
compared to fiscal 1998, was the result of decreased amortization of deferred
financing costs and deferred escalation rents, which included the modification
of the amortization of one operating lease, partially offset by increased
amortization of bargain leases, which included the acceleration of the
amortization of one bargain lease for a location which is to be replaced. The
decrease in fiscal 1998, as compared to fiscal 1997, was the result of a change
in accounting for pre-opening costs and decreased amortization of deferred
financing costs and deferred escalation rents partially offset by increased
amortization of bargain leases. See Note 1 of Notes to Consolidated Financial
Statements - Pre-opening Costs.
Interest Expense:
Interest expense totaled $5.6 million in fiscal 1999 compared to $3.9 million in
fiscal 1998 and $4.3 million in fiscal 1997. The increase in fiscal 1999, as
compared to fiscal 1998, was due to an increase in the average outstanding debt
in fiscal 1999, including capitalized lease obligations, partially offset by a
decrease in the average interest rate on the debt. The decrease in fiscal 1998,
as compared to fiscal 1997, was due to a decrease in average debt outstanding
since November 1, 1997 and lower interest rates on the Company's credit
facility. Interest income was $0.3 million in fiscal 1999 compared to $0.4
million in fiscal 1998 and $0.3 million in fiscal 1997.
Income Taxes:
The Company recorded a tax provision of $1.1 million in fiscal 1999, $0.9
million in fiscal 1998 and $0.6 million in fiscal 1997. See Note 14 of Notes to
Consolidated Financial Statements.
Net Income:
The Company had net income of $1,945,000 or $1.74 per share in fiscal 1999
compared to net income of $1,780,000 or $1.59 per share in fiscal 1998. Earnings
before interest, taxes, depreciation and amortization ("EBITDA") for fiscal 1999
were $20,151,000 as compared to $15,765,000 in fiscal 1998.
Fiscal 1997 resulted in net income of $1,064,000 or $.90 per share. 1997 results
16
<PAGE>
included a net gain after tax on real estate transactions of $413,000 or $.37
per share. EBITDA for fiscal 1997 were $15,744,000. Fiscal 1997 EBITDA includes
$656,000 as a result of the gain on real estate transactions.
Shares outstanding were 1,117,150 for fiscal 1999, fiscal 1998 and fiscal 1997.
Per share amounts for fiscal 1997 are after Preferred Stock dividends of
$57,000.
RECENT ACCOUNTING PRONOUNCEMENTS
In June 1998, the FASB issued SFAS 133, "Accounting for Derivative Instruments
and Hedging Activities." This Statement establishes accounting and reporting
standards for derivative instruments, including certain derivative instruments
embedded in other contracts, (collectively referred to as derivatives) and for
hedging activities. It requires that an entity recognize all derivatives as
either assets or liabilities in the statement of financial position and measure
those instruments at fair value. The Company does not expect a material impact
from adopting the provisions of SFAS No. 133 which becomes effective for the
Company in fiscal 2001.
Year 2000.
For information with respect to Year 2000 compliance, see Item 1. Business -
Year 2000.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
Except for indebtedness under the Amended Credit Agreement which is variable
rate financing, the balance of our indebtedness is fixed rate financing. We
believe that our exposure to market risk relating to interest rate risk is not
material. The Company believes that its business operations are not exposed to
market risk relating to foreign currency exchange risk, commodity price risk or
equity price risk.
Item 8. Financial Statements and Supplementary Data
See Consolidated Financial Statements and Schedules included in Part IV, Item
14.
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
None.
17
<PAGE>
Part III
Item 10. Directors and Executive Officers of the Registrant
The information required in response to this item is contained in the Company's
definitive proxy statement to be filed pursuant to Regulation 14A under the
captions "Nominees as Director of the Company" and "Executive Officers of the
Company" and such information is incorporated herein by reference.
Item 11. Executive Compensation
The information required in response to this item is contained in the Company's
definitive proxy statement to be filed pursuant to Regulation 14A under the
caption "Executive Compensation" and such information is incorporated herein by
reference.
Item 12. Security Ownership of Certain Beneficial Owners and Management
The information required in response to this item is contained in the Company's
definitive proxy statement to be filed pursuant to Regulation 14A under
introductory paragraphs and under the captions "Principal Shareholders" and
"Securities Owned by Management" and such information is incorporated herein by
reference.
Item 13. Certain Relationships and Related Transactions
The information required in response to this item is contained in the Company's
definitive proxy statement to be filed pursuant to Regulation 14A under the
captions "Executive Compensation" and "Certain Transactions" and such
information is incorporated herein by reference.
18
<PAGE>
Part IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K
a.1. Audited financial statements and Page No.
supplementary data
Independent Auditors' Report F-1
Foodarama Supermarkets, Inc. and
Subsidiaries Consolidated Financial
Statements:
Balance Sheets as of October 30, 1999 F-2-3
and October 31, 1998.
Statements of Operations for each of the F-4
fiscal years ended October 30, 1999,
October 31, 1998 and November 1, 1997.
Statements of Shareholders' Equity F-5
for each of the fiscal years ended
October 30, 1999, October 31, 1998
and November 1, 1997.
Statements of Cash Flows for each of the F-6
fiscal years ended October 30, 1999,
October 31, 1998 and November 1, 1997.
Notes to Consolidated Financial Statements F-7 to 28
a.2. Financial Statement Schedules
Schedule II S-1
Schedules other than Schedule II have been
omitted because they are not applicable.
a.3. Exhibits E-1 to 4
b. Reports on Form 8-K
No reports on Form 8-K were required to be filed during the
fourth quarter of fiscal 1999.
* * * * * *
19
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Act of
1934, the Registrant has duly caused this Report to be signed on its behalf by
the undersigned, thereunto duly authorized.
FOODARAMA SUPERMARKETS, INC.
(Registrant)
/S/ Michael Shapiro
Michael Shapiro
Senior Vice President,
Chief Financial Officer
/S/ Thomas H. Flynn
Thomas H. Flynn
Principal Accounting Officer
Date: January 27, 2000
Pursuant to the requirements of the Securities Exchange Act of 1934, this Report
has been signed below by the following persons on behalf of the Registrant and
in the capacities and on the dates indicated.
Name Title Date
/S/ Joseph J. Saker
Joseph J. Saker Chairman of the Board January 26, 2000
of Directors and President,
Chief Executive Officer
/S/ Charles T. Parton
Charles T. Parton Director January 24, 2000
/S/ Albert A. Zager
Albert A. Zager Director January 25, 2000
/S/ Richard Saker
Richard Saker Executive Vice President, January 26, 2000
Secretary and Director,
Chief Operating Officer
20
<PAGE>
Independent Auditors' Report
Board of Directors and Shareholders
Foodarama Supermarkets, Inc.
Freehold, New Jersey
We have audited the accompanying consolidated balance sheets of Foodarama
Supermarkets, Inc. and Subsidiaries as of October 30, 1999 and October 31, 1998,
and the related consolidated statements of operations, shareholders' equity and
cash flows for the fiscal years ended October 30, 1999, October 31, 1998, and
November 1, 1997. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, such consolidated financial statements present fairly, in all
material respects, the financial position of Foodarama Supermarkets, Inc. and
Subsidiaries as of October 30, 1999 and October 31, 1998, and the results of
their operations and their cash flows for the fiscal years ended October 30,
1999, October 31, 1998, and November 1, 1997 in conformity with generally
accepted accounting principles.
In connection with our audits of the financial statements referred to above, we
audited the financial schedule listed under Item 14. In our opinion, the
financial schedule, when considered in relation to the financial statements
taken as a whole, presents fairly, in all material respects, the information
stated therein.
Amper, Politziner & Mattia P.A.
Amper, Politziner & Mattia P.A.
January 21, 2000
Edison, New Jersey
F-1
<PAGE>
FOODARAMA SUPERMARKETS, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
October 30, 1999 and October 31, 1998
(In thousands)
Assets
1999 1998
Current assets
Cash and cash equivalents $ 4,094 $ 3,905
Merchandise inventories 38,113 37,804
Receivables and other current assets 4,496 3,382
Prepaid income taxes - 1,005
Related party receivables - Wakefern 8,000 6,860
Related party receivables - other 25 152
54,728 53,108
Property and equipment
Land 308 308
Buildings and improvements 1,220 1,220
Leasehold improvements 35,032 34,031
Equipment 80,991 75,756
Property under capital leases 38,218 32,353
Construction in progress 2,481 -
158,250 143,668
Less accumulated depreciation and amortization 76,227 65,389
82,023 78,279
Other assets
Investments in related parties 10,992 9,706
Intangibles 3,839 4,562
Other 2,872 2,384
Related party receivables - Wakefern 1,555 1,370
Related party receivables - other 177 158
19,435 18,180
$ 156,186 $ 149,567
See notes to consolidated financial statements.
F-2
<PAGE>
FOODARAMA SUPERMARKETS, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
October 30, 1999 and October 31, 1998
(In thousands)
Liabilities and Shareholders' Equity
1999 1998
Current liabilities
Current portion of long-term debt ................. $ 2,605 $ 7,812
Current portion of long-term debt, related party .. 503 211
Current portion of obligations under capital leases 492 667
Current income taxes payable ...................... 457 --
Deferred income tax liability ..................... 1,541 1,464
Accounts payable
Related party - Wakefern ....................... 29,699 30,525
Others ......................................... 7,115 6,446
Accrued expenses .................................. 9,809 8,708
52,221 55,833
Long-term debt ....................................... 23,126 20,289
Long-term debt, related party ........................ 1,450 916
Obligations under capital leases ..................... 35,028 29,451
Deferred income taxes ................................ 2,732 3,508
Other long-term liabilities .......................... 6,589 6,556
68,925 60,720
Shareholders' equity
Common stock, $1.00 par; authorized
2,500,000 shares; issued 1,621,627 shares;
outstanding 1,117,150 shares ..................... 1,622 1,622
Capital in excess of par .......................... 2,351 2,351
Retained earnings ................................. 37,696 35,751
Accumulated other comprehensive income
Minimum pension liability ...................... -- (81)
41,669 39,643
Less 504,477 shares held in treasury, at cost ..... 6,629 6,629
35,040 33,014
$ 156,186 $ 149,567
See notes to consolidated financial statements.
F-3
<PAGE>
FOODARAMA SUPERMARKETS, INC. AND SUBSIDIARIES
Consolidated Statements of Operations
Fiscal Years Ended October 30, 1999, October 31, 1998, and November 1, 1997
(In thousands, except per share data)
1999 1998 1997
Sales ............................ $ 799,693 $ 697,358 $ 636,731
Cost of merchandise sold ........... 591,591 520,624 475,764
Gross profit ....................... 208,102 176,734 160,967
Operating, general and
administrative expenses ........... 199,762 170,581 155,939
Income from operations ............. 8,340 6,153 5,028
Other (expense) income:
Gain on real estate transactions -- -- 656
Interest expense ................ (5,569) (3,881) (4,273)
Interest income ................. 315 448 279
(5,254) (3,433) (3,338)
Earnings before income tax provision 3,086 2,720 1,690
Income tax provision ............... (1,141) (940) (626)
Net income ......................... $ 1,945 $ 1,780 $ 1,064
Per share information:
Net income per common share, basic
and diluted ....................... $ 1.74 $ 1.59 $ .90
Weighted average shares outstanding 1,117,150 1,117,150 1,117,150
See notes to consolidated financial statements.
F-4
<PAGE>
FOODARAMA SUPERMARKETS, INC. AND SUBSIDIARIES
Consolidated Statements of Shareholders' Equity
Fiscal Years Ended October 30, 1999, October 31, 1998, and November 1, 1997
(In thousands, except per share data)
<TABLE>
Accum.
Common Stock Capital Other
Shares in Excess Comp.CompRetained Treasury Stock Total
Issued Amount of Par Income Inc.Earnings Shares Amount Equity
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Balance - November 2, 1996 ................ 1,621,627 $1,622 $2,351 - $32,964 (503,477) $(6,622) $30,315
Net income 1997 ........................... - - - -$1,064 1,064 - - 1,064
Shares repurchased ........................ - - - - - (1,000) (7) (7)
Preferred stock dividends
paid - $.42 per share .................... - - - - (57) - - (57)
Balance - November 1, 1997 ................ 1,621,627 1,622 2,351 - 33,971 (504,477) (6,629) 31,315
Comprehensive income
Net income 1998 ......................... - - - - 1,780 1,780 - - 1,780
Other comprehensive income
Minimum pension liability ............. - - - (81) (81) - - - (81)
Comprehensive income ...................... $1,699
Balance - October 31, 1998 ................ 1,621,627 1,622 2,351 (81) 35,751 (504,477) (6,629) 33,014
Comprehensive income
Net income 1999 ......................... - - - - 1,945 1,945 - - 1,945
Other comprehensive income
Minimum pension liability ............. - - - 81 81 - - - 81
Comprehensive income ...................... $2,026
Balance - October 30, 1999 ................ 1,621,627 $1,622 $2,351 - $37,696 (504,447) $(6,629) $35,040
</TABLE>
See notes to consolidated financial statements.
F-5
<PAGE>
FOODARAMA SUPERMARKETS, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
Fiscal Years Ended October 30, 1999, October 31, 1998, and November 1, 1997
(In thousands)
1999 1998 1997
Cash flows from operating activities
Net income ..................................$ 1,945 $ 1,780 $ 1,064
Adjustments to reconcile net income to
net cash from operating activities
Depreciation .............................. 10,838 8,273 8,104
Amortization, intangibles ................. 723 538 375
Amortization, deferred financing costs .... 297 535 642
Amortization, deferred rent escalation .... (47) 266 434
Amortization, other assets ................ -- -- 505
Gain on real estate transactions .......... -- -- (656)
Deferred income taxes ..................... (753) 253 626
(Increase) decrease in
Merchandise inventories ................. (309) (4,219) (1,931)
Receivables and other current assets .... (1,114) 194 (845)
Prepaid income taxes .................... 1,005 (613) 582
Other assets ............................ (721) 90 (78)
Related party receivables - Wakefern .... (1,325) (1,650) 481
Increase (decrease) in
Accounts payable ........................ (157) 8,827 (1,343)
Income taxes payable .................... 457 -- --
Other liabilities ....................... 1,316 695 1,739
12,155 14,969 9,699
Cash flows from investing activities
Net proceeds from real estate
transactions ............................... -- -- 2,938
Cash paid for the purchase of
property and equipment ..................... (5,780) (17,019) (3,620)
Cash paid for construction in
progress ................................... (2,481) -- --
Decrease in related party
receivables - other ........................ 108 22 1,159
(8,153) (16,997) 477
Cash flows from financing activities
Payment for redemption of preferred
stock ...................................... -- -- (1,700)
Preferred stock dividend payments ........... -- -- (57)
Proceeds from issuance of debt .............. 5,014 9,937 1,700
Principal payments under long-term debt ..... (7,904) (6,963) (9,213)
Principal payments under capital lease
obligations ................................ (463) (586) (91)
Principal payments under long-term debt,
related party .............................. (460) (108) (24)
Deferred financing costs .................... -- (25) (227)
(3,813) 2,255 (9,612)
Net change in cash and cash equivalents ........ 189 227 564
Cash and cash equivalents, beginning
of year ....................................... 3,905 3,678 3,114
Cash and cash equivalents, end
of year .......................................$ 4,094 $ 3,905 $ 3,678
Supplemental disclosures of cash paid (received)
Interest ....................................$ 5,590 $ 3,960 $ 4,277
Income taxes ................................ 27 900 (606)
See notes to consolidated financial statements.
F-6
<PAGE>
FOODARAMA SUPERMARKETS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Tabular dollars in thousands, except per share amounts)
Note 1 - Summary of Significant Accounting Policies
Nature of Operations
Foodarama Supermarkets, Inc. and Subsidiaries (the
"Company"), operate 21 ShopRite supermarkets, primarily in
Central New Jersey. The Company is a member of Wakefern Food
Corporation ("Wakefern"), the largest retailer-owned food
cooperative in the United States.
Fiscal Year
The Company's fiscal year ends on the Saturday closest to
October 31. Fiscal 1999 consists of the 52 weeks ended October
30, 1999, fiscal 1998 consists of the 52 weeks ended October 31,
1998, and fiscal 1997 consists of the 52 weeks ended November 1,
1997.
Principles of Consolidation
The consolidated financial statements include the accounts of
the Company and its wholly owned subsidiaries. All significant
intercompany accounts and transactions have been eliminated.
Industry Segment
The Company operates in one industry segment, the retail sale of
food and nonfood products, primarily in the Central New Jersey
region.
Use of Estimates
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts
of assets and liabilities and disclosure of contingent assets
and liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates.
Cash Equivalents
The Company considers all highly liquid debt instruments
purchased with an original maturity of three months or less to
be cash equivalents.
Merchandise Inventories
Merchandise inventories are stated at the lower of cost
(first-in, first-out) or market with cost being determined under
the retail method.
Property and Equipment
Property and equipment is stated at cost and is depreciated on a
straight-line basis over the estimated useful lives of between
three and ten years for equipment, the shorter of the useful
life or lease term for leasehold improvements, and twenty years
for buildings.
F-7
<PAGE>
FOODARAMA SUPERMARKETS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Tabular dollars in thousands, except per share amounts)
Note 1 - Summary of Significant Accounting Policies - (continued)
Property and Equipment - (continued)
Property and equipment under capital leases are recorded at
the lower of fair market value or the net present value of
the minimum lease payments. They are depreciated on a
straight-line basis over the shorter of the related lease
terms or its useful life.
Investments
The Company's investment in its principal supplier, Wakefern, is
stated at cost (see Note 4).
Intangibles
Intangibles consist of goodwill and favorable operating lease
costs. Goodwill is being amortized on a straight-line basis over
periods from 15 to 36 years. The favorable operating lease costs
are being amortized on a straight-line basis over the terms of
the related leases which range from 12 to 24 years.
Deferred Financing Costs
Deferred financing costs are being amortized over the life of
the related debt using the effective interest method.
Postretirement Benefits other than Pensions The Company accrues
for the cost of providing postretirement benefits, principally
supplemental income payments and limited medical benefits, over
the working careers of the officers in the plan.
Postemployment Benefits
The Company accrues for the expected cost of providing
postemployment benefits, primarily short-term disability
payments, over the working careers of its employees.
Advertising
Advertising costs are expensed as incurred. Advertising expense
was $28.5, $16.4 and $13.2 million for the fiscal years 1999,
1998, and 1997, respectively.
Pre-opening Costs
Effective November 2, 1997, the Company elected early
application of Statement of Position 98-5 ("SOP 98-5"),
"Reporting on the Cost of Start-Up Activities." In accordance
with SOP 98-5, the Company expenses costs associated with the
opening of new stores as incurred. The Company previously
amortized these costs over a period of 12 months, commencing one
month after the opening of the store. The effect of adopting SOP
98-5 on net income for the year ended October 31, 1998, was a
decrease of $249,000 or $.22 per share. Financial statements for
the year ended November 1, 1997, have not been restated.
Store Closing Costs
The costs, net of amounts expected to be recovered, are expensed
when a decision to close a store is made. It is reasonably
possible that these estimates may change in the near term.
Operating results continue to be reported until a store is
closed.
F-8
<PAGE>
FOODARAMA SUPERMARKETS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Tabular dollars in thousands, except per share amounts)
Note 1 - Summary of Significant Accounting Policies - (continued)
Earnings Per Share
Effective for the Company's financial statements for the
fiscal year ended October 31, 1998, the Company adopted
Statement of Financial Accounting Standards No. 128,
"Earnings per Share" ("SFAS 128"). SFAS 128 replaces the
presentation of primary earnings per share ("EPS") and fully
diluted EPS with a presentation of basic EPS and diluted EPS,
respectively. Basic EPS excludes dilution and is computed by
dividing earnings available to common stockholders by the
weighted-average number of common shares outstanding during
the period. Diluted EPS assumes conversion of dilutive
options and warrants, and the issuance of common stock for
all other potentially dilutive equivalent shares outstanding.
All EPS data for prior periods has been restated. The adoption
of SFAS 128 did not have a material effect on the Company's
reported EPS amounts.
Employee Benefit Plan
As of November 2, 1997, the Company adopted Statement of
Financial Accounting Standards No. 132 ("SFAS 132"), "Employers'
Disclosures about Pensions and Other Postretirement Benefits."
SFAS 132 modifies the disclosure requirements for pensions and
other postretirement benefits, but does not change the
measurement or recognition of those plans. Adoption of this
statement had no effect on the Company's financial position or
results of operations.
Comprehensive Income
Effective November 1, 1998, the Company adopted Statement of
Financial Accounting Standards (SFAS) No. 130, "Reporting
Comprehensive Income". This Statement establishes standards for
reporting and display of comprehensive income and its components
(revenue, expenses, gains, and losses) in a full set of
general-purpose financial statements. This Statement requires
that all items that are required to be recognized under
accounting standards as components of comprehensive income be
reported in a financial statement that is displayed with the
same prominence as other financial statements. Adoption of this
Statement had no effect on the Company's financial position or
results of operations.
Segments of an Enterprise and Related Information Effective
November 1, 1998, the Company adopted SFAS No. 131, "Disclosure
about Segments of an Enterprise and Related Information." This
Statement establishes standards for the way that public business
enterprises report information about operating segments in
annual financial statements and requires that those enterprises
report selected information about operating segments in interim
financial reports issued to stockholders. It also establishes
standards for related disclosures about products and services,
geographic areas, and major customers. Adoption of this
statement had no effect on the Company's position or results of
operations.
F-9
<PAGE>
FOODARAMA SUPERMARKETS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Tabular dollars in thousands, except per share amounts)
Note 2 - Concentration of Cash Balance
As of October 30, 1999, and October 31, 1998, cash balances of
approximately $898,000 and $561,000, respectively, were
maintained in bank accounts insured by the Federal Deposit
Insurance Corporation (FDIC). These balances exceed the insured
amount of $100,000.
Note 3 - Receivables and Other Current Assets
October 30, October 31,
1999, 1998
Accounts receivable $ 3,334 $ 2,380
Prepaids 1,598 1,321
Rents receivable 70 83
Less allowance for uncollectible
accounts (506) (402)
$ 4,496 $ 3,382
Note 4 - Related Party Transactions
Wakefern Food Corporation
As required by Wakefern's By-Laws, all members of the
cooperative are required to make an investment in the common
stock of Wakefern for each supermarket operated ("Store
Investment Program"), with the exact amount per store computed
in accordance with a formula based on the volume of each store's
purchases from Wakefern. During 1999, the required investment in
Wakefern increased. The maximum required investment per store
was $500,000 at October 30, 1999, and $450,000 at October 31,
1998. This resulted in a total increase in the investment in
Wakefern by $1,286,000 and a related increase in the obligations
due Wakefern for the same amount. This increase in the
obligation is non- interest bearing and is payable over the next
four years. The Company has a 12.3% investment in Wakefern of
$10,163,000 at October 30, 1999, and $8,877,000 at October 31,
1998. Wakefern is operated on a cooperative basis for its
members. The shares of stock in Wakefern are assigned to and
held by Wakefern as collateral for any obligations due Wakefern.
In addition, the obligations to Wakefern are personally
guaranteed by principal officers/stockholders of the Company. As
of October 30, 1999 and October 31, 1998, the Company was
obligated to Wakefern for $1,953,000 and $1,113,000,
respectively, for the increase in its required investment (see
Note 9 Long-term Debt, Related Party).
The Company also has an investment of approximately 12% in
Insure-Rite, Ltd., a company affiliated with Wakefern, which was
$829,000 at October 30, 1999, and October 31, 1998. Insure-Rite,
Ltd. provides the Company with liability and property insurance
coverage.
F-10
<PAGE>
FOODARAMA SUPERMARKETS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Tabular dollars in thousands, except per share amounts)
Note 4 - Related Party Transactions - (continued)
Wakefern Food Corporation - (continued)
In fiscal 1997, Insure-Rite, Ltd. made two retrospective
premium calls for the 1992/93 and the 1993/94 policy years for
$869,000 and $770,000, respectively. The premium calls represent
actuarial projections of claims to be paid in excess of the
deposit premium paid by the Company. The Company also had a
balance due in fiscal 1997 of $139,000 for premium calls for the
1991/92 policy year. After the 1993/94 policy year, Insure-Rite,
Ltd. changed its policy to provide for a fixed premium covering
all insured losses and the elimination of premium calls. The
premium calls were payable in scheduled semi-annual payments
through September 1999. No interest was charged on this
obligation. At October 31, 1998, $1,092,000 was included in
accounts payable-related party. Insurance premiums paid to
Insure-Rite, Ltd. for fiscal years 1999, 1998, and 1997 were
$3,275,000, $3,031,000, and $2,702,000, respectively.
As a stockholder member of Wakefern, the Company earns a share
of an annual Wakefern patronage dividend. The dividend is based
on the distribution of operating profits on a pro rata basis in
proportion to the dollar volume of business transacted by each
member with Wakefern during each fiscal year. It is the
Company's policy to accrue quarterly an estimate of the annual
patronage dividend. The Company reflects the patronage dividend
as a reduction of the cost of merchandise in the consolidated
statements of operations. For fiscal 1999, 1998, and 1997, the
patronage dividends were $8,202,000 $7,438,000, and $6,633,000,
respectively.
At October 30, 1999 and October 31, 1998, the Company has
current receivables due from Wakefern of approximately
$8,000,000 and $6,860,000, respectively, representing patronage
dividends, vendor rebates, coupons and other receivables due in
the ordinary course of business and a noncurrent receivable
representing a deposit of approximately $1,555,000 and
$1,370,000, respectively.
In September 1987, the Company and all other stockholder members
of Wakefern entered into an agreement, as amended in 1992, with
Wakefern which provides for certain commitments and restrictions
on all stockholder members of Wakefern. The agreement contains
an evergreen provision providing for an indefinite term and is
subject to termination ten years after the approval of 75% of
the outstanding voting stock of Wakefern. Under the agreement,
each stockholder, including the Company, agreed to purchase at
least 85% of its merchandise in certain defined product
categories from Wakefern and, if it fails to meet such
requirements, to make payments to Wakefern based on a formula
designed to compensate Wakefern for its lost profit. Similar
payments are due if Wakefern loses volume by reason of the sale
of one or more of a stockholder's stores, merger with another
entity or on the transfer of a controlling interest in the
stockholder.
F-11
<PAGE>
FOODARAMA SUPERMARKETS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Tabular dollars in thousands, except per share amounts)
Note 4 - Related Party Transactions - (continued)
Wakefern Food Corporation - (continued)
The Company fulfilled its obligation to purchase a minimum of
85% in certain defined product categories from Wakefern for all
periods presented. The Company's merchandise purchases from
Wakefern, including direct store delivery vendors processed by
Wakefern, approximated $536, $494 and $447 million for the
fiscal years 1999, 1998, and 1997, respectively.
Wakefern charges the Company for, and provides the Company with
support services in numerous administrative functions. These
services include advertising, insurance, supplies, technical
support for communications and in-store computer systems,
equipment purchasing, and the coordination of coupon processing.
In addition to its investment in Wakefern, which carries only
voting rights, the Company's President serves as a member of
Wakefern's Board of Directors and its finance committee. Several
of the Company's officers and employees also hold positions on
various Wakefern committees.
Other
The Company has receivables from related parties that include
stockholders, directors, officers, and real estate partnerships.
At October 30, 1999 and October 31, 1998, approximately $197,000
and $295,000, respectively, of these receivables, consist of
notes bearing interest at 7% to 9%. These receivables have been
classified based upon the scheduled payment terms. The remaining
amounts are not due upon any specified date and do not bear
interest. The Company's management has classified these loans
based upon expected payment dates.
Fair Value
Determination of the fair value of the above receivables is not
practicable due to their related party nature. As the Company's
investments in Wakefern can only be sold to Wakefern for
approximately the amount invested, it is not practicable to
estimate the fair value of such stock.
Note 5 - Intangibles
October 30, October 31,
1999 1998
Goodwill $ 3,493 $ 3,493
Favorable operating lease costs 4,685 4,685
8,178 8,178
Less accumulated amortization 4,339 3,616
$ 3,839 $ 4,562
F-12
<PAGE>
FOODARAMA SUPERMARKETS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Tabular dollars in thousands, except per share amounts)
Note 6- Accrued Expenses
October 30, October 31,
1999 1998
Payroll and payroll related
expenses $ 5,004 $ 4,451
Insurance 1,055 417
Sales, use and other taxes 1,096 1,020
Interest 107 128
Employee benefits 767 673
Occupancy costs 972 1,148
Real estate taxes 357 344
Other 451 527
$ 9,809 $ 8,708
Note 7 - Real Estate Transactions
During the fiscal year ended November 1, 1997, the Company sold
its Shrewsbury and West Long Branch, New Jersey real estate
partnership interests, which resulted in total proceeds and a
gain before income tax of $875,000. The Company had other
miscellaneous real estate transactions that resulted in a loss
before income tax of $219,000 in fiscal year 1997.
Note 8 - Long-term Debt
Long-term debt consists of the following:
October 30, October 31,
1999 1998
Revolving note $ 10,830 $ 5,816
Term loan 1,500 5,500
Stock redemption note 1,105 1,445
Expansion loan 1,213 1,363
Other notes payable 11,083 13,977
25,731 28,101
Less current portion 2,605 7,812
$ 23,126 $ 20,289
The Company has an amended and restated Revolving Credit and
Term Loan Agreement with a financial institution (the
"Agreement"), which was last amended March 15, 1999. The
Agreement is collateralized by substantially all of the
Company's assets and provided for a total commitment of
$34,200,000. The Agreement consists of a Revolving Note, a Term
Loan, a Stock Redemption Note and an Expansion Loan.
F-13
<PAGE>
FOODARAMA SUPERMARKETS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Tabular dollars in thousands, except per share amounts)
Note 8 - Long-term Debt - (continued)
The Revolving Note has an overall availability of $20,000,000
(increased from $17,500,000 on March 15, 1999), not to exceed
60% of eligible inventory. The Note bears interest at .25% over
prime and matures February 15, 2000. The Agreement provides the
Company with the option to borrow a portion of the Revolving
Note under a Eurodollar loan rate based on LIBOR plus 2.25%.
Interest rates on the Eurodollar loans are fixed at the
beginning of the loan term, which cannot exceed six months.
The prime rate at October 30, 1999 and October 31, 1998, was
8.25% and 8%, respectively.
The Company had a $2,000,000 letter of credit outstanding at
October 30, 1999 and October 31, 1998. A commitment fee of .5%
is charged on the unused portion of the Revolving Note.
Available credit under the Revolving Note was $7,170,000 and
$9,684,000 at October 30, 1999 and October 31, 1998. As of
October 30, 1999 and October 31, 1998, $6,197,000 and $5,796,000
of cash receipts on hand or in transit were restricted for
application against the Revolving Note balance.
The Agreement places restrictions on dividend payments and
requires the maintenance of a debt service coverage ratio. If
the debt service coverage ratio is not met, the availability of
the Revolving Note is reduced by $2,500,000. At October 31, 1998
the Company did not meet the debt service coverage ratio;
therefore, the Revolving Note availability was reduced to
$7,184,000.
The Term Loan is payable in quarterly principal installments,
through December 31, 1999, of $1,000,000 plus interest at 8.38%,
with the remaining balance of $500,000 due February 15, 2000.
The Stock Redemption Note was used to reimburse the funding of
the redemption of the Preferred Stock on March 31, 1997. The
note is payable in quarterly principal installments of $85,000,
commencing March 31, 1998, through December 31, 1999, plus
interest at 8.38%, with the remaining principal balance of
$1,020,000 due February 15, 2000.
On November 14, 1997, the Company obtained an Expansion Loan of
$1,500,000 which was used to purchase a building and equipment
in Linden, New Jersey. The Expansion Loan is collateralized by
the building, improvements, and equipment. The loan is payable
in monthly principal installments of $12,500 plus interest at
9.18%, with a final principal payment of $462,500 due December
1, 2004.
F-14
<PAGE>
FOODARAMA SUPERMARKETS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Tabular dollars in thousands, except per share amounts)
Note 8 - Long-term Debt - (continued)
On January 7, 2000, (the "Closing Date"), the Agreement was
assigned to a new lending group (the "New Agreement") and
modified as follows:
The outstanding balances from the old Agreement (Revolving Note,
Term Loan, Stock Redemption Loan, and Expansion Loan) were fully
satisfied by the Company and the outstanding letter of credit
was replaced under the New Agreement.
The New Agreement provides the Company with a total commitment
of $55,000,000, consists of a Revolving Note, Term Loan and
Capital Expenditure Facility and matures December 31, 2004. The
New Agreement gives the Company the option to convert portions
of the debt to Eurodollar loans, as defined in the New
Agreement, which have interest rates indexed to LIBOR.
The Revolving Note has an overall availability of $25,000,000,
not to exceed 65% of eligible inventory and provides for
availability of up to $4,500,000 for letters of credit. The
Revolving Note bears interest at .50% over prime or a Eurodollar
rate of LIBOR plus 2.50%. A commitment fee of .5% is charged on
the unused portion of the Revolving Note.
The Term Loan is $10,000,000 and is payable in quarterly
principal installments of $500,000 commencing April 1, 2000,
through December 31, 2004. Interest is payable monthly at prime
plus .75% or LIBOR plus 2.75%.
The $20,000,000 Capital Expenditure Facility provides for a two
year non-restoring commitment to fund equipment purchases for
five new stores. Interest only is due monthly at prime plus .75%
or LIBOR plus 2.75% for any amount utilized during the first two
years of the commitment. At the end of the two years, any
outstanding amounts will be converted to a term loan with
interest payable monthly at rates described above and fixed
quarterly principal payments based on a seven year amortization
schedule with a balloon payment due at the maturity date of the
New Agreement. A commitment fee of .5% is charged on the unused
portion of the Capital Expenditure Facility. There were no
amounts utilized on this facility at the closing date.
The New Agreement is collateralized by substantially all of the
Company's assets. In addition there are restrictions as to
dividends, debt service coverage and leverage ratios,
maintenance of minimum adjusted EBITDA levels as defined, as
well as limitations on capital expenditures and proceeds on new
debt.
Accordingly, the outstanding debt at October 30, 1999, under the
old Agreement has been excluded from current liabilities, since
the Company has the ability and intent to refinance this debt on
a long-term basis, based on the provisions of the New Agreement.
F-15
<PAGE>
FOODARAMA SUPERMARKETS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Tabular dollars in thousands, except per share amounts)
Note 8 - Long-term Debt - (continued)
Other Notes Payable
Included in other notes payable are the following:
October 30, October 31,
1999 1998
Note payable to a financing
institution, maturing
October 2004, payable at
$56,000 per month plus interest
at 7.26%, collateralized by
related equipment. $ 3,330 $ 4,000
Note payable to a financing
institution, maturing April 2005,
payable at $46,000 per month a
including interest at 7.44%,
collateralized by related equipment. 2,449 2,821
Note payable to a financing
institution, maturing
February 2000, payable at
$105,000 per month including
interest at 10.58%, collateralized
by related equipment. 408 1,550
Various equipment loans maturing
through November 2004, at interest
rates ranging from 5.79% to 10.58%,
collateralized by various
equipment. 4,896 5,606
Total other notes payable. $ 11,083 $ 13,977
Aggregate maturities of long-term debt are as follows:
Fiscal Year
2000 ($14.6 million of which was refinanced
under the New Agreement) $ 17,253
2001 2,034
2002 2,028
2003 2,051
2004 2,091
Thereafter 274
As of October 30, 1999, the fair value of long-term debt was
approximately equivalent to its carrying value, due to the fact
that the interest rates currently available to the Company for
debt with similar terms are approximately equal to the interest
rates for its existing debt.
F-16
<PAGE>
FOODARAMA SUPERMARKETS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Tabular dollars in thousands, except per share amounts)
Note 9 - Long-term Debt, Related Party
As of October 30, 1999 and October 31, 1998, the Company was
indebted for an investment in Wakefern in the amount of
$1,953,000 and $1,113,000, respectively. The debt is
non-interest bearing and payable in scheduled installments as
follows:
Fiscal Year
2000 $ 503
2001 563
2002 563
2003 175
2004 91
Thereafter 58
Determination of the fair value of the above long-term debt is
not practicable due to its related party nature.
Note 10 - Other Long-term Liabilities
October 30, October 31,
1999 1998
Deferred escalation rent $ 4,628 $ 4,675
Postretirement benefit cost 1,212 975
Other 749 906
$ 6,589 $ 6,556
Note 11 - Long-term Leases
Capital Leases
October 30, October 31,
1999 1998
Real estate $ 38,218 $ 32,353
Less accumulated amortization 8,027 6,385
$ 30,191 $ 25,968
F-17
<PAGE>
FOODARAMA SUPERMARKETS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Tabular dollars in thousands, except per share amounts)
Note 11 - Long-term Leases - (continued)
Capital Leases - (continued)
The following is a schedule by year of future minimum lease
payments under capital leases, together with the present value
of the net minimum lease payments, as of October 30, 1999:
Fiscal Year
2000 $ 3,785
2001 3,800
2002 3,961
2003 4,016
2004 4,088
Thereafter 60,607
Total minimum lease payments 80,257
Less amount representing interest 44,737
Present value of net minimum lease
payments 35,520
Less current maturities 492
Long-term maturities $ 35,028
Operating Leases
The Company is obligated under operating leases for rent
payments expiring at various dates through 2021. Certain leases
provide for the payment of additional rentals based on certain
escalation clauses and six leases require a further rental
payment based on a percentage of the stores' annual sales in
excess of a stipulated minimum. Percentage rent expense was
$248,000, $229,000, and $219,000 for the fiscal years 1999,
1998, and 1997, respectively. Under the majority of the leases,
the Company has the option to renew for additional terms at
specified rentals.
Total rental expense for all operating leases consists of:
Fiscal 1999 Fiscal 1998 Fiscal 1997
Land and buildings $ 10,611 $ 10,928 $ 10,471
Less subleases (1,831) (1,765) (1,963)
$ 8,780 $ 9,163 $ 8,508
F-18
<PAGE>
FOODARAMA SUPERMARKETS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Tabular dollars in thousands, except per share amounts)
Note 11 - Long-term Leases - (continued)
Operating Leases - (continued)
The minimum rental commitments under all noncancellable
operating leases reduced by income from noncancellable subleases
at October 30, 1999, are as follows:
Income from
Land and Noncancellable Net Rental
Fiscal Year Buildings Subleases Commitment
2000 $ 10,187 $ 1,899 $ 8,288
2001 9,735 1,828 7,907
2002 9,071 1,479 7,592
2003 8,685 1,235 7,450
2004 7,758 654 7,104
Thereafter 43,873 2,272 41,601
$ 89,309 $ 9,367 $ 79,942
The Company is presently leasing one of its supermarkets, a
garden center, and liquor store from a partnership in which the
president has an interest, at an annual aggregate rental of
$668,000, $660,000, and $645,000 for the fiscal years 1999, 1998
and 1997, respectively.
Note 12 - Mandatory Redeemable Preferred Stock
In fiscal 1993, the Company received $1,700,000 for the
issuance of 136,000 shares of Preferred Stock at $12.50 par
value per share to Wakefern Food Corporation. Dividends on
the Preferred Stock were cumulative and accrued at an annual
rate of 8%. The Preferred Stock was redeemed and canceled on
March 31, 1997, at par value, for $1,700,000. As of the
redemption date, all dividends had been declared and paid.
Note 13 - Stock Options
On May 10, 1995, the Company's stockholders approved the
Foodarama Supermarkets, Inc. 1995 Stock Option Plan, which
provides for the granting of options to purchase up to 100,000
common shares until January 31, 2005, at prices not less than
fair market value at the date of the grant. Options granted
under the plan vest over a period of three years from the date
of grant. At October 30, 1999, no options had been granted.
F-19
<PAGE>
FOODARAMA SUPERMARKETS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Tabular dollars in thousands, except per share amounts)
Note 14 - Income Taxes
The income tax provisions consist of the following:
Fiscal 1999 Fiscal 1998 Fiscal 1997
Federal:
Current $ 1,857 $ 638 $ -
Deferred (506) 99 526
State and local:
Current 37 49 -
Deferred (247) 154 100
$ 1,141 $ 940 $ 626
The following tabulations reconcile the federal statutory tax
rate to the effective rate:
Fiscal 1999 Fiscal 1998 Fiscal 1997
Tax provision at the
statutory rate 34.0 % 34.0 % 34.0 %
State and local
income tax provision,
net of federal income
tax 5.9 % 5.9 % 5.9 %
Goodwill amortization
not deductible for
tax purposes 1.8 % 1.8 % 2.9 %
Tax credits (1.0)% - % - %
Adjustment to prior
years tax provision (5.1)% (5.4)% (6.3)%
Other 1.4 % (1.7)% .5 %
Actual tax provision 37.0 % 34.6 % 37.0 %
Net deferred tax assets and liabilities consist of the
following:
October 30, October 31,
1999 1998
Current deferred tax assets:
Deferred losses $ 152 $ 167
Allowances for uncollectible
receivables 279 226
Inventory capitalization 7 7
Reserves 151 270
Vacation accrual 284 114
Accrued post-employment 151 145
Accrued post-retirement 491 395
Tax credits 27 -
Other 37 37
1,579 1,361
F-20
<PAGE>
FOODARAMA SUPERMARKETS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Tabular dollars in thousands, except per share amounts)
Note 14 - Income Taxes - (continued)
October 30, October 31,
1999 1998
Current deferred tax liabilities:
Prepaids (316) (234)
Patronage dividend receivable (1,921) (1,623)
Accelerated real estate taxes (169) (141)
Prepaid pension (546) (488)
Other (168) (339)
(3,120) (2,825)
Current deferred tax liability $ (1,541) $ (1,464)
Noncurrent deferred tax assets:
Lease obligations $ 2,168 $ 1,690
State loss carryforward 73 741
2,241 2,431
Valuation allowance (73) (506)
2,168 1,925
Noncurrent deferred tax
liabilities:
Depreciation (3,953) (4,753)
Pension obligations (435) (330)
Other (512) (350)
(4,900) (5,433)
Noncurrent deferred tax
liability $ (2,732) $ (3,508)
State loss carryforwards expire through October 2001.
Note 15 - Commitments and Contingencies
Legal Proceedings
The Company is involved in various legal actions and claims
arising in the ordinary course of business. Management believes
that the outcome of any such litigation and claims will not have
a material effect on the Company's financial position or results
of operations.
Guarantees
The Company remains contingently liable under leases assumed by
third parties. As of October 30, 1999, the minimum annual rental
under these leases amounted to approximately $1,582,000 expiring
at various dates through 2011. The Company has not experienced
and does not anticipate any material nonperformance by such
third parties.
F-21
<PAGE>
FOODARAMA SUPERMARKETS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Tabular dollars in thousands, except per share amounts)
Note 15 - Commitments and Contingencies - (continued)
Contingencies
In May 1995, the Company sold its two operating locations in
Pennsylvania. If the purchaser of these supermarkets ceases
to operate prior to May 2000, the Company may be liable for
an unfunded pension withdrawal liability. As of October 30,
1999, the potential withdrawal liability was approximately
$300,000. The Company fully anticipates that the purchaser
of these stores, a Wakefern member, will remain in operation
throughout this period.
Note 16 - Retirement and Benefit Plans
Defined Benefit Plans
The Company sponsors two defined benefit pension plans covering
administrative personnel and members of a union. Employees
covered under the administrative pension plan earned benefits
based upon a percentage of annual compensation and could make
voluntary contributions to the plan. Employees covered under the
union pension benefit plan earn benefits based on a fixed amount
for each year of service. The Company's funding policy is to pay
at least the minimum contribution required by the Employee
Retirement Income Security Act of 1974. The plans' assets
consist primarily of publicly traded stocks and fixed income
securities. As of October 30, 1999 and October 31, 1998, the
plans' assets included common stock of the Company with a fair
value of $1,065,000 and $1,167,000, respectively.
Note 16 - Retirement and Benefit Plans
Defined Benefit Plans
A summary of the plans funded status and the amounts recognized
in the consolidated balance sheet as of October 30, 1999 and
October 31, 1998 follows:
October 30, October 31,
1999 1998
Change in benefit obligation
Benefit obligation - beginning
of year $ (6,121) $ (5,499)
Service cost (71) (36)
Interest cost (447) (404)
Actuarial gain (loss) 38 (580)
Benefits paid 665 398
Benefit obligation - end
of year (5,936) (6,121)
F-22
<PAGE>
FOODARAMA SUPERMARKETS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Tabular dollars in thousands, except per share amounts)
Note 16 - Retirement and Benefit Plans - (continued)
October 30, October 31,
1999 1998
Change in plan assets
Fair value of plan assets -
beginning of year 6,643 6,206
Actual return on plan assets 250 740
Employer contributions 205 94
Benefits paid (665) (397)
Fair value of plan assets -
end of year 6,433 6,643
Funded status 497 522
Unrecognized prior service cost 273 311
Unrecognized net loss from past
experience different from that
assumed 593 394
Unrecognized transition asset (16) (21)
Adjustment required to recogniz
minimum liability - (188)
Prepaid pension cost $ 1,347 $ 1,018
Pension expense consists of the following:
Fiscal 1999 Fiscal 1998 Fiscal 1997
Service cost -
benefits earned
during the period $ 71 $ 36 $ 296
Interest expense on
benefit obligation 447 404 466
Expected return on
plan assets (522) (471) (469)
Amortization of prior
service costs 37 37 37
Amortization of
unrecognized net
loss (gain) 35 - 43
Amortization of
unrecognized transition
obligation (asset) (5) (5) (9)
Total pension expense $ 63 $ 1 $ 364
F-23
<PAGE>
FOODARAMA SUPERMARKETS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Tabular dollars in thousands, except per share amounts)
Note 16 - Retirement and Benefit Plans - (continued)
Defined Benefit Plans - (continued)
The discount rate used in determining the actuarial present
value of the projected benefit obligation ranged from 6.75%
to 7.25% at October 30, 1999 and October 31, 1998. The
expected long-term rate of return on plan assets was 8% at
October 30, 1999 and October 31, 1998.
On September 30, 1997, the Company adopted an amendment to
freeze all future benefit accruals relating to the plan covering
administrative personnel. A curtailment gain of $55,000 was
recorded related to this amendment.
At October 31, 1998, the accumulated benefit obligation exceeded
the fair value of the plans' assets in the plan covering members
of one union. The provisions of SFAS 87, "Employers' Accounting
for Pensions," require recognition in the balance sheet of an
additional minimum liability and related intangible asset for
pension plans with accumulated benefits in excess of plan
assets; any portion of such additional liability which is in
excess of the plan's prior service cost is reflected as a direct
charge to equity, net of related tax benefit. Accordingly, at
October 31, 1998, a liability of $188,000 is included in other
long-term liabilities, an intangible asset equal to the prior
service cost of $53,000 is included in other assets, and a
charge of $81,000 net of deferred taxes of $54,000 is reflected
as a minimum pension liability in stockholders' equity in the
Consolidated Balance Sheet.
Multi-Employer Plans
Health, welfare, and retirement expense was approximately
$8,276,000 in fiscal 1999, $7,804,000 in fiscal 1998 and
$6,354,000 in fiscal 1997 under plans covering union employees.
Such plans are administered through the unions involved. Under
federal legislation regarding such pension plans, a company is
required to continue funding its proportionate share of a plan's
unfunded vested benefits in the event of withdrawal (as defined
by the legislation) from a plan or plan termination. The Company
participates in a number of these pension plans and may have a
potential obligation as a participant. The information required
to determine the total amount of this contingent obligation as
well as the total amount of accumulated benefits and net assets
of such plans, is not readily available. However, the Company
has no present intention of withdrawing from any of these plans,
nor has the Company been informed that there is any intention to
terminate such plans (see Note 15).
F-24
<PAGE>
FOODARAMA SUPERMARKETS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Tabular dollars in thousands, except per share amounts)
Note 16 - Retirement and Benefit Plans - (continued)
401(k)/Profit Sharing Plan
The Company maintains an employee 401(k) Savings Plan for all
qualified non-union employees. Employees are eligible to
participate in the Plan after completing one year of service
(1,000 hours) and attaining age 21. Employee contributions are
discretionary to a maximum of 15% of compensation. The Company
matches 25% of the employees' contributions up to 6% of employee
compensation. The Company has the right to make additional
discretionary contributions, which are allocated to each
eligible employee in proportion to their eligible compensation,
which was 2% for fiscal years 1999 and 1998. 401(k) expense for
the fiscal years 1999, 1998, and 1997 was approximately
$480,000, $480,000, and $12,000, respectively.
Note 17 - Other Postretirement and Postemployment Benefits
Postretirement Benefits
The Company will provide certain current and provides former
officers with supplemental income payments and limited
medical benefits during retirement. The Company recorded an
estimate of deferred compensation payments to be made to the
officers based on their anticipated period of active
employment and the relevant actuarial assumptions at October
30, 1999 and October 31, 1998, respectively. The Company
purchased life insurance to partially fund this obligation.
The participants have agreed to certain non-compete
arrangements and to provide continued service availability
for consulting services after retirement.
A summary of the plan's funded status and the amounts recognized
in the balance sheet as of October 30, 1999 and October 31,
1998, follows:
October 30, October 31,
1999 1998
Change in benefit obligation
Benefit obligation - beginning
of year $ (1,875) $ (1,309)
Service cost (73) (39)
Interest cost (123) (88)
Actuarial gain (loss) (33) (481)
Benefits paid 42 42
Benefit obligation - end of
year (2,062) (1,875)
Change in plan assets
Fair value of plan assets -
beginning of year - -
Actual return on plan assets - -
Employer contributions 42 42
Benefits paid (42) (42)
Fair value of plan assets -
end of year - -
F-25
<PAGE>
FOODARAMA SUPERMARKETS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Tabular dollars in thousands, except per share amounts)
Note 17 - Other Postretirement and Postemployment Benefits -
(continued)
October 30, October 31,
1999 1998
Funded status (2,062) (1,875)
Unrecognized prior service cost 13 15
Unrecognized net loss from past
experience different from that
assumed 837 885
Accrued postretirement benefit
cost $ (1,212) $ (975)
Net postretirement benefit expense consists of the following:
Fiscal 1999 Fiscal 1998 Fiscal 1997
Service cost -
benefits earned
during the period $ 73 $ 39 $ 18
Interest expense on
benefit obligation 123 88 90
Expected return on
plan assets - - -
Amortization of
prior service costs 2 2 -
Amortization of
unrecognized net
loss (gain) 81 30 38
Amortization of
unrecognized
transition
obligation (asset) - - -
Postretirement
benefit expense $ 279 $ 159 $ 146
The assumed discount rate used in determining the postretirement
benefit obligation as of October 30, 1999 and October 31, 1998,
was 7.75% and 7.25%, respectively.
Postemployment Benefits
Under SFAS No. 112, the Company is required to accrue the
expected cost of providing postemployment benefits, primarily
short-term disability payments, over the working careers of
its employees.
The accrued liability under SFAS No. 112 as of October 30, 1999
and October 31, 1998, was $374,000 and $359,000, respectively.
F-26
<PAGE>
FOODARAMA SUPERMARKETS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Tabular dollars in thousands, except per share amounts)
Note 18 - Earnings Per Share
Fiscal 1999 Fiscal 1998 Fiscal 1997
Net income $ 1,945 $ 1,780 $ 1,064
Less: preferred
stock dividends - - (57)
Income available
to common
stockholders $ 1,945 $ 1,780 $ 1,007
Basic EPS $ 1.74 $ 1.59 $ .90
Dilutive EPS $ 1.74 $ 1.59 $ .90
Weighted average
shares
outstanding 1,117,150 1,117,150 1,117,150
Note 19- Noncash Investing and Financing Activities During fiscal
1999, the Company modified one of its capitalized leases,
resulting in an increase of $5,865,000 in property under
capitalized leases and capitalized lease obligations.
During fiscal 1999, the required investment in Wakefern
increased from a maximum per store of $450,000 to $500,000. This
resulted in a increase of $1,286,000 in the investment and
obligations due Wakefern.
During fiscal 1999, the Company financed equipment purchased for
$520,000.
The Company was required to make an additional investment in
Wakefern of $450,000 for a new store opened during fiscal 1998.
In conjunction with the investment, liabilities were assumed for
the same amount.
A capital lease obligation of $12,910,000 was incurred when the
Company entered into a lease for a new store in fiscal 1998.
During fiscal 1998, the Company purchased a building in Linden,
New Jersey for $606,000 and obtained financing for $1,500,000.
The additional financing of $894,000 was used to purchase
equipment at a later date.
At October 31, 1998, the Company had an additional minimum
pension liability of $188,000, a related intangible of $53,000
and a direct charge to equity of $81,000, net of deferred taxes
of $54,000. These amounts were reversed during fiscal 1999.
A capital lease obligation of $4,184,000 was incurred when the
Company entered into a lease for a store in a sale/leaseback
transaction during fiscal 1997.
F-27
<PAGE>
FOODARAMA SUPERMARKETS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Tabular dollars in thousands, except per share amounts)
Note 20 - Year 2000
The Company has not experienced any material Year 2000 problems
with its internal operations or third party suppliers and
services as of the date of this report. The Company does not
currently expect any significant Year 2000 problems to be
encountered for the remainder of the year 2000 that would have a
material effect on the financial condition of the Company.
Note 21 - Unaudited Summarized Consolidated Quarterly Information
Summarized quarterly information for the years ended October
30, 1999 and October 31, 1998, was as follows:
Thirteen Weeks Ended
January 30, May 1, July 31, October 30,
1999 1999 1999 1999
Sales ............ $203,607 $195,420 $203,243 $197,423
Gross profit ..... 52,877 51,724 52,768 50,733
Net income ....... 535 377 421 612
Earnings available
per basic and
diluted share ... .48 .34 .38 .54
Thirteen Weeks Ended
January 31, May 2, August 1, October 31,
1998 1998 1998 1998
Sales ............ $170,231 $166,245 $176,172 $184,710
Gross profit ..... 42,434 42,425 44,634 47,241
Net income ....... 783 258 255 484
Earnings available
per basic and
diluted share ... .70 .23 .23 .43
F-28
<PAGE>
Schedule II
FOODARAMA SUPERMARKETS, INC. AND SUBSIDIARIES
Valuation and Qualifying Accounts
Fiscal Years Ended October 30, 1999, October 31, 1998, and November 1, 1997
(In Thousands)
Additions
Balance Charge to Charge to Balance
at beginning Costs and Other at end
Description of year Expenses accounts Deds. of year
Fiscal year ended October 30, 1999:
Allowance for doubtful
accounts (deducted from
receivables and other
current assets) $402 $ 199 - 95(1) $ 506
Fiscal year ended October 31, 1998:
Allowance for doubtful
accounts (deducted from
receivables and other
current assets) $473 $ 149 - 220(1) $ 402
Fiscal year ended November 1, 1997:
Allowance for doubtful
accounts (deducted from
receivables and other
current assets) $665 $ 120 - 312(1) $ 473
(1) Accounts deemed to be uncollectible.
S-1
<PAGE>
Schedule X
c. Exhibits
3. Articles of Incorporation and By-Laws
*i. Restated Certificate of Incorporation of Registrant
filed with the Secretary of State of the State of
New Jersey on May 15, 1970.
*ii. Certificate of Merger filed with the Secretary of
State of the State of New Jersey on May 15, 1970.
*iii. Certificate of Merger filed with the Secretary of
State of the State of New Jersey on March 14, 1977.
*iv. Certificate of Merger filed with the Secretary of
State of the State of New Jersey on June 23, 1978.
*v. Certificate of Amendment to Restated Certificate of
Incorporation filed with the Secretary of State of
the State of New Jersey on May 12, 1987.
**vi. Certificate of Amendment to Restated Certificate of
Incorporation filed with the Secretary of State of
the State of New Jersey on February 16, 1993.
****vii. Amendment to the Certificate of Incorporation of
the Registrant dated April 4, 1996.
*viii. By-Laws of Registrant.
*ix. Amendments to By-Laws of Registrant adopted
September 14,1983.
x. Amendment to By-Laws of Registrant adopted March
15, 1991 is incorporated herein by reference to the
Registrant's Annual Report on Form 10-K for the
year ended November 2, 1991 filed with the
Securities and Exchange Commission on February 18,
1992.
* Each of these Exhibits is incorporated herein by reference to the
Registrant's Annual Report on Form 10-K for the year ended October 29, 1988
filed with the Securities and Exchange Commission on February 13, 1989.
** Each of these Exhibits is incorporated herein by reference to the
Registrant's Annual Report on Form 10-K for the year ended October 31, 1992
filed with the Securities and Exchange Commission on February 19, 1993.
E-1
<PAGE>
10. Material Contracts.
i. The Agreement dated September 18, 1987 entered into
by Wakefern Food Corporation and the Registrant is
incorporated herein by reference to Exhibit A to
the Registrant's Form 8-K filed with the Securities
and Exchange Commission on November 19, 1987.
***ii. Certificate of Incorporation of Wakefern Food
Corporation together with amendments thereto and
certificates of merger.
***iii. By-Laws of Wakefern Food Corporation.
***iv. Form of Deferred Compensation Agreement, between
the Registrant and certain of its key employees.
v. Registrant's 1987 Incentive Stock Option Plan is
incorporated herein by reference to Exhibit 4 (a)
to the Registrant's Form S-8 filed with the
Securities and Exchange Commission on May 26, 1989.
vi. Agreement, dated September 20, 1993, between the
Registrant, ShopRite of Malverne, Inc. and The
Grand Union Company is incorporated herein by
reference to the Registrant's Annual Report on Form
10-K for the year ended October 30, 1993, filed
with the Securities and Exchange Commission on
February 24, 1994.
vii. Revolving Credit and Term Loan Agreement, dated as
of February 15, 1995 between the Registrant and
NatWest Bank as agent for a group of banks is
incorporated herein by reference to the
Registrant's Form 8-K filed with the Securities and
Exchange Commission on July 10, 1995.
viii. Asset Purchase Agreement dated April 20, 1995 and
Amendment No. 1 to the Agreement dated May 24, 1995
between the Registrant and Wakefern Food Corp. is
incorporated herein by reference to the
Registrant's Form 8-K filed with the Securities and
Exchange Commission on July 27, 1995.
ix. Amendment of Revolving Credit and Term Loan
Agreement, dated as of January 25, 1996, between
the Registrant and each of the banks which are
signatory thereto is incorporated herein by
reference to the Registrant's Form 10-Q for the
quarterly period ended January 27,
1996, filed with the Securities and Exchange
Commission on March 12, 1996.
****x. Agreement, dated as of March 29, 1996, between the
Registrant and Wakefern Food Corporation.
*** Each of these Exhibits is incorporated herein by reference to the
Registrant's Annual Report on Form 10-K for the year ended
October 28, 1989 filed with the Securities and Exchange
Commission on February 9, 1990.
E-2
<PAGE>
****xi. Amendment of Revolving Credit and Term Loan
Agreement, dated as of May 10, 1996, between the
Registrant and each of the Banks which are
signatory thereto.
xii. Waiver and Amendment of Revolving Credit and Term
Loan Agreement, dated as of July 26, 1996, between
the Registrant and each of the Banks which are
signatory thereto is incorporated herein by
reference to the Registrant's Form 10-Q for the
quarterly period ended July 27, 1996, filed with
the Securities and Exchange Commission on
September 10, 1996.
xiii. Amended and Restated Revolving Credit and Term Loan
Agreement, dated as of May 2, 1997, between the
Registrant and the Financial Institution which are
signatory thereto is incorporated herein by
reference to the Registrant's Form 10-Q for the
quarterly period ended May 3, 1997, filed with the
Securities and Exchange Commission on June 16,1997.
*****xiv. First Amendment to Amended and Restated Revolving
Credit and Term Loan Agreement, dated October 28,
1997, between the Registrant and the Financial
Institution which are signatory thereto.
*****xv. Consent and Second Amendment to Amended and
Restated Revolving Credit and Term Loan Agreement
and other loan documents, dated November 14, 1997,
between the Registrant and the Financial
Institution which are signatory thereto.
*****xvi. Third Amendment to Amended and Restated Revolving
Credit and Term Loan Agreement, dated January 15,
1998, between the Registrant and the Financial
Institution which are signatory thereto.
xvii. Amendment to the Amended and Restated Revolving
Credit and Term Loan Agreement, dated March 11,
1999, between the Registrant and the Financial
Institution which are signatory thereto, is
incorporated herein by reference to the
Registrant's Form 10-Q for the quarterly period
ended May 1, 1999, filed with the Securities and
Exchange Commission on June 11, 1999.
xviii. Second Amended and Restated Revolving Credit and
Term Loan Agreement, dated as of January 7, 2000
between the Registrant and each of the Financial
Institutions which are signatory thereto.
**** Incorporated herein by reference to the Registrant's Form
10-Q for the quarterly period ended April 27, 1996, filed
with the Securities and Exchange Commission on June 10,
1996.
***** Incorporated herein by reference to the Registrant's Form
10-K for the year ended November 1, 1997 filed with the
Securities and Exchange Commission on January 29, 1998.
E-3
<PAGE>
Exhibit 21
LIST OF SUBSIDIARIES
OF FOODARAMA SUPERMARKETS, INC.
Name of Subsidiary State of
Incorporation
ShopRite of Malverne, Inc. New York
New Linden Price Rite, Inc. New Jersey
ShopRite of Reading, Inc. Pennsylvania
E-4
<PAGE>
Material Contracts
xviii
SECOND AMENDED AND RESTATED REVOLVING CREDIT AND TERM LOAN AGREEMENT
Dated as of January 7, 2000
Among
FOODARAMA SUPERMARKETS, INC.,
NEW LINDEN PRICE RITE, INC.,
THE GUARANTORS NAMED HEREIN,
THE LENDERS NAMED HEREIN,
and
GMAC BUSINESS CREDIT, LLC, AS AGENT
<PAGE>
TABLE OF CONTENTS
Page
I. DEFINITIONS 1
II. THE LOANS 17
SECTION 2.01. Commitments 17
-----------
SECTION 2.02. Loans 19
-----
SECTION 2.03. Notice of Loans 20
---------------
SECTION 2.04. Notes; Repayment of Loans 21
-------------------------
SECTION 2.05. Interest on Loans 22
-----------------
SECTION 2.06. Fees 22
----
SECTION 2.07. Termination of Revolving Commitments and Capital
Expenditure Facility C 23
mitment
SECTION 2.08. Interest on Overdue Amounts 23
---------------------------
SECTION 2.09. Prepayment of Loans 24
-------------------
SECTION 2.10. Reserve Requirements; Change in Circumstances 28
---------------------------------------------
SECTION 2.10A Change in Legality; Eurodollar Availability 29
-------------------------------------------
SECTION 2.10B Indemnity 30
---------
SECTION 2.11. Pro Rata Treatment 31
------------------
SECTION 2.12. Sharing of Setoffs 31
------------------
SECTION 2.13. Taxes 32
-----
SECTION 2.14. Payments and Computations 34
-------------------------
SECTION 2.15. Settlement Among Lenders 34
------------------------
SECTION 2.16. Making of Revolving Loans 37
-------------------------
SECTION 2.17. Joint and Several Borrowers 38
---------------------------
IIA. LETTERS OF CREDIT 38
SECTION 2A.01. Issuance of Letters of Credit 38
-----------------------------
SECTION 2A.02. Payment; Reimbursement 38
----------------------
SECTION 2A.03. GMACBC's Actions 40
-----------------------
SECTION 2A.04. Payments in Respect of Increased Costs 40
SECTION 2A.05. Indemnity as to Letters of Credit 42
---------------------------------
SECTION 2A.06. Letter of Credit Fees 42
---------------------
III. COLLATERAL SECURITY 43
SECTION 3.01. Security Documents 43
------------------
SECTION 3.02. Filing and Recording 43
--------------------
SECTION 3.03. Real Property; Mortgages; Title Insurance 44
-----------------------------------------
SECTION 3.04. Additional Collateral 46
---------------------
IV. REPRESENTATIONS AND WARRANTIES 46
SECTION 4.01. Organization, Legal Existence 46
-----------------------------
SECTION 4.02. Authorization 47
-------------
SECTION 4.03. Governmental Approvals 47
----------------------
SECTION 4.04. Binding Effect 47
--------------
SECTION 4.05. Material Adverse Change 47
-----------------------
SECTION 4.06. Litigation; Compliance with Laws; etc 48
-------------------------------------
SECTION 4.07. Financial Statements 48
--------------------
SECTION 4.08. Federal Reserve Regulations 49
---------------------------
SECTION 4.09. Taxes 49
-----
SECTION 4.10. Employee Benefit Plans 50
----------------------
SECTION 4.11. No Material Misstatements 51
-------------------------
SECTION 4.12. Investment Company Act; Public Utility Holding
Company Act 51
SECTION 4.13. Security Interest 51
-----------------
SECTION 4.14. Bank Accounts 52
-------------
SECTION 4.15. Subsidiaries 52
------------
SECTION 4.16. Title to Properties; Possession Under Leases;
Trademarks 52
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
-------------------
SECTION 4.21. Undrawn Availability 55
--------------------
SECTION 4.22 Year 2000 55
---------
V. CONDITIONS OF CREDIT EVENTS 56
SECTION 5.01. All Credit Events 56
-----------------
SECTION 5.01A. Capital Expenditure Loans 56
-------------------------
SECTION 5.02. Second Amendment and Restatement Effective Date 57
VI. AFFIRMATIVE COVENANTS
SECTION 6.01. Legal Existence 61
---------------
SECTION 6.02. Businesses and Properties 61
-------------------------
SECTION 6.03. Insurance 62
---------
SECTION 6.04. Taxes 62
-----
SECTION 6.05. Financial Statements, Reports, etc 63
----------------------------------
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 67
------------------
SECTION 6.13. Pay Obligations to Lenders and Perform Other
Covenants 69
SECTION 6.14. Maintain Operating Accounts 69
---------------------------
SECTION 6.15. Amendments 70
----------
SECTION 6.16. Use of Proceeds 70
---------------
SECTION 6.17 Collateral Locations 70
--------------------
VII. NEGATIVE COVENANTS
SECTION 7.01. Liens 70
-----
SECTION 7.02. Sale and Lease-Back Transactions 72
--------------------------------
SECTION 7.03. Indebtedness 72
------------
SECTION 7.04. Dividends, Distributions and Payments 74
-------------------------------------
SECTION 7.05. Consolidations, Mergers and Sales of Assets 74
-------------------------------------------
SECTION 7.06. Investments 74
-----------
SECTION 7.07. EBITDA 75
------
SECTION 7.08. Leverage Ratio 76
--------------
SECTION 7.09. Debt Service Coverage Ratio 76
---------------------------
SECTION 7.10. Capital Expenditures 77
---------------------
SECTION 7.11 Business 78
--------
SECTION 7.12. Sales of Receivables 78
--------------------
SECTION 7.13. Use of Proceeds 78
---------------
SECTION 7.14. ERISA 78
-----
SECTION 7.15. Accounting Changes 78
------------------
SECTION 7.16. Prepayment or Modification of Indebtedness;
Modification of Charter Documents78
SECTION 7.17. Transactions with Affiliates 79
----------------------------
SECTION 7.18. Consulting Fees 79
---------------
SECTION 7.19. Limitations on Dividends and Other Payments 79
-------------------------------------------
VIII. EVENTS OF DEFAULT 79
IX. AGENT 86
X. CASH RECEIPTS COLLECTION 88
SECTION 10.01. Collection of Cash 89
------------------
SECTION 10.02. Monthly Statement of Account 91
----------------------------
SECTION 10.03. Collateral Custodian 91
--------------------
XI. MISCELLANEOUS 91
SECTION 11.01. Notices 91
-------
SECTION 11.02. Survival of Agreement 92
---------------------
SECTION 11.03. Successors and Assigns; Participations 92
--------------------------------------
SECTION 11.04. Expenses; Indemnity 95
-------------------
SECTION 11.05. Applicable Law 96
--------------
SECTION 11.06. Right of Setoff 96
---------------
SECTION 11.07. Payments on Business Days 97
-------------------------
SECTION 11.08. Waivers; Amendments; Final Maturity Date 97
----------------------------------------
SECTION 11.09. Severability 98
------------
SECTION 11.10. Entire Agreement; Waiver of Jury Trial, etc 98
-------------------------------------------
SECTION 11.11. Confidentiality 99
---------------
SECTION 11.12. Submission to Jurisdiction 99
--------------------------
SECTION 11.13. Counterparts; Facsimile Signature 100
---------------------------------
SECTION 11.14. Headings 100
--------
SECTION 11.15. Defaulting Lender 100
-----------------
XII. GUARANTEES 102
XIII. AMENDMENT AND RESTATEMENT 103
1061112.9/LLP/214516/002 1/24/100
- -
<PAGE>
EXHIBITS
EXHIBIT A Form of Revolving Note
EXHIBIT B-1 Form of Term Note
EXHIBIT B-2 Form of Capital Expenditure Facility Note
EXHIBIT C Form of Opinion of Counsel
EXHIBIT D Form of Pledge Agreement
EXHIBIT E Form of Security Agreement
EXHIBIT F Form of Assignment and Acceptance
EXHIBIT G Intentionally Omitted
EXHIBIT H Form of Security Agreement (Partnership Interests)
EXHIBIT I Form of Landlord Waiver
EXHIBIT J Form of Conversion/Continuation Notice
SCHEDULES
SCHEDULE 2.01 Commitments
SCHEDULE 2.02 Domestic Lending Offices
SCHEDULE 2.03 Eurodollar Lending Offices
SCHEDULE 2.09(d) Certain Notes Receivable
SCHEDULE 3.03 Original Mortgages
SCHEDULE 4.01 Qualified Jurisdictions
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 5.01A Exceptions to Capital Expenditure Loan Conditions
SCHEDULE 5.02 Closing Date Additional Mortgages
SCHEDULE 6.07(a) ERISA Covenant Qualifications
SCHEDULE 6.17 Collateral Locations
SCHEDULE 7.01 Existing Liens
SCHEDULE 7.03 Existing Indebtedness
SCHEDULE 7.05 Assets Held for Sale
SCHEDULE 7.06 Permitted Investments
SCHEDULE A Certain Subsidiaries
SCHEDULE B Certain Intellectual Property
SCHEDULE C New/Replacement Store Projects
1061112.9/LLP/214516/002 1/24/100
- -
<PAGE>
SECOND AMENDED AND RESTATED REVOLVING CREDIT AND TERM LOAN AGREEMENT, dated
as of January 7, 2000, among NEW LINDEN PRICE RITE, INC., a New Jersey
corporation ("New Linden"), FOODARAMA SUPERMARKETS, INC., a New Jersey
corporation (the "Parent", and together with New Linden, each a "Borrower" and
collectively, the "Borrowers"), the Guarantors signatory hereto, the lenders
named in Schedule 2.01 annexed hereto (collectively with their respective
permitted successors and assigns, the "Lenders"), and GMAC BUSINESS CREDIT, LLC,
as agent for the Lenders (in such capacity together with any successor thereto
in such capacity, the "Agent").
New Linden, the Parent, the Guarantors, Heller Financial, Inc. (the
("Previous Lender") and Heller Financial, Inc., as Agent (the "Previous Agent")
entered into an Amended and Restated Revolving Credit and Term Loan Agreement
dated as of May 2, 1997 (as amended, restated, modified and supplemented through
but excluding the date hereof, the "Previous Loan Agreement"), pursuant to which
the Previous Lender and the Previous Agent extended certain financial
accommodations. The Obligations (as defined under the Previous Loan Agreement)
were secured by the Security Documents and the other Loan Documents (including
the Mortgages).
Pursuant to a certain Assignment and Assumption Agreement dated January __,
2000 (the "Assignment Agreement"), the Previous Lender assigned all of its
right, title, interest and Commitment as a Lender under the Previous Loan
Agreement to GMAC Business Credit, LLC ("GMACBC"). In connection therewith, the
Previous Agent resigned and was succeeded by the Agent (as defined in the
introductory paragraph of this Agreement) and certain amendments and other
modifications were made to the Previous Loan Agreement (the Previous Loan
Agreement, as so amended and modified to date, the "Existing Loan Agreement").
New Linden, the Parent and the Guarantors have requested that the
Agent and the Lenders amend and restate the Existing Loan Agreement as follows.
The proceeds of the Loans (other than the proceeds of the Capital
Expenditure Facility) shall be used by the Borrowers to pay fees and expenses in
connection with the financing contemplated hereby and for the working capital
and general corporate purposes of the Borrowers to the extent that such purposes
are permitted hereunder. The Lenders are severally, and not jointly, willing to
extend such Loans to the Borrowers subject to the terms and conditions
hereinafter set forth. Therefore, the parties hereto agree that the Existing
Loan Agreement shall be amended and restated as follows:
For purposes hereof, the following terms shall have the meanings
specified below:
I. DEFINITIONS
"Adjusted CAPEX" shall mean, for any period, (i) the total Capital
Expenditures of Parent and its Subsidiaries on a Consolidated basis, minus (ii)
the sum of (x) all Capital Expenditures for real estate assets acquired pursuant
to Capitalized Lease Obligations and (y) all Capital Expenditures relating to
New/Replacement Store Projects.
"Adjusted EBITDA" shall mean, for any period, EBITDA minus cash amounts
due, whether or not paid, as rent under capitalized real estate leases (whether
accounted for as interest expense, principal amortization, or otherwise).
"Adjusted Indebtedness" shall mean, (i) Indebtedness of Parent and its
Subsidiaries on a Consolidated basis less (ii) any such Indebtedness
attributable to Capitalized Lease Obligations related to real estate leases,
less (iii) Indebtedness attributable to any construction loan incurred pursuant
to and in conformance with Section 7.03(x).
"Adjusted Interest Expense" shall mean, for any period, the interest
expense, net of interest income, of the Parent and its Subsidiaries during such
period determined on a Consolidated basis in accordance with generally accepted
accounting principles, excluding (i) the amortization of all fees payable in
connection with the incurrence of Indebtedness to the extent included in
interest expense, and (ii) interest on Capitalized Lease Obligations.
"Adjusted LIBO Rate" shall mean, with respect to any Eurodollar Loan for
any Interest Period a rate of interest equal to:
(a) the offered rate for deposits in U.S. dollars in the London interbank
market for the relevant Interest Period which is published by the British
Bankers" Association and currently appears on Telerate Page 3750 as of 11:00
a.m. (London time) on the day which is two (2) Business Days prior to the first
day of such Interest Period for a term comparable to such Interest Period;
provided, however, that if such a rate ceases to be available on that or any
other source from the British Bankers Association, Adjusted LIBO Rate shall be a
rate per annum equal to the offered rate for deposits in U.S. dollars in the
London interbank market for the relevant Interest Period that appears on Reuters
Screen LIBO Page (or any successor page) as of 11:00 a.m. (London time) on the
day which is two (2) Business Days prior to the first day of such Interest
Period for a term comparable to such Interest Period, provided that if more than
one rate is specified on Reuters Screen LIBO Page, Adjuste LIBO Rate shall be a
rate per annum equal to the arithmetic mean of all such rates (rounded upwards,
if necessary, to the nearest 1/100 of 1%); provided, however, that if, for any
reason, such a rate is not published by the British Bankers' Association or
available on the Reuters Screen LIBO Page, Adjusted LIBO Rate shall be equal to
a rate per annum equal to the average rate (rounded upwards, if necessary, to
the nearest 1/100 of 1%) at which Agent determines that U.S. dollars in an
amount comparable to the amount of the applicable Loans are being offered to
prime banks at approximately 11:00 a.m. (London time) on the day which is two
(2) Business Days prior to the first day of such Interest Period for a term
comparable to such Interest Period for settlement in immediately available funds
by leading banks in the London interbank market selected by Agent; divided by
(b) a number equal to 1.0 minus the aggregate (but without duplication) of
the rates (expressed as a decimal fraction) of reserve requirements in effect on
the day which is two (2) Business Days prior to the beginning of such Interest
Period (including, without limitation, basic, supplemental, marginal and
emergency reserves under any regulations of the Board of Governors of the
Federal Reserve System or other governmental authority having jurisdiction with
respect thereto, as now and from time to time in effect) for Eurocurrency
funding (currently referred to as "Eurocurrency Liabilities" in Regulation D of
such Board) which are required to be maintained by a member bank of the Federal
Reserve System; such rate to be rounded upward to the next whole multiple of
one-sixteenth of one percent (.0625%). -----
"Affiliate" of any person shall mean any other person which, directly or
indirectly, controls or is controlled by or is under common control with such
person and, without limiting the generality of the foregoing, includes (i) any
other person which beneficially owns or holds 5% or more of any class of voting
securities of such person or 5% or more of the equity interest in such person,
(ii) any person of which such person beneficially owns or holds 5% or more of
any class of voting securities or in which such person beneficially owns or
holds 5% or more of the equity interest in such person and (iii) any person who
is known by the Parent or any of its Subsidiaries to be a director, officer or
partner of such person. For the purposes of this definition, the term "control"
(including, with correlative meanings, the terms "controlled by" and "under
common control with"), as used with respect to any person, means the possession,
directly or indirectly, of the power to direct or cause the direction of the
management and policies of such person, whether through the ownership of voting
securities or by contract or otherwise.
"Agent" shall have the meaning assigned to such term in the preamble to
this Agreement.
"Agent's Account" shall mean the deposit account number 3613249-84 of Agent
at Bank One Michigan, or such other deposit account as Agent shall designate by
written notice to Borrower.
"Alternative Capex Financing" shall have the meaning assigned thereto in
Section 7.03 hereof.
"Applicable Lending Office" shall mean, with respect to each Lender, such
Lender's Domestic Lending Office in the case of a Base Rate Loan and such
Lender's Eurodollar Lending Office in the case of a Eurodollar Loan.
"Applicable Margin" shall mean (i) in the case of Loans which are Base Rate
Loans, (x) one-half of one percent (.50%) if such Base Rate Loans are Revolving
Loans, and (y) three-quarters of one percent (.75%) if such Base Rate Loans are
Term Loans or Capital Expenditure Loans; and (ii) in the case of Loans which are
Eurodollar Loans, (x) two and one-half percent (2.50%) if such Eurodollar Loans
are Revolving Loans, and (y) two and three- quarter percent (2.75%) if such
Eurodollar Loans are Term Loans or Capital Expenditure Loans.
"Assignment and Acceptance" shall mean an assignment and acceptance entered
into by a Lender and an assignee and accepted by the Agent, in substantially the
form of Exhibit F annexed hereto.
"Base Rate" shall mean a variable rate of interest per annum equal to the
higher of (a) the rate of interest from time to time published by the Board of
Governors of the Federal Reserve System as the "Bank Prime Loan" rate in Federal
Reserve Statistical Release H.15(519) entitled "Selected Interest Rates" or any
successor publication of the Federal Reserve System reporting the Bank Prime
Loan rate or its equivalent, or (b) the Federal Funds Effective Rate then in
effect plus one-half of one percent (1/2%). The statistical release generally
sets forth a Bank Prime Loan rate for each Business Day. The applicable Bank
Prime Loan rate for any date not so set forth shall be the rate set forth for
the last preceding date. In the event the Board of Governors of the Federal
Reserve System ceases to publish a Bank Prime Loan rate or its equivalent, the
term "Prime Rate" shall mean a variable rate of interest per annum equal to the
highest of the "prime rate", "reference rate", "base rate", or other similar
rate announced from time to time by either of Citibank, N.A. or The Chase
Manhattan Bank or their respective successors (with the understanding that any
such rate may merely be a reference rate and may not necessarily represent the
lowest or best rate actually charged to any customer by the any such bank).
"Base Rate Loan" shall mean a Loan bearing interest based upon the Base
Rate in accordance with Article II hereof.
"Board" shall mean the Board of Governors of the Federal Reserve System of
the United States.
"Borrower" and "Borrowers" shall have the respective meanings assigned to
such terms in the preamble to this Agreement.
"Borrowing Base" shall have the meaning assigned to such term in Section
2.01(a)(i) hereof.
"Business Day" means any day excluding Saturday, Sunday and any day which
is a legal holiday under the laws of the States of New York or Michigan or is a
day on which banking institutions located in either of such states are closed or
authorized to close and for the purposes of Eurodollar Loans and the
determination of Adjusted LIBO Rate and Interest Periods a day on which U.S.
dollar deposits are traded on the London interbank market.
"Capital Expenditure Facility" shall mean the loan facility extended under
Section 2.01(c) hereof.
"Capital Expenditure Facility Availability Period" shall have the meaning
set forth in Section 2.01(d).
"Capital Expenditure Facility Commitment" shall mean with respect to each
Lender, the Capital Expenditure Facility Commitment of such Lender set forth in
Schedule 2.01(c), as it may be adjusted from time to time pursuant to Section
2.07 and the definition of Total Capital Expenditure Facility Commitment.
"Capital Expenditure Loan" shall have the meaning set forth in Section
2.01(c).
"Capital Expenditure Notes" shall mean the Capital Expenditure Notes of the
Borrowers, executed and delivered as provided in Section 2.04 hereof, in
substantially the form of Exhibit B-2, as amended, modified or supplemented from
time to time.
"Capital Expenditures" shall mean the amount of all purchases made by the
Parent or any of its Subsidiaries directly or indirectly for the purpose of
acquiring, constructing or maintaining fixed assets, real property or equipment
which, in accordance with generally accepted accounting principles, would be
added as a debit to the fixed asset account of the Parent or any such
Subsidiary.
"Capitalized Lease Obligation" shall mean an obligation to pay rent or
other amounts under any lease of (or other arrangement conveying the right to
use) real and/or personal property which obligation is required to be classified
and accounted for as a capital lease on a balance sheet prepared in accordance
with generally accepted accounting principles, and for purposes hereof the
amount of such obligation shall be the capitalized amount thereof determined in
accordance with such principles.
"Cash on Hand of Borrowers" shall mean at any point in time of measurement,
the sum of (i) all Payments constituting cleared funds on deposit in any deposit
accounts of Borrowers that are subject to blocked account, collection account or
similar agreements in form and substance satisfactory to Agent but which, at the
point in time of measurement have not been wire transferred to Agent's Account;
(ii) all credit and debit card sales that have taken place and have been
approved by the relevant credit and/or debit card company but for which credit
has not been given by such credit and/or debit card company; (iii) cash and
checks which have been delivered by Borrowers into the custody of their armored
car service for delivery to any deposit account of Borrowers that are subject to
blocked account, collection account or similar agreements in form and substance
satisfactory to Agent, but which funds have not yet been deposited into such
account and (iv) cash and checks in the stores of the Borrowers which have been
deposited into the stores' on-site dual-key depository safes, awaiting pickup by
the Borrowers' armored car service.
"Change of Control" shall mean (i) Joseph Saker, Gloria Saker, Richard
Saker and Permitted Family Transferees shall together fail to own, beneficially
and control all voting rights with respect to, at least 35% of all of the issued
and outstanding capital common stock of the Parent or (ii) Joseph Saker, Gloria
Saker and Richard Saker shall together fail to own, beneficially and all voting
rights with respect to, at least 30% of all of the issued and outstanding
Capital Common Stock of the Parent (provided, however that the 30% requirement
set forth in this clause (ii) shall be reduced by 1% each year (e.g., from 30%
to 29% and from 29% to 28%, etc.) effective on each anniversary date of the
Closing Date, but in no event to lower than 25%.
"CIT" shall mean The CIT Group/Equipment Financing, Inc.
---
"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, the Term Commitment and the Capital Expenditure Facility
Commitment of such Lender as set forth in Schedule 2.01, as it may be adjusted
from time to time pursuant to Section 2.07.
"Commitment Fee" shall have the meaning set forth in Section 2.06(a)
hereof.
"Consolidated" shall mean, in respect of any person, as applied to any
financial or accounting term, such term determined on a consolidated basis in
accordance with generally accepted accounting principles (except as otherwise
required herein) for the person and all consolidated Subsidiaries thereof.
"Credit Event" shall mean each borrowing of a Loan and each issuance of a
Letter of Credit hereunder.
"Debt Service Coverage Ratio" shall mean, for any period, the ratio of (i)
Operating Cash Flow to (ii) the sum of (A) Adjusted Interest Expense for such
period, (B) provision for (to the extent greater than zero) income taxes
included in the determination of Net Income (excluding any provision for
deferred taxes), (C) payment of deferred taxes accrued in any prior period, and
(D) the aggregate of regularly scheduled principal payments of all Adjusted
Indebtedness made or scheduled to have been made by the Parent and its
Subsidiaries during such period, determined on a Consolidated basis in
accordance with generally accepted accounting principles.
"Default" shall mean any condition, act or event which, with notice or
lapse of time or both, would constitute an Event of Default.
"Defaulting Lenders" shall have the meaning assigned to such term in
Section 11.15(a) hereof.
"Dollars" or the symbol "$" shall mean dollars in lawful currency of the
United States of America.
"Domestic Lending Office" shall mean, with respect to any Lender, the
office of such Lender specified as its 'Domestic Lending Office' opposite its
name in Schedule 2.02 annexed hereto, or such other office of such Lender as
such Lender may from time to time specify to the Borrowers and the Agent.
'EBITDA' shall mean, for any period, Net Income plus, (X) to the extent
included in the calculation of Net Income, the sum of (i) any extraordinary
non-cash losses, (ii) the amount of any reserves taken and occasioned by the
closing of store locations, (iii) non-cash charges for assets written down as a
result of store remodels and/or closedowns, (iv) interest expenses net of
interest income, (v) depreciation and amortization, and (vi) federal, state and
local income taxes, and less (Y) the sum of (i) any extraordinary non-cash gains
included in the calculation of Net Income, (ii) any extraordinary cash gains
included in the calculation of Net Income, but only to the extent such gains
exceed extraordinary cash losses included in the calculation of Net Income, and
(iii) any charges to balance sheet reserves previously or presently established
in connection with the closing of store locations or the disposition of other
assets, in each case of the Parent and its Subsidiaries for such period
determined on a Consolidated basis, 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. '167> 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
orders of regulatory and administrative bodies.
'ERISA' shall mean the Employee Retirement Income Security Act of 1974, as
amended, and the rules and regulations promulgated thereunder, as in effect from
time to time.
'ERISA Affiliate' shall mean any trade or business (whether or not
incorporated) which together with the Parent or any of its Subsidiaries would be
treated as a single employer under the provisions of Title I or Title IV of
ERISA.
'Eurodollar Lending Office' shall mean, with respect to any Lender, the
office of such Lender specified as its 'Eurodollar Lending Office' opposite its
name in Schedule 2.03 annexed hereto (or, if no such office is specified, its
Domestic Lending Office), or such other office of such Lender as such Lender may
from time to time specify to the Borrowers and the Agent.
'Eurodollar Loan' shall mean a Loan bearing interest based on the Adjusted
LIBO Rate in accordance with Article II hereof.
'Event of Default' shall have the meaning assigned to such term in Article
VIII hereof.
'Existing Loan Agreement' shall have the meaning assigned to such term in
the preamble to this Agreement.
'Federal Funds Effective Rate' means, for any day, the weighted average of
the rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers, as published on the
immediately following Business Day by the Federal Reserve Bank of New York or,
if such rate is not published for any Business Day, the average of the
quotations for the day of the requested Loan received by Agent from three
Federal funds brokers of recognized standing selected by Agent.
'Fee Letter' shall mean the letter dated as of the Second Amendment and
Restatement Date between and among the Borrowers and the Agent.
'Final Maturity Date' shall mean December 31, 2004, subject to extension
pursuant to Section 11.08(c) hereof.
'Financed Equipment' shall have the meaning assigned to such term in
Section 5.01A(b) hereof.
"Financial Officer' shall mean, with respect to any person, the chief
financial officer or chief accounting officer of such person.
"Finova" shall mean and refer to Finova Capital Corporation, a Delaware
corporation.
"Fiscal Quarter" shall mean and refer to each fiscal quarter of Parent and
its Subsidiaries in accordance with their respective historical practices.
"Fiscal Year" shall mean the fiscal year of the Parent for accounting
purposes which ends on the Saturday nearest to October 31 of each year.
"GMAC" shall mean General Motors Acceptance Corporation, a Delaware
corporation. "GMACBC" shall have the meaning set forth in the preamble to this
Agreement.
"Grantor" shall mean any Assignor, Grantor, Pledgor, Mortgagor or Debtor,
as such terms are defined in any of the Security Documents.
'Guarantee' shall mean any obligation, contingent or otherwise, of any
person guaranteeing or having the economic effect of guaranteeing any
Indebtedness or obligation of any other person in any manner, whether directly
or indirectly, and shall in any event include any guarantee under Article XII
hereof, and shall include, without limitation, any obligation of such person,
direct or indirect, to (i) purchase or pay (or advance or supply funds for the
purchase or payment of) such Indebtedness or obligation or to purchase (or to
advance or supply funds for the purchase of) any security for the payment of
such Indebtedness or obligation, (ii) purchase property, securities or services
for the purpose of assuring the owner of such Indebtedness or obligation of the
payment of such Indebtedness or obligation, or (iii) maintain working capital,
equity capital, available cash or other financial condition of the primary
obligor so as to enable the primary obligor to pay such Indebtedness or
obligation; provided, however, that the term Guarantee shall not include
endorsements for collection or collections for deposit, in either case in the
ordinary course of business.
'Guarantor' shall mean, collectively, the Borrowers and each Subsidiary
thereof or any Subsidiary of the Parent which becomes a guarantor of the
Obligations after the date hereof.
'Hazardous Material' shall mean any pollutant, contaminant, chemical, or
industrial or hazardous, toxic or dangerous waste, substance or material,
defined or regulated as such in (or for purposes of) any Environmental Law and
any other toxic, reactive, or flammable chemicals, including (without
limitation) any asbestos, any petroleum (including crude oil or any fraction),
any radioactive substance and any polychlorinated biphenyls; provided, in the
event that any Environmental Law is amended so as to broaden the meaning of any
term defined thereby, such broader meaning shall apply subsequent to the
effective date of such amendment; and provided, further, to the extent that the
applicable laws of any state establish a meaning for 'hazardous material,'
'hazardous substance,' 'hazardous waste,' 'solid waste' or 'toxic substance'
which is broader than that specified in any federal Environmental Law, such
broader meaning shall apply.
"Heller" shall mean Heller Financial, Inc.
------
"Indebtedness" shall mean, with respect to any
person, without duplication, (a) all obligations of such person for borrowed
money or with respect to deposits (excluding security deposits received by a
Grantor in connection with real property subleases) or advances of any kind, (b)
all obligations of such person evidenced by bonds, debentures, notes or other
similar instruments, (c) all obligations of such person for the deferred
purchase price of property or services, except current accounts payable arising
in the ordinary course of business and not overdue, (d) all obligations of such
person under conditional sale or other title retention agreements relating to
property purchased by such person, (e) all payment obligations of such person
with respect to interest rate or currency protection agreements, (f) all
obligations of such person as an account party under any letter of credit or in
respect of bankers' acceptances, (g) all obligations of any third party
secured by property or assets owned by such person (regardless of whether or not
such person is liable for repayment of such obligations), (h) all Guarantees of
such person and (i) all obligations of such person as lessee under leases the
expenditures under which are Capitalized Lease Obligations.
"Indemnitees" shall have the meaning assigned to such term in Section
11.04(c) hereof.
"Information" shall have the meaning assigned to such term in Section 11.11
hereof.
"Initial Closing Date" shall mean February 15, 1995.
"Intercreditor Agreements" shall mean each of (i) the Intercreditor
Agreement dated as of January 25, 1996 (as amended, the "Finova Intercreditor
Agreement") among Finova, the Parent, New Linden and the Agent (as successor to
NatWest Bank, N.A.); (ii) the Intercreditor Agreement dated as of September 12,
1996 (as amended, the "Wakefern Intercreditor Agreement") among Valley National
Bank (as successor to Wakefern), the Parent, New Linden and the Agent (as
successor to NatWest Bank, N.A.); (iii) the Intercreditor Agreement dated as of
August 31, 1998 (as amended, the "CIT Intercreditor Agreement") among CIT, the
Parent, New Linden and the Agent (as successor to Heller Financial, Inc.) and
(iv) the letter agreement dated December 28, 1999 (the "GE Capital Agreement")
between the Agent and GE Capital Corporation (as successor to MetLife Capital
Corporation).
"Interest Payment Date" shall mean (i) in the case of a Base Rate Loan, the
first day of each month, commencing February 1, 2000, and (ii) with respect to
any Eurodollar Loan, the last day of the Interest Period applicable thereto,
and, in addition, in respect of any Eurodollar Loan of more than three (3)
months' duration, each earlier day which is three (3) months after the first day
of such Interest Period.
"Interest Period" shall mean, as to any Eurodollar Loan, the period
commencing on the date of such Eurodollar Loan and ending on the numerically
corresponding day (or, if there is no numerically corresponding day, on the last
day) in the calendar month that is one (1), two (2), three (3) or six (6) months
thereafter, as the Borrowers may elect with respect to such Eurodollar Loan in
accordance with the terms hereof; provided, however, that (x) if an Interest
Period would end on a day that is not a Business Day, such Interest Period shall
be extended to the next succeeding Business Day unless, with respect to such
Eurodollar Loan, such next succeeding Business Day would fall in the next
calendar month, in which case such Interest Period shall end on the next
preceding Business Day, (y) no Interest Period shall end later than the Final
Maturity Date and (z) interest shall accrue from and including the first day of
an Interest Period to but excluding the last day of such Interest
Period.
"Issuing Bank" shall mean GMAC and/or any other financial institution that
issues a Letter of Credit.
"Landlord Waiver" shall mean a landlord's or bailee's agreement with
respect to each property of a Borrower subject to a lease substantially in the
form of Exhibit 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) any unreimbursed drawing
at such time under Letters of Credit.
"Lien" shall mean, with respect to any asset, (i) any mortgage, lien,
pledge, encumbrance, charge or security interest in or on such asset, (ii) the
interest of a vendor or a lessor under any conditional sale agreement, capital
lease or other title retention agreement relating to such asset, (iii) in the
case of securities, any purchase option, call or similar right of a third party
with respect to such securities or (iv) any other right of or arrangement with
any creditor to be entitled to receive any such mortgage, lien, pledge,
encumbrance, charge or security interest on or to have such creditor's claim
satisfied out of such assets, or the proceeds therefrom, prior to the general
creditors of the owner thereof.
"Loan" shall mean, collectively, each Revolving Loan, the Term Loan and
each Capital Expenditure Loan.
"Loan Documents" shall mean this Agreement, each Security Document, the
Notes, the Intercreditor Agreements, any letter of credit applications with
respect to Letters of Credit and each other document, instrument, or agreement
now or hereafter delivered to the Agent, any Lender, Issuing Bank or GMACBC in
connection herewith or therewith.
"Margin Stock" shall have the meaning assigned to such term in Regulation
U.
"Material Adverse Effect" shall mean a material
adverse effect on (i) the business, assets, liabilities, properties, prospects
(within one year of the date of determination and in any event excluding the
effects of the opening or expansion of competing stores), operations or
financial condition of any Borrower, or the Parent and its Subsidiaries taken as
a whole, (ii) the ability of any Borrower or any Guarantor to perform or pay the
Obligations in accordance with the terms hereof or of any other Loan Document or
to perform its other material obligations thereunder or (iii) the Agent's
Lien on any material portion of the Collateral or the priority of such Lien.
"Mortgages" shall have the meaning set forth in Section 3.03 hereof.
"Multiemployer Plan" shall mean a "multiemployer plan" as defined in
Section 4001(a)(3) of ERISA.
"Net Amount of Eligible Inventory" shall mean, at any time, the
aggregate value, computed at the lower of cost (on a FIFO basis) and
current market value, of Eligible Inventory of the Borrowers.
"Net Income" shall mean, for any period, the aggregate income (or
loss) of the Parent and its Subsidiaries determined on a Consolidated basis
for such period, all computed and calculated in accordance with generally
accepted accounting principles consistently applied.
"New/Replacement Store Projects" shall mean the new store projects and
replacement store projects described on Schedule C hereto.
"Non-Ratable Loans" shall have the meaning assigned to such term in
Section 2.15(c)(iii) hereof.
"Notes" shall mean collectively, the Revolving Notes, the Capital
Expenditure Notes and the Term Notes.
"Obligations" shall mean all obligations, liabilities and Indebtedness
of any Borrower and/or any Guarantor to the Lenders, the Agent, any Issuing
Bank and/or GMACBC, whether now existing or hereafter created, direct or
indirect, due or not, whether created directly or acquired by assignment,
participation or otherwise, under or with respect to this Agreement, the
Notes, the Security Documents and the other Loan Documents, including
without limitation, the principal of and interest on the Loans and the
payment or performance of all other obligations, liabilities, and
Indebtedness of any Borrower and/or any Guarantor to the Lenders, the
Agent, any Issuing Bank and/or GMACBC hereunder, under or with respect to
the Letters of Credit (including, without limitation, any obligation of any
Borrower and/or any Guarantor to reimburse the Lenders, the Agent, any
Issuing Bank and/or GMACBC with respect to any amounts paid in connection
with Letters of Credit) or under any one or more of th other Loan
Documents, including but not limited to all fees, costs, expenses and
indemnity obligations hereunder and thereunder.
"Operating Cash Flow" shall mean, for any period
(i) Adjusted EBITDA for such period, minus (ii) the difference between (x)
Adjusted CAPEX for such period and (y) Remodel/Expansion CAPEX for such period
for stores in operation as of the Second Amendment and Restatement Date, each
for the Parent and its Subsidiaries on a Consolidated basis.
"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.
"Permitted Family Transferees" shall mean a spouse,
sibling, child or grandchild of Richard Saker, Gloria Saker or Joseph Saker or
any trust established by Richard Saker, Gloria Saker or Joseph Saker, the
beneficiary of which is the spouse, sibling or grandchild of Richard Saker,
Gloria Saker or Joseph Saker.
"Person" shall mean any natural person,
corporation, business trust, association, company, joint venture, partnership,
limited liability company, or government or any agency or political subdivision
thereof.
"Plan" shall mean any employee benefit plan within the meaning of
Section 3(3) of ERISA and which is maintained (in whole or in part) for
employees of the Parent, any Subsidiary thereof or any ERISA Affiliate.
"Pledge Agreement" shall mean the Pledge Agreement, dated as of the
Initial Closing Date, among the Parent, New Linden, the Guarantors and the
Agent, for the benefit of the Secured Parties, in substantially the form of
Exhibit D annexed hereto, as amended, modified or supplemented from time to
time.
"Pledged Stock" shall have the meaning assigned to such term in the
Pledge Agreement.
"Previous Agent" shall have the meaning assigned thereto in the
preamble to this Agreement.
"Previous Lender" shall have the meaning assigned
thereto in the preamble to this Agreement.
"Previous Loan Agreement" shall have the meaning assigned thereto in
the preamble to this Agreement.
"Reading" shall mean Shop Rite of Reading, Inc., a Pennsylvania
corporation.
"Register" shall have the meaning assigned to such term in Section
11.03(e) hereof.
"Regulation D" shall mean Regulation D of the Board, as the same is
from time to time in effect, and all official rulings and interpretations
thereunder or thereof.
"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.
"Remodel/Expansion CAPEX" shall mean with respect to any of Borrower's
individual stores, Capital Expenditures used specifically for a remodeling
or expansion project, which Capital Expenditures with respect to each such
project equals or exceeds $500,000.
"Reportable Event" shall mean a Reportable Event as defined in Section
4043(b) of ERISA.
"Required Lenders" shall mean (a) in the event that there are more
than two (2) Lenders, at least two (2) or more Lenders (each having a
minimum $5,000,000 Commitment) having an aggregate of 51% of the aggregate
Commitments of all Lenders and (b) in the event that there are fewer than
three (3) Lenders, Lenders having 67% of the aggregate Commitments of all
Lenders. For the purposes of this definition of "Required Lenders", the
terms "Lender", "Lenders" and "all Lenders" shall exclude all Defaulting
Lenders.
"Responsible Officer" shall mean, with respect to any person, any
senior vice president, executive vice president 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.
"Second Amendment and Restatement Date" shall mean January 7, 2000.
"Secured Parties" shall mean the Agent, the Lenders and GMACBC.
"Security Agreement" shall mean the Security Agreement, dated as of
the Initial Closing Date, between the Grantor(s) and the Agent, for the
benefit of the Secured Parties, substantially in the form of Exhibit E
annexed hereto, as amended, modified or supplemented from time to time.
"Security Agreement (Partnership Interests)" shall mean the Security
Agreement (Partnership Interests) dated as of the Initial Closing Date,
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 Second Amendment and Restatement Date selected by the Agent in its
sole discretion subject to and in accordance with the provisions of Section
2.15(c) as of which a Settlement Report is delivered by the Agent and on which
settlement is to be made among the Lenders in accordance with the provisions of
Section 2.15 hereof.
"Settlement Report" shall mean each report prepared by the Agent and
delivered to each Lender and setting forth, among other things, as of the
Settlement Date indicated thereon and as of the next preceding Settlement
Date, (i) the aggregate principal balance of all Loans outstanding, (ii)
each Lender's ratable portion thereof, and (iii) all Loans made, and all
payments of principal received by the Agent from or for the account of the
Borrowers during the period beginning on such next preceding Settlement
Date and ending on such Settlement Date.
"Subordinated Indebtedness" shall mean, with respect to the Parent or
any Subsidiary thereof, Indebtedness subordinated in right of payment to
such person's monetary obligations under this Agreement and the other Loan
Documents upon terms satisfactory to and approved in writing by the Agent,
to the extent it does not by its terms (except as otherwise approved in
writing by the Agent) mature or become subject to any mandatory prepayment
or amortization of principal prior to the Final Maturity Date.
"Subsidiary" shall mean, with respect to any person, the parent of
such person, any corporation, association or other business entity of which
securities or other ownership interests representing more than 50% of the
ordinary voting power are, at the time as of which any determination is
being made, owned or controlled, directly or indirectly, by the parent or
one or more Subsidiaries of the parent. All references to Subsidiaries of
the Parent shall include the Borrowers.
"Taxes" shall have the meaning assigned to such term in Section
2.13(a) hereof.
"Term Commitment" shall mean, with respect to each
Lender, the Term Commitment of such Lender as set forth in Schedule 2.01(b) to
be reduced pro-rata by amounts amortized pursuant to Section 2.01(b).
"Term Loan" shall mean the Loan made pursuant to,
and described in, Section 2.01(b) hereof.
"Term Notes" shall mean, collectively, the term
notes of the Borrowers, executed and delivered as provided in Section 2.04
hereof, in substantially the form of Exhibit B-1 annexed hereto, as amended,
modified or supplemented from time to time.
"Termination Date" shall mean the earlier to occur
of (i) the Final Maturity Date and (ii) the date on which the Revolving Credit
Commitments shall terminate, expire or be canceled in accordance with the terms
of this Agreement.
"Total Capital Expenditure Facility Commitment"
shall mean the lesser of (i) $20,000,000 and (ii) the sum of the Lenders'
Capital Expenditure Facility Commitments; provided, however, that the sum in
clause (i) shall be permanently reduced by the amount of any Alternative Capex
Financing consummated under Section 7.03 and as a result thereof each
Lender's Capital Expenditure Facility Commitment shall be reduced on a
pro rata basis..
"Total Commitment" shall mean the sum of the
Lenders' Total Revolving Commitments, Total Capital Expenditure Facility
Commitments and Total Term Commitments.
"Total Revolving Commitment" shall mean the lesser
of (i) $25,000,000 and (ii) the sum of the Lenders' Revolving
Commitments.
"Total Term Commitment" shall mean the lesser of
(i) $10,000,000 and (ii) the sum of the Lenders' Term Commitments.
"Transactions" shall have the meaning assigned to
such term in Section 4.02 hereof.
"Undrawn Availability" shall mean, at any time, an
amount equal to (A) the lesser of (i) the Total Revolving Commitment and (ii)
the Borrowing Base, minus (B) the sum of (i) all Revolving Loans outstanding at
such time, (ii) the Letter of Credit Usage at such time and (iii) reserves
established pursuant to Section 2.01(a)(iii) below at such time.
"Wakefern" shall mean Wakefern Food Corp., a corporation.
"Wakefern Intercreditor Agreement" shall have the
meaning assigned to such term in Section 8(n) hereof.
"Wakefern Shareholder Agreement" shall mean the
Stockholders' Agreement dated as of August 20, 1987, by and among
Wakefern Food Corp. and each of its member-stockholders (including Parent) as
heretofore and hereafter amended, restated, modified and supplemented.
Unless otherwise expressly provided herein, each accounting term
used herein shall have the meaning given it under generally accepted accounting
principles in effect from time to time in the United States applied on a basis
consistent with those used in preparing the financial statements referred to in
Section 6.05 hereof; provided, however, that each reference in Article VII
hereof, or in the definition of any term used in Article VII hereof, to
generally accepted accounting principles shall mean generally accepted
accounting principles as in effect on the 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
Revolving Loans outstanding at any time to the Borrowers shall not exceed
(1) the lesser of (A) the Total Revolving Commitment (as such amount may be
reduced pursuant to Section 2.07 hereof) and (B) an amount equal to
sixty-five percent (65%) of the Net Amount of Eligible Inventory (this
clause (1) (B) referred to herein as the "Borrowing Base"), minus (2) the
Letter of Credit Usage at such time (which Letter of Credit Usage shall not
exceed $4,500,000 at any time), and minus (3) reserves established pursuant
to Section 2.01(a)(iii) below at such time. The Borrowing Base will be
computed weekly and a compliance certificate from a Responsible Officer of
the Borrowers presenting its computation will be delivered to the Agent in
accordance with Section 6.05 hereof.
(ii) Subject to the foregoing and within the foregoing limits, and
subject to all other applicable terms, provisions and limitations set forth
in this Agreement, the Borrowers may borrow, repay (or, subject to the
provisions of Section 2.09 hereof, prepay) and reborrow Revolving Loans, on
and after the date hereof and prior to the Termination Date.
(iii) The Agent may from time to time decrease the Loans
and Letters of Credit available to the Borrowers by an amount equal to the
aggregate amount of all reserves which the Agent deems necessary or desirable to
maintain hereunder, such reserves to be determined by the Agent in its
commercially reasonable judgment and to include, without limitation, reserves
with respect to (i) rent payments with respect to premises leased by the
Borrowers for which a Landlord Waiver has not been obtained, (ii) trust fund
liabilities under the Perishable Agricultural Commodities Act and the Packers
and Stockyards Act, (iii) environmental remediation and liability, (iv) Liens on
Collateral (other than Liens in existence on the Second Amendment and
Restatement Date which are listed on Schedule 7.01; and (v) credit exposure of
Borrowers with respect to interest rate protection arrangements. Agent shall
provide Borrowers with prompt notice, in writing, of any such reserves
established.
(b) Term Commitments. The aggregate outstanding principal balance of
the Term Loan as of the Second Amendment and Restatement Date is
$10,000,000. On and after the Second Amendment and Restatement Date, the
Term Loan shall be payable in twenty (20) consecutive quarterly
installments of principal, each equal to $500,000, commencing on April 1,
2000, and on the first day of each subsequent July, October, January and
April thereafter. The entire remaining principal amount of the Term Loan
shall be due and payable on the Final Maturity Date. ----------------
(c) Capital Expenditure Facility. Subject to the terms and
conditions hereof (including, without limitation, the conditions set forth in
Section 5.01A) and relying upon the representations and warranties herein set
forth, each Lender, severally and not jointly, agrees to make Loans (the
"Capital Expenditure Loans") during the Capital Expenditure
Facility Availability Period to the Borrowers to finance Borrowers'
purchase of Financed Equipment for use in New/Replacement Store Projects in the
sum equal to such Lender's aggregate Capital Expenditure Facility
Commitment in an amount not to exceed ninety-five percent (95%) of the net
invoice cost of such Financed Equipment purchased by Borrowers (which shall be
exclusive of shipping, handling, taxes, and installation costs, provided,
however, that in the case of refrigeration equipment, installation costs may be
included), provided that the total amount of all outstanding Capital Expenditure
Loans shall not exceed the Total Capital Expenditure Facility Commitment. All
Capital Expenditure Loans must be in original principal amounts of not less than
$250,000. Once repaid, a Capital Expenditure Loan may not be reborrowed. Capital
Expenditure Loans may consist of either Base Rate Loans or Eurodollar Rate Loans
and may be converted pursuant to Section 2.02 hereof.
(d) Capital Expenditure Loans shall be available at all times
from the Second Amendment and Restatement Date through and excluding the earlier
of (i) the Termination Date and (ii) the second anniversary of the Second
Amendment and Restatement Date (the "Capital Expenditure Facility
Availability Period"). At the end of such two year Capital Expenditure
Facility Availability Period, the sum of the principal amount of all Capital
Expenditure Loans made during such Capital Expenditure Facility Availability
Period will be amortized on the basis of a twenty-eight (28) quarter
amortization schedule. The Capital Expenditure Loans shall be, with respect to
principal, payable in equal quarterly installments based upon the amortization
schedule set forth above, commencing on April 1, 2002 and on the first day of
each July, October, January and April thereafter, subject to acceleration upon
the occurrence of an Event of Default under this Agreement or termination of
this Agreement. In any event, the entire principal amount of the Capital
Expenditure Loans shall be due and payable on the Final Maturity Date.
SECTION 2.02. Loans. (a) The Eurodollar Loans made by the Lenders on
any date shall be in integral multiples of $1,000,000 and in a minimum
aggregate principal amount of $1,000,000. -----
(b) Subject to the provisions of Sections 2.15 and 2.16 hereof, Loans
shall be made ratably by the Lenders in accordance with their respective
Commitments; provided, however, that the failure of any Lender to make any
Loan shall not in itself relieve any other Lender of its obligation to lend
hereunder. The initial Loans shall be made by the Lenders against delivery
of Notes, payable to the order of the Lenders, as referred to in Section
2.04 hereof. -------- -------
(c) Each Loan shall be either a Base Rate Loan or a Eurodollar Loan as
the Borrowers may request pursuant to Section 2.03 hereof. Each Lender may
fulfill its obligations under this Agreement by causing its Applicable
Lending Office to make such Loan; provided, however, that the exercise of
such option shall not affect the obligation of the Borrower to repay such
Loan in accordance with the term of the Notes. Not more than three (3)
Eurodollar Loans may be outstanding at any one time. -------- -------
(d) Subject to the provisions of Sections 2.15 and 2.16 hereof, each
Lender shall make its Loans on the proposed dates thereof by paying the
amount required to the Agent in immediately available funds not later than
1:00 p.m., New York City time, and the Agent shall as soon as practicable,
but in no event later than 3:00 p.m., New York City time, wire the amounts
received to a deposit account designated by the Borrowers, or, if Loans are
not to be made on such date because any condition precedent to a borrowing
herein specified is not met, return the amounts so received to the
respective Lenders.
(e) The Borrowers shall have the right at any time upon prior
irrevocable written or facsimile notice to the Agent given in the manner
and at the times specified in Section 2.03 hereof and in substantially the
form of Exhibit J (a "Conversion/Continuation Notice") hereof with respect
to the Loans into which conversion or continuation is to be made, to
convert all or any portion of Eurodollar Loans into Base Rate Loans, to
convert all or any portion of Base Rate Loans into Eurodollar Loans
(specifying the Interest Period to be applicable thereto) and to continue
all or any portion of any Eurodollar Loans into a subsequent Interest
Period selected by the Borrowers in accordance with the terms hereof, in
each instance subject to the terms and conditions of this Agreement
(including the last sentence of Section 2.02(c) hereof) and to the
following:
(i) in the case of a conversion or continuation of fewer than all the
Loans, the aggregate principal amount of Loans (A) converted shall not be
less than $1,000,000 in the case of Base Rate Loans or (B) converted or
continued shall not be less than $1,000,000 in the case of Eurodollar Loans
and shall be an integral multiple of $1,000,000;
(ii) accrued interest on a Loan (or portion thereof) being converted
or continued shall be paid by the Borrowers at the time of conversion or
continuation;
(iii) if any Eurodollar Loan is converted at any time
other than the end of an Interest Period applicable thereto, the Borrowers shall
make such payments associated therewith as are required pursuant to Section
2.10B hereof;
(iv) any portion of a Eurodollar Loan which is subject to an Interest
Period ending on a date that is less than three (3) months prior to the
Termination Date may not be converted into, or continued as, a Eurodollar
Loan and shall be automatically converted at the end of such Interest
Period into a Base Rate Loan;
(v) no Default or Event of Default shall have occurred and be
continuing; and
(vi) in the case of a Term Loan or a Capital Expenditure Loan which is
being converted to a Eurodollar Loan or is being continued as a Eurodollar
Loan, there shall be sufficient remaining Term Loans and/or Capital
Expenditure Loans, as the case may be, to repay the next succeeding
scheduled principal installment with respect to such Term Loans and/or
Capital Expenditure Loans, as the case may be, without requiring an
indemnity payment under Section 2.10B of this Agreement.
The Interest Period applicable to any Eurodollar Loan resulting
from a conversion or continuation shall be specified by the Borrower in the
irrevocable Conversion/Continuation Notice delivered pursuant to this Section;
provided, however, that if no such Interest Period shall be specified, the
Borrowers shall be deemed to have selected an Interest Period of one (1)
month's duration. If the Borrowers shall not have given timely notice to
continue any Eurodollar Loan into a subsequent Interest Period (and shall not
otherwise have given notice to convert such Loan), such Loan (unless repaid or
required to be repaid pursuant to the terms hereof) shall, subject to (iv)
above, automatically be converted into a Base Rate Loan.
SECTION 2.03. Notice of Loans. The Borrowers shall, through a
Responsible Officer, give the Agent irrevocable written or facsimile notice of
each borrowing (including, without limitation, a conversion as permitted by
Section 2.02(e) hereof) (i) not later than 11:00 A.M., New York City time, three
(3) Business Days before a proposed Eurodollar Loan borrowing or conversion, and
(ii) not later than 12:00 Noon, New York City time on the Business Day of the
requested Base Rate Loan borrowing or conversion. Such notice shall specify (x)
whether the Loans then being requested are to be Base Rate Loans or Eurodollar
Loans, (y) the date of such borrowing (which shall be a Business Day) and amount
thereof and (z) if such Loans are to be Eurodollar Loans, the Interest Period
with respect thereto. If no election as to the type of Loan is specified in any
such notice, all such Loans shall be Base Rate Loans. If no Interest Period with
respect to any Eurodollar Loan is specified in any such notice, then an Interest
Period of one (1) month's duration shall be deemed to have been selected.
The Agent shall promptly advise the Lenders of any notice given pursuant to this
Section 2.03 and of each Lender's portion of the requested borrowing.
SECTION 2.04. Notes; Repayment of Loans.
(a) Revolving Notes. All Revolving Loans made by a Lender to the
Borrowers shall be evidenced by a single Revolving Note, duly executed on
behalf of the Borrowers, in substantially the form of Exhibit A annexed
hereto, delivered and payable to such Lender in a principal amount equal to
its Revolving Commitment in respect of the Borrowers on such date. The
outstanding balance of each Revolving Loan, as evidenced by any such
Revolving Note, shall mature and be due and payable on the Termination
Date. --------------- ---------
(b) Term Notes. All Term Loans made by a Lender to the Borrowers shall
be evidenced by a single Term Note, duly executed on behalf of the
Borrowers, in substantially the form of Exhibit B-1 annexed hereto,
delivered and payable to such Lender in an aggregate principal amount equal
to its Term Commitment in respect of the Borrowers on such date. The
outstanding balance of the Term Loan, as evidenced by the Term Note, shall
be repaid as required under Section 2.01(b) hereof. ---------- -----------
(c) Capital Expenditure Notes. All Capital Expenditure Loans made by a
Lender to the Borrowers shall be evidenced by a single Capital Expenditure
Note, duly executed on behalf of the Borrowers, in substantially the form
of Exhibit B-2 annexed hereto, delivered and payable to such Lender in an
aggregate principal amount equal to its Capital Expenditure Facility
Commitment in respect of the Borrowers on such date. The outstanding
balance of the Capital Expenditure Loans, as evidenced by the Capital
Expenditure Note, shall be repaid as required under Section 2.01(c) hereof.
-------------------------
(d) Each Note shall bear interest from its date on the outstanding
principal balance thereof, as provided in Section 2.05 hereof.
(e) Each Lender, or the Agent on its behalf, shall, and is hereby
authorized by the Borrowers to, endorse on the schedule attached to the
Notes of such Lender (or on a continuation of such schedule attached to
such Note and made a part thereof) an appropriate notation evidencing the
date and amount of each Loan to the Borrowers from such Lender, as well as
the date and amount of each payment and prepayment with respect thereto;
provided, however, that the failure of any person to make such a notation
on a Note shall not affect any obligations of the Borrowers under such
Note. Any such notation shall be conclusive and binding as to the date and
amount of such Loan or portion thereof, or payment or prepayment of
principal or interest thereon, absent manifest error. -------- -------
(f) Each Borrower hereby irrevocably authorizes and directs the Agent
on behalf of itself and the Lenders to charge the loan accounts of the
Borrowers with the Agent for all amounts which may now or hereafter be due
and payable by Borrowers and their Subsidiaries hereunder or under any
other Loan Document, including, without limitation, all amounts of
principal and interest, fees and expenses. If at any time there is not
sufficient availability to cover any of the payments referred to in the
prior sentence, and, in any event, upon the occurrence and during the
continuance of any Default, the Borrowers shall make any such payments to
the Agent on demand.
SECTION 2.05. Interest on Loans. (a) Subject to the provisions of
Sections 2.05(d) and Section 2.08 hereof, each Base Rate Loan shall bear
interest at a rate per annum equal to the Base Rate plus the Applicable
Margin.
(b) Subject to the provisions of Section 2.05(c) and Section 2.08
hereof, each Eurodollar Loan shall bear interest at a rate per annum equal
to the Adjusted LIBO Rate plus the Applicable Margin.
(c) Interest on each Loan shall be payable in arrears on each
applicable Interest Payment Date and on the maturity thereof (whether as
scheduled, by acceleration or otherwise). Interest on each Loan shall be
computed based on the number of days elapsed in a year of 360 days. The
Agent shall determine each interest rate applicable to the Loans and shall
promptly advise the Borrowers and the Lenders of the interest rate so
determined (which determination shall be conclusive and binding on the
Borrowers and the Lenders absent manifest error).
SECTION 2.06. Fees. (a) The Borrowers shall pay to the Agent for the
benefit of the Lenders without duplication for any time period,(i) on the first
Business Day of each month in arrears commencing February 1, 2000, (ii) on the
date of any reduction of the Revolving Commitment and/or Capital Expenditure
Facility Commitment pursuant to Section 2.07 hereof and (iii) on the Termination
Date, in immediately available funds, a commitment fee (the "Commitment
Fee") of one-half percent (1/2%) per annum on (A) the average amount,
calculated on a daily basis, by which the Revolving Commitment of such Lender,
during the month (or shorter period commencing with the date hereof or ending
with the Termination Date) ending on such date exceeds the aggregate outstanding
principal amount of the Revolving Loans made by such Lender and such
Lender's pro rata share of the aggregate undrawn amount of all
outstanding Letters of Credit plus (B) the average amount, calculated on a daily
basis for the Capital Expenditure Facility Availability Period only, by which
the Capital Expenditure Facility Commitment of such Lender, during the month (or
shorter period commencing on the date hereof or ending with the Termination
Date) ending on such date exceeds the aggregate outstanding principal amount of
the Capital Expenditure Loans made by such Lender. The Commitment Fee due to
each Lender under this Section 2.06(a)(A) shall commence to accrue on the Second
Amendment and Restatement Date and cease to accrue on the earlier of (i) the
Termination Date and (ii) the termination of the Revolving Commitment of such
Lender pursuant to Section 2.07 hereof. The Commitment Fee due to each Lender
under Section 2.06(a)(B) shall commence to accrue on the Second Amendment and
Restatement Date and cease to accrue on the earlier of (i) the Termination Date
and (ii) the two year anniversary of the Second Amendment and Restatement Date.
The Commitment Fee shall be calculated on the basis of the actual number of days
elapsed in a year of 360 days. The Borrowers represent and warrant to Agent and
Lenders that all interest, commitment fees and unused line fees that have been
accrued and unpaid as of immediately prior to the Second Amendment and
Restatement Date have been paid to Previous Lender.
(b) The Borrowers shall pay to the Agent, for its own account, an
audit fee of $650 per audit day per auditor of GMACBC, plus out-of-pocket
expenses incurred, and fees, costs and expenses paid to third-party
auditors.
SECTION 2.07. Termination of Revolving Commitments and Capital
Expenditure Facility Commitment. (a) Upon at least five (5) Business
Days' prior irrevocable written notice (or facsimile notice promptly
confirmed in writing) to the Agent, the Borrowers may at any time in whole
permanently terminate or in part permanently reduce the Total Revolving
Commitment and/or the Total Capital Expenditure Facility Commitment; provided,
however, that no termination or partial reduction may be made with respect to
the Total Revolving Commitment if any Term Loan, Capital Expenditure Loan or
Capital Expenditure Facility Commitment is outstanding.
(b) Simultaneously with any termination or partial reduction of the
Total Revolving Commitment pursuant to paragraph (a) of this Section 2.07,
the Borrowers shall (i) pay to the Agent for the account of the Lenders,
the Commitment Fee due and owing through and including the date of such
termination on the amount of the Revolving Commitment and Capital
Expenditure Facility Commitment of such Lender, (ii) with respect to a
partial reduction in the Revolving Commitment, terminate the Capital
Expenditure Facility Commitment and repay all Obligations (other than with
respect to the Revolving Loans) and (iii) with respect to a termination of
the Revolving Commitment, terminate all other Commitments under this
Agreement and repay all of the Obligations.
(c) Simultaneously with the termination or partial reduction of the
Total Capital Expenditure Facility Commitment pursuant to paragraph (a) of
this Section 2.07, the Borrowers shall pay to the Agent for the account of
the Lenders the Commitment Fee due and owing through and including the date
of such termination on the amount of the Capital Expenditure Facility of
such Lender.
(d) In any event, the Revolving Commitment and Capital Expenditure
Facility Commitment of each Lender shall automatically and permanently
terminate on the Termination Date unless extended as herein provided, and
all Revolving Loans and Capital Expenditure Loans still outstanding on such
date shall be due and payable in full together with accrued interest
thereon.
SECTION 2.08. Interest on Overdue Amounts. If there shall occur and be
continuing any Event of Default, the Borrowers shall on demand from time to time
pay interest, to the extent permitted by law, on principal, interest, fees and
any other amount which is payable hereunder or under any other Loan Document
(whether then due and payable or not) (after as well as before judgment) at a
rate per annum equal to two percent (2%) in excess of the rates otherwise
applicable thereto (or if no rate is applicable thereto, at a rate per annum
equal to four percent (4%) in excess of the Prime Rate).
SECTION 2.09. Prepayment of Loans. (a) Subject to the terms and
conditions contained in this Section 2.09 and elsewhere in this Agreement, the
Borrowers shall have the right to prepay any Revolving Loan, Term Loan and/or
Capital Expenditure Loan at any time in whole or from time to time in part
(except in the case of a Eurodollar Loan, only on the last day of an Interest
Period therefor) without penalty (except as otherwise provided for herein);
provided, however, that each such partial prepayment of a Eurodollar Loan shall
be in an integral multiple of $1,000,000, and provided, further, that no
prepayment of Term Loans may be made under this Section 2.09(a) to the extent
that any Capital Expenditure Loans or any Capital Expenditure Facility
Commitments shall remain outstanding.
(b) On the date of any termination of the Total Revolving Commitment
pursuant to Section 2.07(a) hereof or elsewhere in this Agreement, the
Borrowers shall pay the aggregate principal amount of all Loans then
outstanding, together with interest to the date of such payment and all
fees and other amounts due under this Agreement and deposit in a cash
collateral account with the Agent on terms satisfactory to the Agent an
amount equal to 105% of the amount of the Letter of Credit Usage.
(c) The Borrowers shall make prepayments of the Revolving Loans from
time to time such that the outstanding principal balance of the Revolving
Loans plus the Letter of Credit Usage plus the reserves then in effect
under Section 2.01(a)(iii) hereof does not exceed the lesser of (i) the
Total Revolving Commitment and (ii) the Borrowing Base at such time. In the
event that after the prepayment in full (or cash collateralization thereof
as provided above) of the Revolving Loans, the Letter of Credit Usage plus
the reserves then in effect under Section 2.01(a)(iii) hereof 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 a financial
institution acceptable to the Agent to be held in such account on terms
satisfactory to the Agent.
(d) Within five days of (i) the sale or other disposition (other
than the sale of Inventory in the ordinary course of business, collections of
accounts receivable arising out of the sale of Inventory in the ordinary course
of business, collections of notes receivable in existence prior to February 15,
1995 or accounts receivable in existence prior to February 15, 1995 and
subsequently converted to notes receivable, in each case listed on Schedule
2.09(d), payments made to the Parent or any of its Subsidiaries as lessors with
respect to store leases, sales of assets of less than $10,000 per transaction or
series of transactions, or $50,000 in the aggregate over the term of this
Agreement and returns of insurance deposits and other deposits made by Borrowers
in their ordinary course of business) of any assets of the Parent or any of its
Subsidiaries, any Grantor or any Guarantor or any sale or issuance by any
Subsidiary of the Parent of any of such Subsidiary's capital stock or
other equity interests in such Subsidiary or any option, warrant or similar
right to acquire any of same, or (ii) the consummation of the issuance of any
debt securities of the Parent or any of its Subsidiaries (other than
Indebtedness permitted by Section 7.03(i) of this Agreement to the extent
secured by Liens permitted under Section 7.01(e) of this Agreement), the
Borrowers shall make a mandatory prepayment of the Loans in an amount equal to
100% of the proceeds received by the Parent or any of its Subsidiaries (net of
related pension obligations, estimated taxes due, any reasonable expenses of
sale and any Indebtedness secured by Liens on the assets sold), which proceeds
shall be applied as set forth in paragraph (g) below. Nothing contained in this
paragraph shall constitute, or be deemed to constitute, a consent to any of the
transactions described in this paragraph (d).
(e) (i) Except as provided in clause (ii) below, not later than
the third day following the receipt by the Agent or the Parent or any of its
Subsidiaries (x) of any net proceeds of any insurance required to be maintained
pursuant to Section 6.03 hereof on account of each separate loss, damage or
injury to any asset of the Parent or such Subsidiary (including, without
limitation, any Collateral) or of any condemnation or eminent domain awards with
respect to any real property or improvements thereon owned by the Parent or any
of its Subsidiaries, or (y) of any net proceeds of any business interruption
insurance required to be maintained pursuant to Section 6.03 hereof, the Parent
or such Subsidiary shall notify the Agent of such receipt in writing or by
telephone promptly confirmed in writing, and not later than the third day
following receipt by the Agent or the Parent or such Subsidiary of any such
proceeds or awards, there shall become due and payable a prepayment of the Loans
in an amount equal to 100% of such proceeds or award. Prepayments from such net
proceeds or award shall be applied as set forth in paragraph (g) below.
(ii) In the case of the receipt of net proceeds or awards described in
clause (i) above with respect to the loss, damage or injury to any asset of
the Parent or any of its Subsidiaries or the condemnation or taking by
eminent domain of any real property or improvements thereon owned by the
Parent or any of its Subsidiaries (other than net proceeds of any business
interruption 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 Initial 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.
(f) All prepayments made pursuant to the foregoing clause (e)(iv)
shall be applied in the manner set forth in paragraph (g) below.
(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) (i) one (1)
Business Day prior to the date of such prepayment of Base Rate Loans and (ii)
five (5) Business Days prior to the date of such prepayment of Eurodollar Loans,
written or facsimile notice (promptly confirmed in writing) of prepayment which
shall specify the prepayment date and the principal amount of each Loan (or
portion thereof) to be prepaid, which notice shall be irrevocable and shall
commit the Borrowers to prepay such Loan by the amount stated therein on the
date stated therein. All prepayments shall be accompanied by accrued interest on
the principal amount being prepaid to the date of prepayment. Prepayments made
pursuant to paragraph (d) or paragraph (e) (other than paragraph (e) (i) (y)
above) shall be applied to the repayment of the Capital Expenditure Loans, with
any excess to be applied to the repayment of the Term Loan and any further
excess to be applied to the repayment of the Revolving Loans (with respect to
the Term Loan and the Capital Expenditure Loans, such payment being applied to
installments in inverse order of maturity (in the case of prepayments of less
than $1,000,000 or, if such prepayment is equal to or greater than $1,000,000,
then pro rata to each installment of the Loan being repaid)). Payments made
pursuant to paragraph (e)(i)(y) above shall be applied as a prepayment of the
Revolving Loans. Notwithstanding the terms of this clause (g), if at the time of
the making of any prepayment described in this Section 2.09, a Default or an
Event of Default is in existence and is continuing and there are undrawn Letters
of Credit outstanding (but no principal or interest with respect to Loans are
outstanding), then in the discretion of the Agent, all or a portion of any such
prepayment (not to exceed an amount equal to the aggregate undrawn amount o all
such outstanding Letters of Credit) shall be deposited in a cash collateral
account to be held by the Agent for the benefit of the Lenders for application
by the Agent to the payment of any drawing made under any such Letters of Credit
(the foregoing to be invested by Agent in investments permitted under clauses
(a), (b), (c) and (d) of Section 7.06 (provided that neither Agent nor any
Lender shall have any responsibility for or obligation with respect to any
return on such investment or loss of principal) and the foregoing requirement to
be in addition to any other cash collateral requirements under this Agreement);
and, provided, further, that any prepayments of Loans required by this Section
2.09 shall be applied to outstanding Base Rate Loans of such type up to the full
amount of such Base Rate Loans before they are applied to outstanding Eurodollar
Loans of such type; provided, however, that the Borrowers shall not be required
to make any prepayment of any Eurodollar Loan pursuant to this Section 2.09
until the last day of the Interest Period with respect thereto so long as an
amount equal to such prepayment is deposited by the Borrowers in a cash
collateral account with the Agent or a depository institution acceptable to
Agent to be held in such account on terms satisfactory to the Agent.
(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 the earlier of accrual and payment and shall be
nonrefundable in all circumstances.
SECTION 2.10. Reserve Requirements; Change in Circumstances. (a)
Notwithstanding any other provision herein, if after the date of this Agreement
(or in the case of any assignee of any Lender, the date such assignee becomes a
Lender hereunder) any change in applicable law or regulation or in the
interpretation or administration thereof by any governmental authority charged
with the interpretation or administration thereof (whether or not having the
force of law) shall (i) subject the Agent or any Lender (which shall for the
purpose of this Section 2.10 include any assignee or lending office or branch of
the Agent or any Lender) to any tax with respect to any amount paid or to be
paid by either the Agent or any Lender with respect to any Eurodollar Loans made
by a Lender to a Borrower (other than (x) taxes imposed on the overall net
income of the Agent or such Lender and (y) franchise taxes imposed on the Agent
or such Lender, in either case by the jurisdiction in which such Lender or the
Agent has its principal office or its lending office with respect to such
Eurodollar Loan or any political subdivision or taxing authority of either
thereof); (ii) change the basis of taxation of payments to any Lender or the
Agent of the principal of or interest on any Eurodollar Loan or any other fees
or amounts payable hereunder (other than taxes imposed on the overall net income
of such Lender or the Agent by the jurisdiction in which such Lender or the
Agent has its principal office or by any political subdivision or taxing
authority therein); (iii) impose, modify or deem applicable any reserve, special
deposit or similar requirement against assets of, deposits with or for the
account of, or loans or loan commitments extended by, such Lender; or (iv)
impose on any Lender or the London interbank market any other condition
affecting this Agreement or Eurodollar Loans made by such Lender; and the result
of any of the foregoing shall be to increase the cost to any such Lender of
making or maintaining any Eurodollar Loan, or to reduce the amount of any
payment (whether of principal, interest or otherwise) receivable by such Lender
or to require such Lender to make any payment in respect of any Eurodollar Loan,
then the Borrowers shall pay to such Lender or the Agent, as the case may be,
upon such Lender's or the Agent's demand, such additional amount
or amounts as will compensate such Lender or the Agent for such additional costs
or reduction. The Agent and each Lender agree to give notice to the Borrowers of
any such change in law, regulation, interpretation or administration with
reasonable promptness after becoming actually aware thereof and of the
applicability thereof to the Transactions and, at the request of the Borrowers,
shall set out in reasonable detail the calculations used in determining such
additional amounts. Notwithstanding anything contained herein to the contrary,
nothing in clause (i) or (ii) of this Section 2.10(a) shall be deemed to (x)
permit the Agent or any Lender to recover any amount thereunder which would not
be recoverable under Section 2.13 hereof or (y) require the Borrowers to make
any payment of any amount to the extent that such payment would duplicate any
payment made by the Borrowers pursuant to Section 2.13 hereof.
Notwithstanding any other provision of this Section 2.10, no
Lender shall demand any payment referred to above if it shall not at the time be
the general policy or practice of such Lender to demand such compensation in
substantially similar circumstances under substantially comparable provisions of
other credit agreements.
(b) If at any time and from time to time after the date of this
Agreement, any Lender shall determine that the adoption of any applicable law,
rule, regulation or guideline regarding capital adequacy, or any change in any
applicable law, rule, regulation or guideline regarding capital adequacy, or any
change in the interpretation or administration of any thereof by any
governmental authority, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by such Lender (or its
lending office or an affiliate) with any request or directive regarding capital
adequacy (whether or not having the force of law) of any such authority, central
bank or comparable agency, has or will have the effect of reducing the rate of
return on such Lender's or its affiliate's capital as a
consequence of such Lender's obligations hereunder to a level below that
which such Lender or affiliate could have achieved but for such adoption, change
or compliance (taking into consideration such Lender's or its
affiliate's policies with respect to capital adequacy), then from time to
time the Borrowers shall pay to such Lender such additional amount or amounts as
will compensate such Lender or its affiliate for such reduction. Each Lender
agrees to give notice to the Borrowers of any adoption of, change in, or change
in interpretation or administration of, any such law, rule, regulation or
guideline with reasonable promptness after becoming actually aware thereof and
of the applicability thereof to the Transactions.
(c) A statement of any Lender or the Agent setting forth such amount
or amounts, supported by calculations in reasonable detail, as shall be
necessary to compensate such Lender or its affiliate (or the Agent) as
specified in paragraph (a) and (b) above shall be delivered to the
Borrowers and shall be conclusive absent manifest error. The Borrowers
shall pay each Lender or the Agent the amount shown as due on any such
statement within ten (10) days after its receipt of the same.
(d) Failure on the part of any Lender or the Agent to demand
compensation for any increased costs, reduction in amounts received or
receivable or reduction in the rate of return earned on such Lender's or
its affiliate's capital, shall not constitute a waiver of such Lender's or
the Agent's rights to demand compensation for any increased costs or
reduction in amounts received or receivable or reduction in rate of return
in such Interest Period or in any other Interest Period. The protection
under this Section 2.10 shall be available to each Lender and the Agent
regardless of any possible contention of the invalidity or inapplicability
of any law, regulation or other condition which shall give rise to any
demand by such Lender or the Agent for compensation.
SECTION 2.10A Change in Legality; Eurodollar Availability. (a)
Notwithstanding anything to the contrary herein contained, if any change in any
law or regulation or in the interpretation thereof by any governmental authority
charged with the administration or interpretation thereof shall make it unlawful
for any Lender to make or maintain any Eurodollar Loan or to give effect to its
obligations to make Eurodollar Loans as contemplated hereby, then, by written
notice to Borrowers and to the Agent, such Lender may:
(i) declare that Eurodollar Loans will not thereafter be made by such
Lender hereunder, whereupon the Borrowers shall be prohibited from
requesting Eurodollar Loans from such Lender hereunder unless such
declaration is subsequently withdrawn; and
(ii) require that all outstanding Eurodollar Loans made by it be
converted to Base Rate Loans, in which event (A) all such Eurodollar Loans
shall be automatically converted to Base Rate Loans as of the effective
date of such notice as provided in paragraph (b) below and (B) all payments
of principal which would otherwise have been applied to repay the converted
Eurodollar Loans, shall instead be applied to repay the Base Rate Loans
resulting from the conversion of such Eurodollar Loans.
(b) For purposes of Section 2.10A(a) hereof, a notice to the Borrowers
by any Lender shall be effective, if lawful, on the last day of the then
current Interest Period or, if there are then two or more current Interest
Periods, on the last day of each such Interest Period, respectively;
otherwise, such notice shall be effective with respect to the Borrowers on
the date of receipt by the Borrowers.
(c) In the event, and on each occasion, that on the day two (2)
Business Days prior to the commencement of any Interest Period for a Eurodollar
Loan the Agent shall have determined that dollar deposits in the amount of each
Eurodollar Loan are not generally available in the London interbank market, or
that the rate at which dollar deposits are being offered will not reflect
adequately and fairly the cost to one or more Lenders of making or maintaining
such Eurodollar Loan during such Interest Period, or that reasonable means do
not exist for ascertaining the Adjusted LIBO Rate, the Agent shall as soon as
practicable thereafter give written notice (or facsimile notice promptly
confirmed in writing) of such determination to the Borrowers and the Lenders,
and any request by Borrower for the making of a Eurodollar Loan pursuant to
Section 2.03 hereof or conversion or continuation of any Loan into a Eurodollar
Loan pursuant to Section 2.02 hereof shall, until the circumstances giving rise
to such notice no longer exist, be deemed to be a request for a Base Rate Loan.
Each determination by the Agent made hereunder shall be conclusive absent
manifest error.
Notwithstanding any other provisions of this Section 2.10A, no
Lender shall apply or request that the Agent apply the provisions of subsection
(c) of this Section 2.10A with respect to the Borrowers if it shall not at the
time be the general policy or practice of such Lender to apply the provisions of
subsection (c) of this Section 2.10A to other borrowers in substantially similar
circumstances under substantially comparable provisions of other credit
agreements.
SECTION 2.10B Indemnity. Each Borrower shall indemnify each Lender
against any loss (including, without limitation, loss of anticipated profits) or
expense (including, but not limited to, any loss or expense sustained or
incurred or to be sustained or incurred in liquidating or employing deposits
from third parties acquired to effect or maintain any Loan or part thereof as a
Eurodollar Loan) which such Lender may sustain or incur as a consequence of the
following events (regardless of whether such events occur as a result of the
occurrence of an Event of Default or the exercise of any right or remedy of the
Agent or the Lenders under this Agreement or any other agreement, or at law):
any failure of any Borrower to fulfill on the date of any borrowing of a
Eurodollar Loan hereunder (including, without limitation, any conversion to or
continuation of a Eurodollar Loan or portion thereof) the applicable conditions
set forth in Article V hereof applicable to it; any failure of any Borrower to
borrow a Eurodollar Loan hereunder (including, without limitation, to convert to
or continue a Eurodollar Loan) after irrevocable notice of borrowing pursuant to
Section 2.03 hereof has been given; any payment, prepayment or conversion of
principal on a Eurodollar Loan on a date other than the last day of the relevant
Interest Period; any default in payment or prepayment of the principal amount of
any Eurodollar Loan or any part thereof or interest accrued thereon, as and when
due and payable (at the due date thereof, by irrevocable notice of prepayment or
otherwise); or the occurrence of an Event of Default. Such loss or expense shall
include, without limitation, an amount equal to the excess, if any, of (i) the
amount of interest which would have accrued on the principal amount so paid,
prepaid or converted or not borrowed for the period from the date of such
payment, prepayment or conversion or failure to borrow to the last day of the
Interest Period for such Loan (or, in the case of a failure to borrow, the
Interest Period for such Eurodollar Loan which would have commenced on the date
of such failure to borrow), at the applicable rate of interest for such Loan
provided for herein over (ii) the amount of interest (as reasonably determined
by such Lender) that would be realized by such Lender in reemploying the funds
so paid, prepaid or converted or not borrowed in United States Treasury
obligations with comparable maturities for comparable periods. Any such Lender
shall provide to the Borrowers a statement, signed by an officer of such Lender,
explaining any loss or expense and setting forth, if applicable, the computation
pursuant to the preceding sentence, and such statement shall be conclusive
absent manifest error. The Borrowers shall pay such Lender the amount shown as
due on any such statement within three (3) Business Days after the receipt of
the same.
SECTION 2.11. Pro Rata Treatment. Except as otherwise provided hereunder
and subject to the provisions of Sections 2.15 and 2.16 hereof, each borrowing,
each payment or prepayment of principal of the Notes, each payment of interest
on the Notes, each payment of any fee or other amount payable hereunder and each
reduction of the Total Revolving Commitment and/or the Total Capital Expenditure
Facility Commitment shall be made pro rata among the Lenders in the proportions
that their Commitments bear to the Total Commitment.
SECTION 2.12. Sharing of Setoffs. Each Lender agrees that if it shall,
through the exercise of a right of banker's lien, setoff or counterclaim
against the Parent or any of its Subsidiaries, including, but not limited to, a
secured claim under Section 506 of Title 11 of the United States Code or other
security or interest arising from, or in lieu of, such secured claim, received
by such Lender under any applicable bankruptcy, insolvency or other similar law
or otherwise, obtain payment (voluntary or involuntary) in respect of a Note
held by it as a result of which the unpaid principal portion of the Notes held
by it shall be proportionately less than the unpaid principal portion of the
Notes held by any other Lender, it shall be deemed to have simultaneously
purchased from such other Lender a participation in the Notes held by such other
Lender, so that the aggregate unpaid principal amount of the Notes and
participations in Notes held by it shall be in the same proportion to the
aggregate unpaid principal amount of all Notes then outstanding as the principal
amount of the Notes held by it prior to such exercise of banker's lien,
setoff or counterclaim was to the principal amount of all Notes outstanding
prior to such exercise of banker's lien, setoff or counterclaim;
provided, however, that if any such purchase or purchases or adjustments shall
be made pursuant to this Section 2.12 and the payment giving rise thereto shall
thereafter be recovered, such purchase or purchases or adjustments shall be
rescinded to the extent of such recovery and the purchase price or prices or
adjustments restored without interest. The Parent and its Subsidiaries expressly
consent to the foregoing arrangements and agree that any Lender holding a
participation in a Note deemed to have been so purchased may exercise any and
all rights of banker's lien, setoff or counterclaim with respect to any
and all moneys owing to such Lender as fully as if such Lender held a Note in
the amount of such participation.
SECTION 2.13. Taxes. (a) Any and all payments by the Borrowers and/or
Guarantors hereunder shall be made, in accordance with Section 2.14 hereof, free
and clear of and without deduction for any and all present or future taxes,
levies, imposts, deductions, charges or withholdings in any such case imposed by
the United States or any political subdivision thereof, provided that the
following taxes may be deducted:
(i) in the case of the Agent and each Lender, taxes imposed or based
on its net income, and franchise or capital taxes imposed on it, (A) if the
Agent or such Lender is organized under the laws of the United States or
any political subdivision thereof and (B) if the Agent or such Lender is
not organized under the laws of the United States or any political
subdivision thereof, and its principal office or Domestic Lending Office is
located in the United States, and in the case of both (A) and (B),
withholding taxes payable with respect to payments to the Agent or such
Lender at its principal office or Applicable Lending Office under laws
(including, without limitation, any treaty, ruling, determination or
regulation) in effect on the date hereof, but not any increase in
withholding tax resulting from any subsequent change in such laws (other
than withholding with respect to taxes imposed or based on its net income
or with respect to franchise or capital taxes), and
(ii) taxes (including withholding taxes) imposed by reason of the
failure or inability of the Agent or any Lender, in either case that is
organized outside the United States, to comply with Section 2.13(f) hereof
(or the inaccuracy at any time of the certificates, documents and other
evidence delivered thereunder)
(all such nondeducted taxes, levies, imposts, deductions, charges, withholdings
and liabilities being hereinafter referred to as "Taxes"). If the
Borrowers or any Guarantor shall be required by law to deduct any Taxes from or
in respect of any sum payable hereunder to the Lenders or the Agent, (x) the sum
payable shall be increased by the amount necessary so that after making all
required deductions (including without limitation deductions applicable to
additional sums payable under this Section 2.13) such Lender or the Agent (as
the case may be) receives an amount equal to the sum it would have received had
no such deductions been made, (y) the Borrowers and/or such Guarantor shall make
such deductions and (z) the Borrowers and/or such Guarantor shall pay the full
amount deducted to the relevant tax authority or other authority in accordance
with applicable law.
(b) In addition, the Borrowers and each Guarantor agrees to pay any
present or future stamp or documentary taxes or any other excise or
property taxes, charges or similar levies which arise from any payment made
hereunder or from the execution, delivery or registration of, or otherwise
with respect to, this Agreement (hereinafter referred to as "Other Taxes").
(c) The Borrowers will indemnify each Lender and the Agent for the full
amount of Taxes or Other Taxes (including, without limitation, any Taxes or
Other Taxes imposed by any jurisdiction (except as specified in clauses (a)(i)
and (ii)) on amounts payable under this Section 2.13) paid by such Lender or the
Agent (as the case may be) and any liability (including penalties, interest and
expenses) arising therefrom or with respect thereto. This indemnification shall
be made within 30 days from the date such Lender or the Agent (as the case may
be) makes written demand therefor. If any Lender receives a refund in respect of
any Taxes or Other Taxes for which such Lender has received payment from the
Borrowers hereunder, such Lender shall promptly notify the Borrowers of such
refund and such Lender shall, within 30 days of receipt of a request by the
Borrowers, repay such refund to the Borrowers (or if there shall at such time be
continuing a Default or Event of Default, pay same to the Agent to be applied to
the Obligations in such order and manner as the Agent shall choose in its
discretion), provided that the Borrowers, upon the request of such Lender, agree
to return such refund (whether returned to the Borrowers or applied to the
Obligations) (plus any penalties, interest or other charges) to such Lender in
the event such Lender is required to repay such refund.
(d) Within 30 days after the date of any payment of Taxes or Other
Taxes withheld by the Borrowers, or any Guarantor in respect of any payment
to any Lender, the Borrowers will furnish to the Agent, at its address
referred to in Section 11.01 hereof, such certificates, receipts and other
documents as may be reasonably required to evidence payment thereof.
(e) Without prejudice to the survival of any other agreement
hereunder, the agreements and obligations contained in this Section 2.13
shall survive the payment in full of principal and interest hereunder.
(f) Each Lender that is organized outside of the United States
shall deliver to the Borrowers on the date hereof (or, in the case of an
assignee, on the date of the assignment) and from time to time as required for
renewal under applicable law duly completed copies of United States Internal
Revenue Service Form 1001 or 4224 (or any successor or additional forms as the
Borrowers may reasonably request), as appropriate, indicating in each case that
such Lender is entitled to receive payments under this Agreement without any
deduction or withholding of any United States federal income taxes. The Agent
(if the Agent is an entity organized outside the United States) and each Lender
that is organized outside the United States shall promptly notify the Borrowers
and the Agent of any change in its Applicable Lending Office and upon written
request of the Borrowers such Lender shall, prior to the immediately following
due date of any payment by the Borrowers hereunder, deliver to the Borrowers
(with copies to the Agent), such certificates, documents or other evidence, as
required by the Code or Treasury Regulations issued pursuant thereto, including
without limitation Internal Revenue Service Form 4224, Form 1001 and any other
certificate or statement of exemption required by Treasury Regulation Section
1.1441-4(a) or Section 1.1441-6(c) or any subsequent version thereof, properly
completed and duly executed by such Lender establishing that such payment is (i)
not subject to withholding under the Code because such payment is effectively
connected with the conduct by such Lender of a trade or business in the United
States or (ii) totally exempt from United States tax under a provision of an
applicable tax treaty. The Borrowers shall be entitled to rely on such forms in
their possession until receipt of any revised or successor form pursuant to this
Section 2.13(f). If the Agent or a Lender fails to provide a certificate,
document or other evidence required pursuant to this Section 2.13(f), then (i)
the Borrowers shall be entitled to deduct or withhold on payments to the Agent
or such Lender as a result of such failure, as required by law, and (ii) the
Borrowers shall not be required to make payments of additional amounts with
respect to such withheld Taxes pursuant to clause (x) of Section 2.13(a) to the
extent such withholding is required by reason of the failure of the Agent or
such Lender to provide the necessary certificate, document or other evidence.
SECTION 2.14. Payments and Computations. The Borrowers shall make each
payment hereunder and under any instrument delivered hereunder not later than
12:00 noon (New York City time) on the day when due in lawful money of the
United States (in freely transferable dollars) to the Agent's Account or,
at the option of Agent, to Agent's office at 300 Galleria Officentre,
Suite 110, Southfield, Michigan 48034, in each case for the account of the
Lenders, in immediately available funds. The Agent may charge, when due and
payable, the Borrowers' loan account with the Agent for all interest,
principal and fees owing to the Agent, the Lenders, any Issuing Bank or GMACBC
on or with respect to this Agreement and/or the Loans and Letters of Credit and
other Loan Documents.
SECTION 2.15. Settlement Among Lenders. (a) The Agent shall pay to each
Lender not later than one (1) Business Day after each Interest Payment Date, or
upon receipt of interest payments otherwise received, its ratable portion, based
on the principal amount of the Loans owing to such Lender, of all interest
payments and any other fees received by the Agent hereunder in respect of the
Loans, net of any amounts payable by such Lender to the Agent, by wire transfer.
(b) It is agreed that each Lender's Revolving Loans are intended by
the Lenders to be equal at all times to such Lender's ratable portion (as
determined in accordance with the percentage amounts set forth in Schedule
2.01(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 (including, without limitation, GMACBC as a Lender) in the manner
provided in this Section 2.15 in accordance with the Settlement Report delivered
by the Agent pursuant to the provisions of this Section 2.15 in respect of such
Settlement Date so that as of each Settlement Date, and after giving effect to
the transactions on such Settlement Date, each Lender's Revolving Loans
shall equal such Lender's ratable portion of the Revolving Loans
outstanding as determined in accordance with the percentage amounts set forth in
Schedule 2.01(a) hereto.
(ii) The Agent shall designate periodic Settlement Dates which may
occur on any Business Day after the Second Amendment and Restatement Date;
provided, however, that Settlement Dates shall occur weekly or more
frequently as determined by the Agent in its discretion (including, without
limitation, under clause (d)(i) hereof). The Agent shall designate a
Settlement Date by delivering to each Lender a Settlement Report not later
than 10:00 a.m. (New York City time) on the proposed Settlement Date, which
Settlement Report shall be with respect to the period beginning on the next
preceding Settlement Date and ending on such designated Settlement Date.
-------- -------
(iii) Between Settlement Dates, the Agent shall request
and GMACBC as a Lender shall, subject to the provisions of clause (d) below,
advance to the Borrower out of GMACBC own funds, the entire principal amount of
any Revolving Loan requested or deemed requested pursuant to Section 2.03 (any
such Revolving Loan being referred to as a "Non-Ratable Loan").
The making of each Non-Ratable Loan by GMACBC shall be deemed to be a purchase
by GMACBC of a 100% participation in each other Lender's ratable portion
of the amount of such Non-Ratable Loan. All payments of principal, interest and
any other amount with respect to such Non-Ratable Loan shall be payable to and
received by the Agent for the account of GMACBC. Any payments received by the
Agent between Settlement Dates which in accordance with the terms of this
Agreement are to be applied to the reduction of the outstanding principal
balance of Revolving Loans, shall be paid over to and retained by GMACBC for
such
application, and such payment to and retention by GMACBC shall be deemed, to the
extent of each other Lender's ratable portion of such payment, to be a
purchase by each such other Lender of a participation in the Revolving Loans
(including the repurchase of participations in Non-Ratable Loans) held by GMACBC
immediately prior to the receipt and application of such payment.
(iv) If any amounts received by GMACBC in respect of the Obligations
are later required to be returned or repaid by GMACBC to the Borrowers or
any other obligor or their respective representatives or successors in
interest, whether by court order, settlement or otherwise, and such amounts
repaid or returned by GMACBC are in excess of GMACBC's ratable portion of
all such amounts required to be returned by all Lenders, each other Lender
shall, upon demand by GMACBC with notice to the Agent, pay to the Agent for
the account of GMACBC, an amount equal to the excess of such Lender's
ratable portion of all such amounts required to be returned by all Lenders
over the amount, if any, returned directly by such Lender.
(v) (x) Payment by any Lender to the Agent shall be made not later
than 1:00 p.m. (New York City time) on the Business Day such payment is
due, provided that if such payment is due on written demand by another
Lender, including pursuant to clause (d) below, such written demand shall
be made on the paying Lender not later than 10:00 a.m. (New York City time)
on such Business Day. Payment by the Agent to any Lender shall be made by
wire transfer, promptly following the Agent's receipt of funds for the
account of such Lender and in the type of funds received by the Agent,
provided that if the Agent receives such funds at or prior to 12:00 noon
(New York City time), the Agent shall pay such funds to such Lender by 3:00
p.m. (New York City time) on such Business Day. If a demand for payment is
made after the applicable time set forth above, the payment due shall be
made by 3:00 p.m. (New York City time) on the first Business Day following
the date of such demand.
(y) If a Lender shall, at any time, fail to make any payment to the
Agent required hereunder, the Agent may, but shall not be required to,
retain payments that would otherwise be made to such Lender hereunder and
apply such payments to such Lender's defaulted obligations hereunder, at
such time, and in such order, as the Agent may elect in its sole
discretion.
(z) With respect to the payment of any funds under this Section
2.15(c), whether from the Agent to a Lender or from a Lender to the Agent,
the party failing to make full payment when due pursuant to the terms
hereof shall, upon written demand by the other party, pay such amount
together with interest on such amount at the Federal Funds Effective Rate.
(d) (i) The Agent shall have the right at any time to require, by
notice to each Lender, that all settlements in respect of advances and
repayments of Revolving Loans be made on a daily basis. From and after the
giving of such notice (and until such time, if any, as the Agent notifies the
Lenders of its determination to return to a periodic settlement basis), each
Lender shall pay to the Agent such Lender's ratable portion of the amount
of each Revolving Loan on the date such Revolving Loan is made in accordance
with the provisions of clause (c)(v) above and the Agent shall pay to each
Lender by wire transfer by 5:00 p.m. (New York City time) funds received before
1:00 p.m. (New York City time) on such Business Day by the Agent from the
Borrower and by 3:00 p.m. (New York City time) funds received after 1:00 p.m.
(New York City time) of the preceding Business Day by the Agent from the
Borrowers, by wire transfer, such Lender's ratable portion of the net
amount of all payments received by the Agent hereunder in respect of the
principal of the Revolving Loans (after deducting the principal amount of
Revolving Loans made on such day) or in respect of interest on the Revolving
Loans. Any amount payable pursuant to this subsection which is not paid when due
shall bear interest, payable by the Agent, or the applicable Lender, as the case
may be, for each day until paid in full at the Federal Funds Effective Rate in
effect on such day.
(ii) In addition to, and without limiting the right of the Agent to
require daily settlement pursuant to clause (i), upon written demand by
GMACBC with notice thereof to the Agent, each other Lender shall pay to the
Agent, for the account of GMACBC, as the repurchase of GMACBC's
participation interest in such Lender's 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 1:00 p.m. New York City time on the
date of any borrowing, the Agent may assume that each Lender will make its
ratable portion of any amount to be borrowed available to the Agent in
accordance with Section 2.02(b) hereof, and the Agent may in its discretion, in
reliance upon such assumption, make available to the Borrowers on such date a
corresponding amount. If and to the extent such Lender shall not make such
ratable portion available to the Agent, such Lender and the Borrowers severally
agree to repay to the Agent forthwith on demand such corresponding amount,
together with interest thereon for each day from the date such amount is made
available to the Borrowers until the date such amount is repaid to the Agent, as
to the Borrowers, at the rate of interest applicable to Loans hereunder, and as
to such other Lender, at the Federal Funds Effective Rate and until so repaid
such amount shall be deemed to constitute a Revolving Loan by the Agent to the
Borrowers hereunder entitled to the benefits of the Collateral and the other
provisions hereof applicable to the Revolving Loans. If such Lender shall repay
to the Agent such corresponding amount, the amount so repaid shall constitute
such Lender's ratable portion of the Revolving Loans made on such
borrowing date 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 1:00 p.m. New York time on such borrowing date), (ii) the creation of any
reserves against the Borrowing Base, (iii) any reduction of advance rates
applicable to the Borrowing Base, (iv) approval of one or more overadvances
(provided, however, that any such overadvance shall not result in the principal
amount of Revolving Loans exceeding, prior to a Default or an Event of Default,
an amount which is $1,000,000 in excess of the Borrowing Base minus the Letter
of Credit Usage and the reserves described in Section 2.01(a)(iii) but not in
excess of the Total Revolving Commitment (it being understood that any such
excess Revolving Loans shall be payable upon demand of the Agent) and such
overadvance shall not remain outstanding for a period of longer than 45
consecutive Business Days without approval of Required Lenders and in no event
shall overadvances exist for more than 45 Business Days in the aggregate during
any calendar year), and (v) whether specific items of inventory constitute
"Eligible Inventory" in accordance with the definition of such
term set forth in Article I. The Agent shall give prompt notice to the Lenders
of any determinations made pursuant to clause (ii), (iii) or (iv) above. Nothing
contained in this Section 2.16(b) shall create any rights in favor of the
Borrower, any Guarantor or any person other than the Agent, and the terms of
this Section 2.16(b) may be amended by the Agent without the consent of the
Borrowers or any Guarantor.
SECTION 2.17. Joint and Several Borrowers. The parties hereto agree and
confirm that the obligations of the Borrowers under and/or in connection with
this Agreement and the other Loan Documents (including, without limitation, with
respect to payments of principal, interest, fees and all other amounts with
respect to the Loans) are the joint and several undertaking of each Borrower.
IIA. LETTERS OF CREDIT
SECTION 2A.01. Issuance of Letters of Credit. Upon the request of the
Borrowers, and subject to the conditions set forth in Article V hereof and such
other conditions to the opening of Letters of Credit as GMACBC requires of its
customers generally, the Agent shall cause GMACBC from time to time to open or
arrange (by means of a guaranty (a "Letter of Credit Guaranty") in favor of the
Issuing Bank or otherwise) for an Issuing Bank to open standby letters of credit
(each, a "Letter of Credit") for the account of the Borrowers,
provided that the Letter of Credit Usage shall not at any time exceed $4,500,000
and provided, further, that the face amount of any Letter of Credit that the
Borrowers may request to be opened at any time shall not exceed an amount equal
to (A) the lesser of (i) the Total Revolving Commitment at such time and (ii)
the Borrowing Base at such time minus (B) the sum of (i) the unpaid principal
amount of all Revolving Loans outstanding at such time, (ii) the Letter of
Credit Usage at such time and (iii) the reserves then in effect under Section
2.01 hereof. The issuance of each Letter of Credit shall be made on at least
four Business Days' prior written notice from the Borrowers to the Agent,
at its Domestic Lending Office, which written notice shall be an application for
a Letter of Credit on GMACBC's or such Issuing Bank's customary
form. The expiration date of any Letter of Credit shall not be later than 365
days from the date of issuance thereof and, in any event, no Letter of Credit
shall have an expiration date later than the Termination Date. The Letters of
Credit shall be issued with respect of transactions occurring in the ordinary
course of business of the Borrowers.
SECTION 2A.02. Payment; Reimbursement. Upon the issuance of any Letter
of Credit or any Letter of Credit Guaranty, as the case may be, the Agent shall
notify each Lender of the principal amount, the number, and the expiration date
thereof and the amount of such Lender's participation therein. By the
issuance of a Letter of Credit hereunder and without further action on the part
of the Agent, GMACBC or the Lenders, each Lender hereby accepts from GMACBC a
participation (which participation shall be nonrecourse to GMACBC) in such
Letter of Credit or such Letter of Credit Guaranty, as the case may be, equal to
such Lender's pro rata (based on its Revolving Commitment) share of such
Letter of Credit or such Letter of Credit Guaranty, as the case may be,
effective upon the issuance of such Letter of Credit or Letter of Credit
Guaranty. Each Lender hereby absolutely and unconditionally assumes, as primary
obligor and not as a surety, and agrees to pay and discharge, and to indemnify
and hold GMACBC harmless from liability in respect of, such Lender's pro
rata share of the amount of any drawing under a Letter of Credit or payment
under a Letter of Credit Guaranty, as the case may be. Each Lender acknowledges
and agrees that its obligation to acquire participations in each Letter of
Credit issued by GMACBC or arranged to be issued by GMACBC and its obligation to
make the payments specified herein, and the right of GMACBC to receive the same,
in the manner specified herein, are absolute and unconditional and shall not be
affected by any circumstance whatsoever, including, without limitation, the
occurrence and continuance of a Default or an Event of Default hereunder, and
that each such payment shall be made without any offset, abatement, withholding
or reduction whatsoever. The Agent, GMACBC and/or the Issuing Bank shall review,
on behalf of the Lenders, each draft and any accompanying documents presented
under a Letter of Credit and shall notify each Lender of any such presentment.
Promptly after the Agent, GMACBC and/or the Issuing Bank shall have ascertained
that any draft and any accompanying documents presented under such Letter of
Credit appear on their face to be in substantial conformity with the terms and
conditions of the Letter of Credit, the Agent shall give telephonic or facsimile
notice to the Lenders and the Borrowers of the receipt and amount of such draft
and the date on which payment thereon will be made, and the Lenders shall, by
11:00 a.m., New York City time on the date such payment is to be made, pay the
amounts required to the Agent on behalf of GMACBC in immediately available
funds, and GMACBC, not later than 3:00 p.m. on such day, shall make, or arrange
to be made, the appropriate payment to the beneficiary of such Letter of Credit.
If GMACBC or the applicable Issuing Bank shall pay any draft presented under a
Letter of Credit, then Borrowers shall be deemed to have automatically requested
a Revolving Loan in an amount equal to the amount thereof. If there i
insufficient availability to make such Revolving Loans and the Lenders have not
been reimbursed with respect to such drawing by 11:00 a.m., New York City Time,
on the date of such payment, the Borrowers shall pay to the Agent, for the
account of the Lenders, the amount of the drawing together with interest on such
amount at a rate per annum (computed on the basis of the actual number of days
elapsed over a year of 360 days) equal to the Prime Rate plus 4%, payable on
demand. Nothing set forth in this paragraph or otherwise shall obligate Agent or
any Lender to advance Revolving Loans in excess of the amounts set forth in
Section 2.01(a). The obligation of the Borrowers under this Section 2A.02 to
reimburse the Lenders and GMACBC for all drawings under Letters of Credit and
Letter of Credit Guaranties shall be absolute, unconditional and irrevocable and
shall be satisfied strictly in accordance with their terms, irrespective of:
(a) any lack of validity or enforceability of any Letter of Credit;
(b) the existence of any claim, setoff, defense or other right which
Borrowers or any other person may at any time have against the beneficiary
under any Letter of Credit, the Agent, GMACBC, the Issuing Bank or any
Lender (other than the defense of payment in accordance with the terms of
this Agreement) or any other person in connection with this Agreement or
any other transaction;
(c) any draft or other document presented under any Letter of Credit
proving to be forged, fraudulent, invalid or insufficient in any respect or
any statement therein being untrue or inaccurate in any respect;
(d) payment by the Agent, GMACBC, the Issuing Bank or any Lender under
any Letter of Credit against presentation of a draft or other document
which does not comply with the terms of such Letter of Credit; and
(e) any other circumstance or event whatsoever, whether or not similar
to any of the foregoing.
It is understood that in making any payment under any Letter of
Credit (x) the Agent's, GMACBC's, the Issuing Bank's or any
Lender's exclusive reliance on the documents presented to it under such
Letter of Credit as to any and all matters set forth therein, including, without
limitation, reliance on the amount of any draft presented under such Letter of
Credit, whether or not the amount due to the beneficiary equals the amount of
such draft and whether or not any document presented pursuant to such Letter of
Credit proves to be insufficient in any respect, if such document on its face
appears to be in order, and whether or not any other statement or any other
document presented pursuant to such Letter of Credit proves to be forged or
invalid or any statement therein proves to be inaccurate or untrue in any
respect whatsoever and (y) any noncompliance in any immaterial respect of the
documents presented under such Letter of Credit with the terms thereof shall, in
each case, not be deemed willful misconduct or bad faith of the Agent, GMACBC,
the Issuing Bank or any Lender.
SECTION 2A.03. GMACBC's Actions. Any Letter of Credit may, in the
discretion of GMACBC, the Issuing Bank or their respective correspondents, be
interpreted by them (to the extent not inconsistent with such Letter of Credit)
in accordance with the International Standby Practices (ISP 98-International
Chamber of Commerce Publication No. 590), as adopted or amended from time to
time. GMACBC, the Issuing Bank and their respective correspondents may accept
and act upon the name, signature, or act of any party purporting to be the
executor, administrator, receiver, trustee in bankruptcy, or other legal
representative of any party designated in any Letter of Credit in the place of
the name, signature, or act of such party.
SECTION 2A.04. Payments in Respect of Increased Costs. (a)
Notwithstanding any other provision herein, if after the date of this Agreement
any change in applicable law or regulation or in the interpretation or
administration thereof by any governmental authority charged with the
interpretation or administration thereof (whether or not having the force of
law) or any change in generally accepted accounting principles or regulatory
accounting principles applicable to the Agent, GMACBC, any Issuing Bank or any
Lender shall (i) impose, modify or make applicable to the Agent, GMACBC, any
Issuing Bank or any Lender any reserve, special deposit or similar requirement
with respect to its obligations under this Article IIA, any Letter of Credit
Guaranty or any Letter of Credit, (ii) impose on the Agent, GMACBC, any Issuing
Bank or any Lender any other condition with respect to its obligations under
this Article IIA, any Letter of Credit Guaranty or any Letter of Credit, or
(iii) subject the Agent, GMACBC, any Issuing Bank or any Lender to any tax
(other than (x) taxes imposed on the overall net income of the Agent, GMACBC,
any Issuing Bank or such Lender and (y) franchise taxes imposed on the Agent,
GMACBC, such Issuing Bank or such Lender, in either case by the jurisdiction in
which the Agent, GMACBC, such Issuing Bank or such Lender, as appropriate, has
its principal office or lending office or any political subdivision or taxing
authority of any such jurisdiction), charge, fee, deduction or withholding of
any kind whatsoever, and the result of any of the foregoing shall be to increase
the cost to the Agent, GMACBC, such Issuing Bank or such Lender of maintaining
such Letter of Credit or making any payment under such Letter of Credit, such
Letter of Credit Guaranty or this Article IIA or to reduce the amount of
principal, interest or any fee or compensation receivable by the Agent, GMACBC,
such Issuing Bank or such Lender in respect of this Article IIA, such Letter of
Credit Guaranty or such Letter of Credit, then such additional amount or amounts
as will compensate the Agent, GMACBC, such Issuing Bank or such Lender for such
additional costs or reduction shall be paid to the Agent for its benefit or the
benefit of GMACBC, such Issuing Bank or such Lender by the Borrowers. Each
Lender agrees to give notice to the Borrowers and the Agent of any such change
in law, regulation, interpretation or administration with reasonable promptness
after becoming actually aware thereof and of the applicability thereof to the
transactions contemplated in this Article IIA.
(b) If, after the date of this Agreement, any Lender, Issuing
Bank or GMACBC shall have determined that the adoption of any applicable law,
rule, regulation or guideline regarding capital adequacy, or any change therein,
or any change in the interpretation or administration thereof by any
governmental authority, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by any Lender, Issuing
Bank or GMACBC (or its lending office) with any request or directive regarding
capital adequacy (whether or not having the force of law) of any such authority,
central bank or comparable agency, has or would have the effect of reducing the
rate of return on such Lender's, Issuing Bank's or GMACBC's
capital as a consequence of its obligations under this Article IIA, with respect
to a Letter of Credit Guaranty or with respect to a Letter of Credit to a level
below that which such Lender, Issuing Bank or GMACBC could have achieved but for
such adoption, change or compliance (taking into consideration such
Lender's, Issuing Bank's and GMACBC's policies with respect
to capital adequacy) then from time to time, the Borrowers shall pay to such
Lender, Issuing Bank, GMACBC or the Agent on behalf of GMACBC such additional
amount or amounts as will compensate such Issuing Bank, GMACBC or such Lender
for such reduction. Each Lender agrees to give notice to the Borrowers and the
Agent of any adoption of, change in, or change in interpretation or
administration of, any such law, rule, regulation or guideline with reasonable
promptness after becoming actually aware thereof and of the applicability
thereof to the transactions contemplated hereby.
(c) A certificate of the Agent, Issuing Bank, GMACBC or a Lender
setting forth such amount or amounts, supported by calculations in
reasonable detail, as shall be necessary to compensate the Agent, Issuing
Bank, GMACBC or such Lender, as appropriate, as specified in paragraphs (a)
and (b) above shall be delivered to the Borrowers and shall be conclusive
and binding upon the Borrowers absent manifest error. The Borrowers shall
pay the Agent on behalf of Issuing Bank, GMACBC or such Lender the amount
shown as due on any such certificate within five (5) Business Days after
its receipt of the same.
(d) Failure on the part of any Lender, Issuing Bank, GMACBC or the
Agent to demand compensation for any increased costs, reduction in amounts
received or receivable with respect to this Article IIA, any Letter of
Credit Guaranty or any Letter of Credit or reduction in the rate of return
earned on such Lender's, Issuing Bank's, GMACBC's capital, in each case
pursuant to paragraph (a) or (b) above, shall not constitute a waiver of
the Agent's, Issuing Bank's, GMACBC's or such Lender's rights to demand
compensation for any increased costs or reduction in amounts received or
receivable or reduction in rate of return pursuant to paragraph (a) or (b)
above. The protection under this Section 2A.04 shall be available to each
Lender, Issuing Bank, GMACBC and the Agent regardless of any possible
contention of the invalidity or inapplicability of any law, regulation or
other condition which shall give rise to any demand by such Lender, Issuing
Bank, GMACBC or the Agent for compensation (but if such law, regulation or
other condition is finally determined to be invalid or inapplicable, the
Agent on its behalf and on behalf of Issuing Bank, GMACBC or Lenders shall
promptly refund (without interest) all amounts paid under this Section
2A.04 arising from such invalid or inapplicable law, regulation or other
condition).
SECTION 2A.05. Indemnity as to Letters of Credit. Each Borrower hereby
agrees to indemnify and hold harmless the Agent, Issuing Bank, GMACBC and the
Lenders from and against any and all claims, damages, losses, liabilities, costs
or expenses whatsoever which the Agent, Issuing Bank, GMACBC or the Lenders may
incur or suffer by reason of or in connection with the execution and delivery or
assignment of, or payment under, any Letter of Credit Guaranty or any Letter of
Credit, except only if and to the extent that any such claim, damage, loss,
liability, cost or expense shall be caused by the gross negligence, willful
misconduct or bad faith of the Agent, Issuing Bank, GMACBC or any Lender
performing its obligations under this Agreement. Without limiting the foregoing,
Borrowers and each Guarantor further agrees to indemnify and hold harmless the
Agent, Issuing Bank and GMACBC, their respective officers and directors, each
person who controls the Agent, Issuing Bank or GMACBC within the meaning of
Section 15 of the Securities Act of 1933 or any applicable state securities law
and their respective successors from and against any and all claims, damages,
losses, liabilities, costs or expenses, joint or several, to which they or any
of them may become subject under any Federal or state securities law, rule or
regulation, at common law or otherwise, insofar as such claims, damages, losses,
liabilities, costs or expenses arise out of or are based upon the execution and
delivery by Issuing Bank or GMACBC of any Letter of Credit Guranty or 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 Issuing Bank or GMACBC). The Borrowers, upon demand by the
Agent, Issuing Bank or GMACBC at any time, shall reimburse the Agent, and
Issuing Bank and GMACBC for any reasonable legal or other expenses incurred in
connection with investigating or defending against any of the foregoing. The
indemnities contained herein shall survive the expiration or termination of the
Letters of Credit and this Agreement.
SECTION 2A.06. Letter of Credit Fees. The Borrowers agree to pay to the
Agent for the ratable benefit of the Lenders, with respect to any Letter of
Credit, on the last business day of each month and on the date of the full
drawing, cancellation, termination or expiration of such Letter of Credit, a
letter of credit fee for such month or shorter period equal to two percent (2%)
per annum on the average daily undrawn amount thereof for such month or shorter
period, payable to the Agent at its Domestic Lending Office in immediately
available funds. The foregoing fees shall be computed on the basis of the actual
number of days elapsed over a year of 360 days. Additionally, the Borrowers
shall pay to the Agent at its Domestic Lending Office for the sole account of
GMACBC and/or any Issuing Bank, as the case may be, upon demand by the Agent or
GMACBC all of the customary fees and expenses of GMACBC and/or such Issuing Bank
with respect to the opening, drawing upon, extending, amending, transferring,
canceling or administration of Letters of Credit from time to time in effect.
The Agent shall disburse to each Lender such Lender's pro rata share of
any payment of the letter of credit fees referred to in clause (a) of the first
sentence of this Section 2A.06 in immediately available funds within one (1)
Business Day of the Agent's receipt of such payment.
III. COLLATERAL SECURITY
SECTION 3.01. Security Documents. The Obligations shall be secured by
the Collateral described in the Security Documents and are entitled to the
benefits thereof. The Parent shall, and shall cause the other Grantors to, duly
execute and deliver the Security Documents, all consents of third parties
necessary to permit the effective granting of the Liens created in such
agreements, financing statements pursuant to the 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. Without in any manner limiting the foregoing, (i) each
of the Grantors hereby agrees and confirms that the Collateral includes all
"investment property" of each Grantor, as such term may from time
to time be used under the UCC and (ii) each Grantor hereby grants a Lien on and
security interest in such investment property and all proceeds thereof (to the
extent any applicable jurisdiction contemplates or permits a Lien or security
interest in investment property) as security for the Obligations. The Grantors
agree, at the request of the Agent, to promptly execute all documents that may
be required by the Agent in order to further create and perfect such Lien and
Security Interest. Notwithstanding the terms of this Section 3.01, the foregoing
grant of a Lien in "investment property" shall specifically
exclude any capital stock of Wakefern Food Corp, Insure-Rite, Ltd. and/or WFC-1
Realty Corp. owned by any Grantor and described in Schedule 7.06.
SECTION 3.02. Filing and Recording. The Parent and its Subsidiaries
shall, at their sole cost and expense, cause all instruments and documents given
as evidence of security pursuant to this Agreement to be duly recorded and/or
filed or otherwise perfected in all places necessary, in the opinion of the
Agent, and take such other actions as the Agent may reasonably request, in order
to perfect and protect the Liens of the Agent and the Secured Parties in the
Collateral. The Borrowers and each Guarantor, to the extent permitted by law,
hereby authorize the Agent to file any financing statement in respect of any
Lien created pursuant to the Security Documents which may at any time be
required or which, in the opinion of the Agent, may at any time be desirable
although the same may have been executed only by the Agent or, at the option of
the Agent, to sign such financing statement on behalf of the Borrowers or the
Guarantor, as the case may be, and file the same, and the Borrowers and each
Guarantor hereby irrevocably designate the Agent, its agents, representatives
and designees as its agent and attorney-in-fact for this purpose. In the event
that any re-recording or refiling thereof (or the filing of any statements of
continuation or assignment of any financing statement) is required to protect
and preserve such Lien, Borrowers shall, at the Borrowers' cost and
expense, cause the same to be recorded and/or refiled at the time and in the
manner requested by the Agent.
SECTION 3.03. Real Property; Mortgages; Title Insurance.
(a) In connection with the Existing Loan Agreement, the Parent and its
Subsidiaries had executed and delivered mortgages or deeds of trust (each
an "Original Mortgage" and collectively the "Original Mortgages") in
respect of real property owned or leased by the Parent or such Subsidiary,
listed on Schedule 3.03 annexed hereto and made a part hereof.
(b) (i) To the extent requested by the Agent, the Parent and each of
its Subsidiaries shall duly execute and deliver to the Agent mortgages or
deeds of trust with respect to additional real property owned or leased by
the Parent or such Subsidiary (each an "Additional Mortgage" and
collectively the "Additional Mortgages") so as to create in the Agent's
favor, for the benefit of the Secured Parties, upon recordation of each of
the Additional Mortgages, a valid, perfected and enforceable first priority
Lien securing the Obligations (subject to Liens permitted under Section
7.01 hereof) on the real property and improvements described therein. To
the extent requested by the Agent, the Parent and each of its Subsidiaries
shall make best efforts to deliver to the Agent consents of third parties
to the Additional Mortgages, and such title searches, non-disturbance
agreements, lease amendments and/or consents, landlord's waivers, estoppel
certificates an waivers, as the Agent shall request (in each case, in form
and substance satisfactory to the Agent). Such Additional Mortgages shall
be in form and substance satisfactory to the Agent. The parties hereto
acknowledge and agree that the term Additional Mortgages shall include (x)
the additional fee mortgages and leasehold mortgages required to be
delivered as a condition precedent to the effectiveness of this Agreement
pursuant to Section 5.02 hereof and (y) any future leasehold mortgages
requested by Agent with respect to real property where a Grantor acts as
lessor;
(ii) Without limiting the foregoing clause (i), the Parent and
each of its Subsidiaries shall duly execute and deliver to the Agent mortgages
or deeds of trust with respect to all real property owned or leased by the
Parent or such Subsidiary with respect to each New/Replacement Store Project
(each a "New/Replacement Store Project Mortgage" and collectively
the "New/Replacement Store Project Mortgages") so as to create in
the Agent's favor, for the benefit of the Secured Parties, upon
recordation of each of the New/Replacement Store Project Mortgages, a valid,
perfected and enforceable first priority Lien securing the Obligations (subject
to Liens permitted under Section 7.01 hereof) on the real property and
improvements described therein. The Parent and each of its Subsidiaries shall
deliver to the Agent consents of third parties to the New/Replacement Store
Project Mortgages, and such title searches, non-disturbance agreements, lease
amendments and/or consents, landlord's waivers, estoppel certificates and
waivers, as the Agent shall request (in each case, in form and substance
satisfactory to the Agent). Such New/Replacement Store Project Mortgages shall
be in form and substance satisfactory to the Agent; The obligation of Parent and
its Subsidiaries under this clause (b)(ii) with respect to the Middletown, NJ
New/Replacement Store Project shall be satisfied if the applicable Parent or
Subsidiary uses its best efforts to deliver and/or cause the delivery of the
New/Replacement Store Project Mortgage and the other documents required under
this clause (b)(ii) with respect to such Middletown, NJ New/Replacement Store
Project.
(c) To the extent requested by the Agent, the Parent and each of
its Subsidiaries shall duly execute and deliver to the Agent amendments to the
Original Mortgages (each a "Mortgage Amendment" and collectively
the "Mortgage Amendments") modifying the Original Mortgages to
also secure the Capital Expenditure Facility so as to cause, upon recordation of
the Mortgage Amendments, the Original Mortgages, as so amended by the Mortgage
Amendments, to be a valid, perfected, and enforceable first priority Lien
(subject to the liens under Section 7.01 hereof) on the real property and
improvements described therein securing the Obligations. To the extent requested
by the Agent, the Parent and each of its Subsidiaries shall duly execute and
deliver to the Agent, consents of third parties to the Mortgage Amendments and
such title searches, non-disturbance agreements and/or consents,
Landlord's Waivers, estoppel certificates and waivers as the Agent may
request (in eac case, in form and substance satisfactory to the Agent).
(d) the Parent and each of its Subsidiaries shall cause the Additional
Mortgages, New/Replacement Store Project Mortgages and the Mortgage
Amendments (such mortgages as they are now and may hereafter be amended,
modified, consolidated or supplemented, collectively, the "Mortgages")
executed and delivered to be duly recorded in the appropriate recording
office or offices and shall pay all fees and taxes payable in connection
therewith.
(e) If requested by the Agent, the Parent and each of its
Subsidiaries shall furnish to the Agent for the benefit of the Secured Parties,
at the expense of the Parent and its Subsidiaries, one or more policies of
mortgagee title insurance, in form, substance and amount satisfactory to the
Agent, insuring that each of the Mortgages executed and delivered by it pursuant
hereto is a valid and perfected first priority Lien securing the Obligations
(except for the Liens permitted by Section 7.01) in favor of the Agent, for the
benefit of the Secured Parties, on the fee or leasehold interest of the Parent
or such Subsidiary, in the real property and improvements described therein, and
that the Parent or such Subsidiary has good and marketable title thereto, issued
by a title insurance company reasonably satisfactory to the Agent, together with
satisfactory evidence that all title insurance premiums have been fully paid.
The Parent shall furnish to the Agent certified surveys of real property an such
other certificates and documents as the Agent may reasonably request and which
are customary in financing of this type. The Parent and each applicable
Subsidiary shall provide to each Lender with respect to any real property to be
subject to a Mortgage, or any other real property of Parent or any of its
Subsidiaries, such appraisals of such real property as shall be requested by the
Agent (provided, however, that so long as no Default or Event of Default shall
be in existence, Borrowers shall not be required to reimburse Agent for more
than one such real property appraisal for any property every thirty months). If
requested by the Agent, the Parent and its Subsidiaries shall, at their cost and
expense, furnish to the Agent, for the benefit of the Secured Parties, flood
insurance with respect to any real property subject to any Mortgage to the
extent such flood insurance can be obtained by the Parent and its Subsidiaries
on commercially reasonable terms; provided, however, that, at the cost and
expense of the Parent and its Subsidiaries, the Parent and its Subsidiaries
shall in any event maintain and shall furnish to the Agent flood insurance with
respect to any real property subject to any Mortgage to the extent flood
insurance with respect to such real property is required to be maintained by
applicable law (whether such law is applicable to any Lender, including, without
limitation, by reason of such Mortgage, the Parent, any Subsidiary thereof or
otherwise). This Section 3.03 shall not be deemed to allow the Parent or any
Subsidiary to acquire any property if otherwise prohibited by this Agreement.
SECTION 3.04. Additional Collateral. The Borrowers and each Guarantor
acknowledge that it is their intention to provide the Agent with a Lien on all
the property of the Parent and its Subsidiaries (personal, real and mixed),
whether now owned or hereafter acquired (other than as agreed to in writing by
the Agent), subject only to Liens permitted hereunder. Without limitation of
Section 3.03(c) hereof, the Parent and its Subsidiaries shall from time to time
promptly notify the Agent of the acquisition by the Parent or any of its
Subsidiaries of any material property in which the Agent does not then hold a
perfected Lien (other than as agreed to in writing by the Agent), or the
creation or existence of any such property, and such person shall, upon request
by the Agent, promptly execute and deliver to the Agent or cause to be executed
and delivered to the Agent pledge agreements, security agreements, mortgages or
other like agreements with respect to such property, together with such other
documents, certificates, opinions of counsel and the like as the Agent shall
reasonably request in connection therewith, in form and substance satisfactory
to the Agent, such that the Agent shall receive valid and perfected first
priority Liens (subject to Liens permitted hereby) on all such property
(including property which, on the Second Amendment and Restatement Date, is not
subject to a Lien in favor of the Agent). In addition, in the event that the
Borrowers or any Subsidiary acquires or owns any material trademarks,
copyrights, patents or other intellectual property, the Borrowers shall notify
the Agent promptly in writing and shall execute, or cause the execution of a
security agreement and other documents with respect thereto in form and
substance reasonably satisfactory to the Agent.
IV. REPRESENTATIONS AND WARRANTIES
The Borrowers and each of the Guarantors jointly and severally
represents and warrants to each of the Lenders that:
SECTION 4.01. Organization, Legal Existence. The Borrowers 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 Borrowers and each Guarantor has the corporate power to
execute, deliver and perform its obligations under this Agreement and the other
Loan Documents to which it is a party, and, with respect to Borrowers, to borrow
hereunder and to execute and deliver the Notes.
SECTION 4.02. Authorization. The execution, delivery and performance by
the Borrowers and each Guarantor of this Agreement and each of the other Loan
Documents to which it is a party, the borrowings hereunder by Borrowers, the
execution and delivery by Borrowers of the Notes and the grant of security
interests in the Collateral created by the Security Documents (collectively, the
"Transactions") (a) have been duly authorized by all requisite
corporate and, if required, stockholder action and (b) will not (i) violate (A)
any provision of law, statute, rule or regulation applicable to the Borrowers or
any Guarantor or the certificate or articles of incorporation or other
applicable constitutive documents or the by-laws of the Borrowers, any
Guarantor, or its Subsidiaries, as the case may be, (B) any order of any court,
or any rule, regulation or order of any other agency of government binding upon
the Borrowers, any Guarantor, or its Subsidiaries, or (C) any provisions of any
indenture agreement or other instrument to which the Borrowers, any Guarantor or
its Subsidiaries, or any of their respective properties or assets are or may be
bound, (ii) be in conflict with, result in a breach of or constitute (alone or
with notice or lapse of time or both) a default under any indenture, agreement
or other instrument referred to in (b)(i)(C) above or (iii) result in the
creation or imposition of any Lien of any nature whatsoever (other than in favor
of the Agent, for the benefit of the Secured Parties, as contemplated by this
Agreement and the Security Documents) upon any property or assets of the
Borrowers, any Guarantor, or its Subsidiaries.
SECTION 4.03. Governmental Approvals. No registration or filing (other
than the filings necessary to perfect the Liens created by the Security
Documents and the filing of a SEC form 8K, 10K, or 10Q) with, consent or
approval of, or other action by, any Federal, state or other governmental
agency, authority or regulatory body is or will be required on behalf of the
Borrowers or any Guarantor in connection with the Transactions, other than any
which have been made or obtained.
SECTION 4.04. Binding Effect. This Agreement and each of the other Loan
Documents to which it is a party constitutes, and each of the Notes when duly
executed and delivered will constitute, a legal, valid and binding obligation of
the Borrowers and each Guarantor, as appropriate, enforceable in accordance with
its terms, subject to the effect of any applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors' rights
generally and to general principles of equity (regardless of whether considered
in a proceeding in equity or at law).
SECTION 4.05. Material Adverse Change. There has been no change, event
or facts that would reasonably be expected to have a Material Adverse Effect
since October 31, 1998.
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, October 29, 1994,
October 28, 1995, November 2, 1996, November 1, 1997 and October 31, 1998,
respectively, each audited by and accompanied by the opinion of independent
public accountants. Such balance sheets and statements of income and cash flows
present fairly the Consolidated financial condition and results of operations of
the Parent and its Subsidiaries as of the dates and for the periods indicated,
and such balance sheets and the notes thereto disclose all material liabilities,
direct or contingent, of the Parent and its Subsidiaries, as of the dates
thereof to the extent such material liabilities are required to be disclosed
under GAAP. The Parent has heretofore furnished to the Lenders unaudited
Consolidated balance sheets and statements of income and cash flows of the
Parent dated as o October 29, 1994, dated as of July 27, 1996 and dated as of
October 30, 1999, respectively. 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 October 28, 1999, furnished to
the Lenders projected income statements, balance sheets and cash flows of the
Parent, on a Consolidated basis through the Fiscal Year ended October 30, 2004
(which projections are on a quarterly basis for Fiscal Year of Borrower ending
October 28, 2000 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
Second Amendment and Restatement Date the reasonable estimate of the Parent and
its Subsidiaries of the results of operations and other information projected
therein.
SECTION 4.08. Federal Reserve Regulations. (a) Neither the Parent nor
any of its Subsidiaries is engaged principally, or as one of its important
activities, in the business of extending credit for the purpose of
purchasing or carrying Margin Stock.
(b) No part of the proceeds of the Loans will be used, whether
directly or indirectly, and whether immediately, incidentally or
ultimately, (i) to purchase or carry Margin Stock or to extend credit to
others for the purpose of purchasing or carrying Margin Stock or to refund
indebtedness originally incurred for such purpose, or (ii) for any purpose
which entails a violation of, or which is inconsistent with, the provisions
of the Regulations of the Board, including, without limitation, Regulation
T, U or X thereof. If requested by any Lender, the Parent or any of its
Subsidiaries shall furnish to such Lender a statement on Federal Reserve
Form U-1 referred to in said Regulation U.
SECTION 4.09. Taxes. Except for filing extensions which have been duly
obtained from the appropriate government authorities and are still in effect,
the Parent and each of its Subsidiaries have filed or caused to be filed all
Federal, state, local and foreign tax returns which are required to be filed by
them, on or prior to the date hereof, other than tax returns in respect of taxes
that (x) are not franchise, capital or income taxes, (y) in the aggregate are
not material and (z) would not, if unpaid, result in the imposition of any
material Lien on any property or assets of the Parent or any of its
Subsidiaries. The Parent and its Subsidiaries have paid or caused to be paid all
taxes shown to be due and payable on such filed returns or on any assessments
received by them, other than any taxes or assessments the validity of which the
Parent or a Subsidiary is contesting in good faith by appropriate proceedings,
and with respect to which the Parent or such Subsidiary shall, to the extent
required by generally accepted accounting principles consistently applied have
set aside on its books adequate reserves. After the fiscal year ended October
30, 1993, no Federal income tax returns of the Parent or any of its Subsidiaries
have been audited by the United States Internal Revenue Service. All
deficiencies which have been asserted against the Parent or its Subsidiaries as
a result of such completed examinations have been fully paid or finally settled
and no issue has been raised in any such examination which, by application of
similar principles, reasonably can be expected to result in assertion of a
material deficiency for any other year not so examined which has not been
reserved for in any financial statement of the Parent or any of its Subsidiaries
delivered to the Lenders. Neither the Parent nor any of its Subsidiaries has
taken any reporting positions for which they do not have a reasonable basis and
neither the Parent nor any of its Subsidiaries anticipate any further material
tax liability wit respect to the years which have not been closed. Neither the
Parent nor any of its Subsidiaries is party to or has any obligation under any
tax sharing agreement. None of the Parent or any Subsidiary files a consolidated
tax return with a person other than the Parent or a Subsidiary of the Parent.
SECTION 4.10. Employee Benefit Plans. With respect to the provisions
of ERISA:
(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
Borrowers nor any ERISA Affiliate is now, or has been during the preceding five
years, obligated to contribute to a Pension Plan or a Multiemployer Plan. Except
as set forth on Schedule 4.10, none of the Borrowers nor any ERISA Affiliate has
(A) ceased operations at a facility so as to become subject to the provisions of
Section 4062(e) of ERISA, (B) withdrawn as a substantial employer so as to
become subject to the provisions of Section 4063 of ERISA, (C) ceased making
contributions to any Pension Plan subject to the provisions of Section 4064(a)
of ERISA to which the Borrowers, any Subsidiary of Borrowers or any ERISA
Affiliate made contributions, (D) incurred or caused to occur a "complete
withdrawal" (within the meaning of Section 4203 of ERISA) or a
"partial withdrawal" (within the meaning of Section 4205 of ERISA)
from a Multiemployer Plan that is a Pension Plan so as to incur withdrawal
liability under Section 4201 of ERISA (without regard to subsequent reduction or
waiver of such liability under Section 4207 or 4208 of ERISA), or (E) been a
party to any transaction or agreement under which the provisions of Section 4204
of ERISA were applicable.
(iv) No notice of intent to terminate a Pension Plan (other than a
Multiemployer Plan) has been filed, nor has any Plan been terminated
pursuant to the provisions of Section 4041(e) of ERISA which termination
could have a Material Adverse Effect.
(v) The PBGC has not instituted proceedings to terminate (or appoint a
trustee to administer) a Pension Plan (other than a Multiemployer Plan) and
no event has occurred or condition exists which might constitute grounds
under the provisions of Section 4042 of ERISA for the termination of (or
the appointment of a trustee to administer) any such Plan.
(vi) With respect to each Pension Plan (other than a Multiemployer
Plan) that is subject to the provisions of Title I, Subtitle B, Part 3 of
ERISA, the funding method used in connection with such Plan is acceptable
under ERISA, and the actuarial assumptions and methods used in connection
with funding such Pension Plan satisfy the requirements of Section 302 of
ERISA. The aggregate present value of all accrued benefits under all
Pension Plans (other than Multiemployer Plans) do not exceed the aggregate
fair market value of the assets of such Plans by more than $1,000,000, in
each case as of the latest actuarial valuation date for such Plan
(determined in accordance with the same actuarial assumptions and methods
as those used by the Plan's actuary in its valuation of such Plan as of
such valuation date). 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 Borrowers or any
ERISA Affiliate, which could reasonably be expected to be asserted, against any
Plan (other than a Multiemployer Plan) or the assets of any such Plan. No civil
or criminal action brought pursuant to the provisions of Title I, Subtitle B,
Part 5 of ERISA is pending or threatened against any fiduciary or any Plan
(other than a Multiemployer Plan) which could have a Material Adverse Effect.
None of the Plans or any fiduciary thereof (in its capacity as such) has been
the direct or indirect subject of any audit, investigation or examination by any
governmental or quasi-governmental agency which could have a Material Adverse
Effect.
(viii) All of the Plans (other than Multiemployer Plans)
comply currently, and have substantially complied in the past, both as to form
and operation, with their terms and with the provisions of ERISA and the Code,
and all other applicable laws, rules and regulations except for such
noncompliance as may be remedied during the remedial amendment period under
Section 401(b) of the Code; all necessary governmental approvals for the Plans
have been obtained and a favorable determination as to the qualification under
Section 401(a) of the Code of each of the Plans which is an employee pension
benefit plan (within the meaning of Section 3(2) of ERISA) has been made by the
Internal Revenue Service and a recognition of exemption from federal income
taxation under Section 501(a) of the Code of each of the funded employee welfare
benefit plans (within the meaning of Section 3(1) of ERISA) has been made by the
Internal Revenue Service, and nothing has occurred since the date of each such
determination or recognition letter that would adversely affect such
qualification which could have a Material Adverse Effect.
SECTION 4.11. No Material Misstatements. No information, report,
financial statement, exhibit or schedule prepared or furnished by or on behalf
of the Borrowers or any Guarantor to the Agent or any Lender in connection with
any of the Transactions or this Agreement, the Security Documents, the Notes or
any other Loan Documents or included therein contained or contains any material
misstatement of fact or omitted or omits to state any material fact necessary to
make the statements therein, taken together with all other such statements made
to the Agent or any Lender, in the light of the circumstances under which they
were made, not misleading.
SECTION 4.12. Investment Company Act; Public Utility Holding Company
Act. None of the Parent or any of its Subsidiaries is an "investment
company" as defined in, or is otherwise subject to regulation under, the
Investment Company Act of 1940. None of the Parent or any of its Subsidiaries is
a "holding company" as that term is defined in, or is otherwise
subject to regulation under, the Public Utility Holding Company Act of 1935.
SECTION 4.13. Security Interest. Each of the Security Documents creates
and grants to the Agent, for the benefit of the Secured Parties, a legal, valid
and perfected first (except as permitted pursuant to Section 7.01 hereof)
priority security interest in the collateral identified therein. Such collateral
or property is not subject to any other Liens whatsoever, except Liens permitted
by Section 7.01 hereof.
SECTION 4.14. Bank Accounts. Schedule 4.14 hereto sets forth as of the
Second Amendment and Restatement 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 Second Amendment and Restatement 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
Second Amendment and Restatement Date (x) each parcel of real property owned by
the Parent or a Subsidiary of the Parent, together in each case with an accurate
street address and description of the use of such parcel, (y) each parcel of
real property leased by or to the Parent or a Subsidiary, together in each case
with an accurate street address and description of the use of such parcel, and
(z each other interest in real property owned, leased or granted to or held by
the Parent and each Subsidiary of the Parent. Except as set forth on Schedules
4.16(a-1) and 4.16(a-2):
(i) no structure owned or leased by the Parent or any Subsidiary of
the Parent fails to conform in any material respect with applicable
ordinances, regulations, zoning laws and restrictive covenants (including
in any such case and without limitation those relating to environmental
protection) nor encroaches upon property of others, nor is any such real
property encroached upon by structures of others in any case in any manner
that would have or would be reasonably likely to have a Material Adverse
Effect on the Agent's or Lenders' interest in any material Collateral
located on the premises or otherwise would have or would be reasonably
likely to have a Material Adverse Effect;
(ii) no charges or violations have been filed, served, made or
threatened, to the knowledge of the Parent, against or relating to any such
property or structure or any of the operations conducted at any such
property or structure, as a result of any violation or alleged violation of
any applicable ordinances, requirements, regulations, zoning laws or
restrictive covenants (including in any such case and without limitation
those relating to environmental protection) or as a result of any
encroachment on the property of others where the effect of same would have
or would be reasonably likely to have a Material Adverse Effect on the
Agent's or Lenders' interest in any material Collateral located on the
premises or otherwise would have or would be reasonably likely have a
Material Adverse Effect;
(iii) other than pursuant to applicable laws, rules,
regulations or ordinances, covenants that run with the land or provisions in the
applicable leases, there exists no restriction on the use, transfer or
mortgaging of any such property;
(iv) the applicable Borrower and/or Subsidiary each have adequate
permanent rights of ingress to and egress from any such property used by it
for the operations conducted thereon;
(v) 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 B, 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 Second Amendment and Restatement 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.
SECTION 4.21. Undrawn Availability. As of the Second Amendment and
Restatement Date, the Borrowers had Undrawn Availability in an amount not less
than $12,000,000 (assuming payment of all trade payables owing by Borrowers
within normal industry trade terms therefor and adjusting for an amount to
reflect peak borrowings that would reasonably be expected to be required within
a one week period of the Second Amendment and Restatement Date).
SECTION 4.22 Year 2000 Parent and its Subsidiaries have reviewed the
areas within their business operations which could be adversely affected
by, and have developed a program to address on a timely basis, the risk
that certain computer applications used by Parent or any of its
Subsidiaries (or any of their respective material suppliers, customers or
vendors) may be unable to recognize and perform properly date sensitive
functions involving dates prior to and after December 31, 1999 (the "Year
2000 Problem"). The Year 2000 Problem will not have a Material Adverse
Effect. The foregoing is provided as a Year 2000 Readiness Disclosure
within the meaning of the Year 2000 Information and Readiness Disclosure
Act.
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 5.01A. Capital Expenditure Loans.
On each date on which a Capital Expenditure Loan is requested to be
made:
(a) all conditions to Credit Events set forth in Section 5.01
shall have been satisfied.
(b) The Agent shall have received (i) a copy of invoices relating
to the equipment purchased (the "Financed Equipment"),
such invoices to indicate that the Financed Equipment was acquired by
the applicable Borrower no more than forty-five (45) days prior to the
date of the requested Capital Expenditure Loan, (ii) a certificate of a
Responsible Officer of the applicable Borrower stating (w) that such
Financed Equipment has been received by the applicable Borrower at the
premises ("Project Premises") listed on the schedule of
New/Replacement Store Projects set forth herein on Schedule C; (x) the
address of the relevant Project Premises; (y) that it is intended that
such Financed Equipment will be used by the applicable Borrower at such
Project Premises; and (z) that no Person other than the Agent for the
benefit of the Lenders has a Lien on any Collateral or other property of
Borrowers located or to be located on the Project Premises (other than
Liens described in clauses (a) through (d), clause (f) and clauses (h)
through (k) of Section 7.01), and (iii) evidence that the requested
Capital Expenditure Loan does not exceed ninety-five percent (95%) of
the net invoice cost of such Financed Equipment purchased by the
applicable Borrower, and such other documentation and evidence that
Agent may request, each in form and substance satisfactory to the Agent
provided, however, that the foregoing requirements shall be subject to
the exceptions expressly set forth in Schedule 5.01A hereto.
(c) (i) the aggregate principal amount of Capital Expenditure Loans
(including the requested Capital Expenditure Loan) made with respect to the
Project Premises shall not exceed the amount corresponding to such Project
Premises on Schedule C, (ii) the Borrower has entered into a lease with
respect to such Project Premises in form and substance reasonably
satisfactory to Agent, and (iii) Agent shall have been granted a Mortgage
and such other agreements as Agent shall require under Section 3.03 and
Section 3.04 of this Agreement with respect to such Project Premises and
the Collateral located thereon, each in form and substance satisfactory to
Agent, and (iv) there shall be no Liens or security interests in the
Financed Equipment, other than Liens in favor of Agent;
(d) Agent shall receive a certificate of a Responsible Officer of
Borrowers stating that the conditions set forth in clauses (a) through and
including (c) above have been satisfied; and
(e) Agent and each Lender shall have received a schedule summarizing
the invoices, costs, and description of the Financed Equipment relating to
such Capital Expenditure Loan.
Each request for a Capital Expenditure Loan by a Borrower hereunder
shall constitute a representation and warranty by Borrowers as of the date of
such Capital Expenditure Loan that the conditions contained in this subsection
shall have been satisfied.
SECTION 5.02. Second Amendment and Restatement Effective Date. The
obligations of the Agent and the Lenders hereunder and the effectiveness of the
amendment and restatement of the Existing Loan Agreement are each subject to the
following additional conditions precedent:
(a) The Lenders shall have received the favorable written opinion of
counsel for the Borrowers and each of the Guarantors and Grantors,
substantially in the form of Exhibit C hereto, dated the Second Amendment
and Restatement Date, addressed to the Lenders and satisfactory to the
Agent. ---------
(b) The Lenders shall have received (i) a copy of the certificate
or articles of incorporation or constitutive documents, in each case as
amended to date, of each of the Borrowers, the Grantors and the
Guarantors, certified as of a recent date by the Secretary of State or
other appropriate official of the state of its organization, and a
certificate as to the good standing of each from such Secretary of State
or other official, in each case dated as of a recent date; (ii) a
certificate of the Secretary of the Borrowers, Grantors and Guarantors,
dated the Second Amendment and Restatement 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 Second
Amendment and Restatement Date and signed by the Financial Officer of the
Borrowers, confirming compliance with the conditions precedent set forth in
paragraphs (b) and (c) of Section 5.01 hereof and the conditions set forth
in this Section 5.02.
(d) Each Lender shall have received its Notes, each duly executed by
the Borrowers, payable to its order and otherwise complying with the
provisions of Section 2.04 hereof.
(e) The Agent shall have received 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
Agreements, 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 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 Borrowers and each
Grantor and Guarantor in the jurisdictions in which Uniform Commercial Code
filings have been made against the Borrowers, 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) evidence of the compliance by the Parents and its Subsidiaries
with Section 6.03 hereof;
(ii) the financial statements described in Section 4.07 hereof;
(iii) evidence that the Transactions are in compliance with all
applicable laws and regulations;
(iv) evidence of payment of all fees owed to the Agent and the Lenders
by the Borrowers under this Agreement or otherwise;
(v) evidence that all requisite third party consents and waivers
(including, without limitation, consents with respect to Borrowers and each
of the Grantors and Guarantors, landlords' waivers, and lease amendments
required under Section 3.03) to the Transactions, have been received;
(vi) a representation by the Borrowers that since October 31, 1998,
there has been no event that could reasonably be expected to have a
Material Adverse Effect;
(vii) evidence that there are no actions, suits or
proceedings at law or in equity or by or before any governmental instrumentality
or other agency or regulatory authority now pending or (to the best of the
knowledge of the Parent and its Subsidiaries) threatened against or affecting
the Borrowers, any of the Grantors or Guarantors, any of their respective
businesses, assets or rights or any Lender (i) which is reasonably likely to
have a Material Adverse Effect or which may materially impair the ability of any
Borrower, any Grantor or any Guarantor to perform its obligations under any Loan
Document to which it is a party or (ii) which involve any of the Transactions;
(viii) evidence of compliance with the representations and warranties
made in Section 4.17 hereof; and
(ix) evidence reasonably satisfactory to Agent of compliance with the
representations and warranties made in Section 4.22 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 nor any Lender
shall have become aware of any previously undisclosed materially adverse
information with respect to the Parent or any of its Subsidiaries or the
Transactions or of any material adverse change in the facts,
circumstances or information with respect to the Parent or any of its
respective Subsidiaries or the Transactions as understoo by the Agent on
or as of July 31, 1999. None of the information submitted prior to the
Second Amendment and Restatement Date shall have been or become, taken
together with all other such information submitted prior to the Second
Amendment and Restatement Date, false, incomplete, or inaccurate in any
material and adverse respect, and none of the conditions represented or
indicated by the Parent or any of its Subsidiaries to exist shall change
in any material and adverse respect.
(k) The Agent shall have received and had the opportunity to
review and determine to be in form and substance satisfactory to it:
(i) copies of all lease agreements entered into by the Parent and/or
its Subsidiaries;
(ii) copies of all loan agreements, notes and other documentation
evidencing Indebtedness for borrowed money of the Parent, its Subsidiaries,
Grantors or Guarantors and of all other material agreements of the Parent,
its Subsidiaries, the Grantors and the Guarantors.
(l) Hahn & Hessen LLP, counsel to the Agent, shall have received
payment in full for all legal fees charged, and all costs and expenses
incurred, by such counsel through the Second Amendment and Restatement 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 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.
(p) The Agent shall have received Additional Mortgages (as such term
is defined in Section 3.03 hereof) and such other agreements, documents and
information described in Section 3.03 as Agent shall request with respect
to the real property of Parent and its Subsidiaries listed on Schedule
5.02(p) hereof, the foregoing to be in form and substance satisfactory to
Agent.
(q) The Agent shall have received such other documents as the Lenders
or the Agent or Agent's counsel shall reasonably deem necessary (including,
without limitation, all UCC amendment statements, UCC assignment
statements, mortgage amendments, mortgage assignments, and other agreements
reasonably requested by the Agent to ensure the Agent and the Lenders the
full enjoyment of all collateral security and other benefits enjoyed by the
Previous Agent and Previous Lender under the Previous Loan Agreement).
VI. AFFIRMATIVE COVENANTS
The Borrowers each covenant and agree with each Lender that, so long as
this Agreement shall remain in effect or the principal of or interest on any
Note, any amount under or with respect to any Letter of Credit or any fee,
expense or amount payable hereunder or in connection with any of the
Transactions shall be unpaid, it will, and will cause each of its Subsidiaries
and, with respect to Section 6.07 hereof, each ERISA Affiliate, to:
SECTION 6.01. Legal Existence. Do or cause to be done all things
necessary to preserve, renew and keep in full force and effect its legal
existence.
SECTION 6.02. Businesses and Properties. At all times do or cause to be
done all things necessary to preserve, renew and keep in full force and effect
the rights, licenses, Permits, franchises, patents, copyrights, trademarks and
trade names material to the conduct of its businesses; maintain and operate such
businesses in the same general manner in which they are presently conducted and
operated; comply with all laws, rules, regulations and governmental orders
(whether Federal, state or local) applicable to the operation of such businesses
whether now in effect or hereafter enacted (including, without limitation, all
applicable laws, rules, regulations and governmental orders relating to public
and employee health and safety and all Environmental Laws) and with any and all
other applicable laws, rules, regulations and governmental orders the lack of
compliance with which would have a Material Adverse Effect; take all actions
which may be required to obtain, preserve, renew and extend all Permits and
other authorizations which are material to the operation of such businesses; and
at all times maintain, preserve and protect all property material to the conduct
of such businesses and keep such property in good repair, working order and
condition, ordinary wear and tear excepted, and from time to time make, or cause
to be made, all needful and proper repairs, renewals, additions, improvements
and replacements thereto necessary in order that the business carried on in
connection therewith may be properly conducted at all times.
SECTION 6.03. Insurance. (a) Keep its insurable properties adequately
insured against all risks, including fire, flood, sprinkler leakage and other
hazards, at all times by financially sound and reputable insurers with a rating
of "A-" or better (except for Home Insurance, which may be rated
B+ or better), as established by Best's Rating Guide (or an equivalent
rating with such other publications of a similar nature as shall be in current
use), (b) maintain such other insurance, to such extent and against all risks,
including fire and other risks insured against by extended coverage, provided,
however, that such insurance shall insure the property of the Parent and its
Subsidiaries against all risk of physical damage, including, without limitation,
loss by fire, explosion, theft, fraud and such other casualties as may be
reasonably satisfactory to the Agent, but in no event at any time in an amount
less than the greater of (i) the Obligations and (ii) the replacement value of
the Collateral, (c) maintain in full force and effect public liability insurance
against claims for personal injury or death or property damage occurring upon,
in, about or in connection with the use of any properties owned, occupied or
controlled by the Parent or any of its Subsidiaries, in such amount as the Agent
shall reasonably deem necessary, and (d) maintain such other insurance as may be
required by law or as may be reasonably requested by the Agent for purposes of
assuring compliance with this Section 6.03. All insurance covering tangible
personal property subject to a Lien in favor of the Agent for the benefit of the
Lenders granted pursuant to the Security Documents shall provide that, in the
case of each separate loss the full amount of insurance proceeds shall be
payable to the Agent and shall further provide for at least 30 days'
prior written notice to the Agent of the cancellation or substantial
modification thereof.
SECTION 6.04. Taxes. Pay and discharge promptly when due all taxes,
assessments and governmental charges or levies imposed upon it or upon its
income or profits or in respect of its property before the same shall become
delinquent or in default, as well as all lawful claims for labor, materials and
supplies or otherwise, which, if unpaid, would give rise to Liens upon such
properties or any part thereof, except such taxes, assessments and governmental
charges and levies which are diligently contested in good faith by appropriate
proceedings and as to which adequate reserves have been established in
accordance with generally accepted accounting principles and except for di
minimus Liens on property other than inventory and accounts receivable securing
not more than $50,000 in the aggregate.
SECTION 6.05. Financial Statements, Reports, etc. Furnish to the
Agent, with copies for each of the Lenders:
(a) within 90 days after the end of each Fiscal Year, (i) Consolidated
balance sheets and Consolidated income statements showing the financial
condition of the Parent and its Subsidiaries as of the close of such Fiscal
Year and the results of their operations during such year, and (ii) a
Consolidated statement of shareholders' equity and a Consolidated statement
of cash flow, as of the close of such Fiscal Year, all the foregoing
financial statements to be audited by a Big 4 or other independent public
accountants reasonably acceptable to the Agent (including the firm of
Amper, Politziner & Mattia) (which report shall not contain any
qualification except with respect to new accounting principles mandated by
the Financial Accounting Standards Board), and to be in form and substance
reasonably acceptable to the Agent;
(b) (i) within 45 days after the end of each Fiscal Quarter,
unaudited Consolidated balance sheets and Consolidated income statements
showing the financial condition and results of operations of the Parent
and its Subsidiaries as of the end of each such quarter, a Consolidated
statement of shareholders' equity and a Consolidated statement of
cash flow as of the end of each such quarter, together with a statement
comparing actual results for such quarter with the projections set forth
in paragraph (f) below, prepared and certified by the Financial Officer
of the Parent as presenting fairly the financial condition and results
of operations of the Parent and its Subsidiaries and as having been
prepared in accordance with generally accepted accounting principles
consistently applied, setting forth in each case in comparative form the
corresponding figures for the corresponding quarter of the preceding
year and corresponding figures for the period beginning with the first
day of the relevant Fiscal Year and ending on the last day of the
relevant Fiscal Quarter and the corresponding period for the previous
Fiscal Year, in each case subject to normal year-end audit adjustments;
and (ii) within 30 days 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 and 7.09 hereof) and, if such a Default or Event of
Default has occurred, specifying the nature and extent thereof and any
corrective action taken or proposed to be taken with respect thereto;
(e) within 60 days of any delivery under (a) above, a management
letter prepared by the independent public accountants who reported on the
financial statements delivered under (a) above, with respect to the
internal audit and financial controls of each of the Parent and its
Subsidiaries;
(f) within 45 days prior to the beginning of each Fiscal Year, a
summary of business plans and financial operation projections (including,
without limitation, forecasts of Capital Expenditures, forecasts regarding
expenditures with respect to New/Replacement Store Projects and any other
expenditures for fixed assets, along with forecasts of any financing
associated with any of the foregoing expenditures and information regarding
the status of New/Replacement Store Projects) for the Parent and its
Subsidiaries for such Fiscal Year (including Fiscal Quarterly balance
sheets, statements of income and of cash flow and an Undrawn Availability
forecast) and annual projections through the Final Maturity Date prepared
by management and in form, substance and detail (including, without
limitation, principal assumptions) reasonably satisfactory to the Agent;
(g) no later than Friday of each week, a certificate, in form,
substance and detail reasonably satisfactory to the Agent, of the
Financial Officer of the Borrowers demonstrating that (A) the sum of (x)
the amount available to be borrowed under Section 2.01(a) of this
Agreement as at the close of business on Saturday of the preceding week
plus (y) the Cash on Hand of Borrowers on the day of the week after such
Saturday on which the weekly payment for amounts due to Wakefern is made
(such day, the "Wakefern Payment Day") exceeded by at
least $2,500,000 (B) the sum of (x) all Revolving Loans outstanding as
of such Wakefern Payment Day after giving effect to all such payments
made to Wakefern; provided, however, for the purpose of this sub-section
6.05 (g) only, the Cash on Hand of Borrowers noted above shall only be
added to the extent that on the day on which the above certificate is
delivered, all funds included in the Cash on Hand of Borrowers on the
Wakefern Payment Day hav been forwarded to Agent and applied to reduce
the Revolving Loans.
(h) promptly upon the request of the Agent, a certificate, in form,
substance and detail satisfactory to the Agent, of the Financial Officer of
the Borrowers demonstrating that, as at the close of business on such
previous date as Agent shall reasonably request the sum of (x) the amount
available to be borrowed under Section 2.01(a) of this Agreement plus (y)
the Cash on Hand of Borrowers exceeded by at least $2,500,000 the sum of
all Revolving Loans outstanding as of such date of determination;
(i) immediately upon becoming aware thereof, notice to the Agent of
the breach beyond any applicable grace period by any party of any material
agreement with the Parent or any of its Subsidiaries;
(j) such other information as the Agent or any Lender may reasonably
request, including, without limitation, profit and loss information on a
store by store basis, as well as supplemental expense information. At the
reasonable request of any Lender, the Agent agrees to promptly forward such
request for information to the Borrowers; and
(k) a copy of all documents and information provided by Borrowers or
any Guarantor to any other lender, to the extent such documents and/or
information has not already been provided to Agent.
SECTION 6.06. Litigation and Other Notices. Give the Agent prompt
written notice of the following:
(a) the issuance by any court or governmental agency or authority of
any injunction, order, decision or other restraint prohibiting, or having
the effect of prohibiting, the making of the Loans or occurrence of other
Credit Events, or invalidating, or having the effect of invalidating, any
provision of this Agreement, the Notes or the other Loan Documents, or the
initiation of any litigation or similar proceeding seeking any such
injunction, order, decision or other restraint;
(b) the filing or commencement of any action, suit or proceeding
against the Parent or any of its Subsidiaries, whether at law or in equity
or by or before any court or any Federal, state, municipal or other
governmental agency or authority, (i) which is material and is brought by
or on behalf of any governmental agency or authority, or in which
injunctive or other equitable relief is sought or (ii) as to which it is
probable (within the meaning of Statement of Financial Accounting Standards
No. 5) that there will be an adverse determination and which, if adversely
determined, would (A) reasonably be expected to result in liability of the
Parent or a Subsidiary thereof in an aggregate amount of $100,000 or more,
not reimbursable by insurance, or (B) materially impair the right of the
Parent or a Subsidiary thereof to perform its obligations under this
Agreement, any Note or any other Loan Document to which it is a party;
(c) any Default or Event of Default, specifying the nature and extent
thereof and the action (if any) which is proposed to be taken with respect
thereto; and
(d) any development in the business or affairs of the Parent or its
Subsidiaries which has had or which is likely, in the reasonable judgment
of any Responsible Officer of the Borrowers, to have, a Material Adverse
Effect (including, without limitation, any actual or threatened strike,
work stoppage or other labor action, whether or not authorized by labor
unions).
SECTION 6.07. ERISA. (a) Except as set forth on Schedule 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 Borrowers are
contesting the liability in good faith.
(b) Deliver to the Agent, promptly, and in any event within 30
days, after (i) the occurrence of any Reportable Event, a copy of the materials
that are filed with the PBGC, (ii) any Borrower or any ERISA Affiliate or an
administrator of any Pension Plan files with participants, beneficiaries or the
PBGC a notice of intent to terminate any such Plan, a copy of any such notice,
(iii) the receipt of notice by any Borrower or any ERISA Affiliate or an
administrator of any Pension Plan from the PBGC of the PBGC's intention
to terminate any Pension Plan or to appoint a trustee to administer any such
Plan, a copy of such notice, (iv) the filing thereof with the Internal Revenue
Service, copies of each annual report that is filed on Treasury Form 5500 with
respect to any Plan, together with certified financial statements (if any) for
the Plan and any actuarial statements on Schedule B to such Form 5500, (v) any
Borrower or any ERISA Affiliate knows or has reason to know of any event or
condition which might constitute grounds under the provisions of Section 4042 of
ERISA for the termination of (or the appointment of a trustee to administer) any
Pension Plan, an explanation of such event or condition, (vi) the receipt by any
Borrower or any ERISA Affiliate of an assessment of withdrawal liability under
Section 4201 of ERISA from a Multiemployer Plan, or any other notice from such
Multiemployer Plan of any action or event involving or in connection with
insolvency, reorganization or termination (each as defined in ERISA) a copy of
such assessment, or notice (vii) any Borrower or any ERISA Affiliate knows or
has reason to know of any event or condition which might cause any one of them
to incur a liability under Section 4062, 4063, 4064 or 4069 of ERISA or Section
412(n) or 4971 of the Code, an explanation of such event or condition, and
(viii) any Borrower or any ERISA Affiliate knows or has reason to know that an
application is to be, or has been, made to the Secretary of the Treasury for
waiver of the minimum funding standard under the provisions of Section 412 of
the Code, a copy of such application, and in each case described in clauses (i)
through (iii) and (v) through (vii) together with a statement signed by the
Financial Officer of the Parent setting forth details as to such Reportable
Event, notice, event or condition and the action which the Parent, the Borrower
or such ERISA Affiliate proposes to take with respect thereto.
(c) within 30 days after the end of any Fiscal Quarter in which any
Borrower becomes aware, directly or indirectly, of any fact or information
that materially changes the status of the Borrowers with respect to the
Multiemployer Plans, give notice thereof to the Agent.
SECTION 6.08. Maintaining Records; Access to Properties and Inspections;
Right to Audit. Maintain financial records in accordance with accepted financial
practices and, upon reasonable notice (which may be telephonic), at all
reasonable times and as often as any Agent may request, permit any authorized
representative designated by such Agent to visit and inspect the properties and
financial records of the Parent and its Subsidiaries and to make extracts from
such financial records at the Borrowers' expense, and permit any
authorized representative designated by such Agent to discuss the affairs,
finances and condition of the Parent and its Subsidiaries with the appropriate
Financial Officer and such other officers as such Agent shall deem appropriate
and the Parent's independent public accountants, as applicable. An
authorized representative of each of the Lenders may accompany the Agent on such
visits and inspections. The Agent shall have the right to audit, as often as it
may request, the existence and condition of the inventory, books and records of
the Parent and its Subsidiaries and to review their compliance with the terms
and conditions of this Agreement and the other Loan Documents. The Borrowers
shall pay Agent's customary per diem rates, all out-of-pocket expenses of
Agent's auditors and all costs of Agent with respect to third-party
examiners. Notwithstanding the foregoing, prior to a Default or Event of
Default, the Borrowers shall not be obligated to reimburse Agent for more than
four visits each calendar year.
SECTION 6.09. Fiscal Year-End. Cause its Fiscal Year to end on the
Saturday nearest to October 31 in each year.
SECTION 6.10. Further Assurances. Execute any and all further documents
and take all further actions which may be required under applicable law, or
which the Agent may reasonably request, to grant, preserve, protect and perfect
the first priority security interest created by the Security Documents in the
Collateral.
SECTION 6.11. Additional Grantors and Guarantors. Promptly inform the
Agent of the creation or acquisition of any direct or indirect Subsidiary
(subject to the provisions of Section 7.06 hereof) and cause each direct or
indirect Subsidiary not in existence on the date hereof to become a Guarantor
hereunder pursuant to an agreement in form and substance reasonably satisfactory
to the Agent, and to execute the Security Documents, as applicable, as a
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 Borrowers or any Guarantor by any Environmental Law.
(e) Without in any way limiting the scope of Section 11.04(c) and
in addition to any obligations thereunder, Borrowers each hereby indemnifies and
agrees to hold the Agent and the Lenders harmless from and against any
liability, loss, damage, suit, action or proceeding arising out of its business
or the business of its Subsidiaries pertaining to Hazardous Materials,
including, but not limited to, claims of any governmental body or any third
person arising under any Environmental Law or under tort, contract or common
law. To the extent laws of the United States or any state or local jurisdiction
in which property owned, operated, leased or occupied by the Borrowers or any of
their respective Subsidiaries is located provide that a Lien upon such property
of the Borrowers or such Subsidiary may be obtained for the removal of Hazardous
Materials which have been Released, no later than sixty days after notice is
given by the Agent to the Borrowers or such Subsidiary, the Borrowers or such
Subsidiary shall deliver to the Agent a report issued by a qualified third party
engineer certifying as to the existence of any Hazardous Materials located upon
or beneath the specified property. To the extent any Hazardous Materials located
therein or thereunder either subject the property to Lien or require removal
pursuant to any applicable Environmental Laws, the removal thereof shall be an
affirmative covenant of the Borrowers hereunder.
(f) In the event that any Remedial Work is required to be performed by
the Parent or any of its Subsidiaries under any applicable Environmental
Law, any judicial order, or by any governmental entity, the Parent or such
Subsidiaries shall commence all such Remedial Work at or prior to the time
required therefor under such Environmental Law or applicable judicial
orders and thereafter diligently prosecute to completion all such Remedial
Work in accordance with and within the time allowed under such applicable
Environmental Laws or judicial orders.
SECTION 6.13. Pay Obligations to Lenders and Perform Other Covenants.
(a) Make full and timely payment of the Obligations, whether now existing or
hereafter arising, (b) duly comply with all the terms and covenants contained in
this Agreement (including, without limitation, the borrowing limitations and
mandatory prepayments in accordance with Article II hereof) in each of the other
Loan Documents, all at the times and places and in the manner set forth therein,
and (c) except for the filing of continuation statements and the making of other
filings by the Agent as secured party or assignee, at all times take all actions
necessary to maintain the Liens and security interests provided for under or
pursuant to this Agreement and the Security Documents as valid and perfected
first Liens on the property intended to be covered thereby (subject only to
Liens expressly permitted hereunder) and supply all requested information to the
Agent necessary for such maintenance.
SECTION 6.14. Maintain Operating Accounts. Maintain all of its operating
accounts and cash management arrangements with a bank or banks acceptable to the
Agent or as otherwise contemplated by Section 10.01 hereof; and notify the Agent
promptly of the closing of any account specified in Schedule 4.14 and the
opening up of any new accounts, in detail satisfactory to the Agent.
SECTION 6.15. Amendments. Promptly supply to the Agent certified
copies of any amendments to any Subordinated Indebtedness (subject to
Section 7.17 hereof).
SECTION 6.16. Use of Proceeds. (a) Use all proceeds of each borrowing
under the Revolving Commitment and the Term Commitment to pay out-of-pocket fees
and expenses incurred by the Borrowers in connection with the financing
contemplated hereunder, to provide for working capital requirements and the
general corporate purposes of the Borrowers to the extent that such purposes are
permitted hereunder.
(b) Use all proceeds of each borrowing under the Capital
Expenditure Facility Commitment in compliance with Section 5.01A hereof.
SECTION 6.17 Collateral Locations. Keep the Collateral at the locations
specified on Schedule 6.17. With respect to any new location (which in any event
shall be within the continental United States), Parent and its Subsidiaries will
execute such documents and take such actions as Agent deems necessary to perfect
and protect the security interests of the Agent and Lenders in the Collateral,
as well as any documents requested by Agent pursuant to Sections 3.03 and/or
3.04 prior to the transfer or removal of any Collateral to such new location.
VII. NEGATIVE COVENANTS
The Borrowers each covenant and agree with each Lender that, so long as
this Agreement shall remain in effect or the principal of or interest on any
Note, any amount under or with respect to any Letter of Credit, or any fee,
expense or amount payable hereunder or in connection with any of the
Transactions shall be unpaid, it will not and will not cause or permit any of
its Subsidiaries and, in the case of Section 7.14 hereof, any ERISA Affiliate
to, either directly or indirectly:
SECTION 7.01. Liens. Incur, create, assume or permit to exist any Lien
on any of its property or assets (including the stock of any direct or indirect
Subsidiary), whether owned at the date hereof or hereafter acquired, or assign
or convey any rights to or security interests in any future revenues, except:
(a) Liens incurred and pledges and deposits made in the ordinary
course of business in connection with workers' compensation, unemployment
insurance, old-age pensions and other social security benefits (not
including any lien described in Section 412(m) of the Code);
(b) Liens imposed by law, such as landlord, carriers', warehousemen's,
mechanics', materialmen's and vendors' liens and other similar liens,
incurred in good faith in the ordinary course of business and securing
obligations which are not overdue or which are being contested in good
faith by appropriate proceedings as to which the Parent or any of its
Subsidiaries, as the case may be, shall, to the extent required by
generally accepted accounting principles consistently applied, have set
aside on its books adequate reserves;
(c) Liens securing the payment of taxes, assessments and governmental
charges or levies, that are not delinquent or are being diligently
contested in good faith by appropriate proceedings and as to which adequate
reserves have been established in accordance with generally accepted
accounting principles; provided, however, that in no event shall the
aggregate amount of such reserves be less than the aggregate amount secured
by such Liens, and provided, further, that the amount secured by such Liens
shall at no time exceed an aggregate of $50,000; -------- ------- --------
-------
(d) zoning restrictions, easements, licenses, reservations,
provisions, covenants, conditions, waivers, restrictions on the use of real
property or minor irregularities of title (and with respect to leasehold
interests, mortgages, obligations, liens and other encumbrances incurred,
created, assumed or permitted to exist and arising by, through or under a
landlord, ground lessor or owner of the leased property, with or without
consent of the lessee) which do not in the aggregate materially detract
from the value of its property or assets or materially impair the use
thereof in the operation of its business;
(e) Liens upon any equipment purchased or leased by the Parent or
any of its Subsidiaries (other than Financed Equipment as defined in
Section 5.01A hereof and other than equipment located on the same
Project Premises as Financed Equipment), which Liens are created or
incurred by the Parent or any of its Subsidiaries (x) as a condition to
the financing of such acquisition to secure or provide for the payment
of any part of the purchase price of, or lease payments on, such
equipment or (y) as a condition to the financing of a Capital
Expenditure made in cash by the Parent or any of its Subsidiaries in
order to acquire such equipment, to the extent that such financing is
consummated and Lien is granted within forty-five (45) days of the
acquisition of such equipment, in each of (x) and (y) above to secure or
provide for the payment of any part of the purchase price of, or lease
payments on, such equipment or to secure the repayment of such
refinancing as described in clause (y) above (but no other amounts and
not in excess of the purchase price or lease payments); provided,
however, that any such Lien shall not apply to any other property of the
Parent or any of its Subsidiaries (other than the proceeds of such
equipment and accessions and additions thereto, substitutions therefor,
and all replacements thereof); and provided, further, that after giving
effect to such purchase, lease or refinancing, compliance is maintained
with Section 7.10 hereof;
(f) Liens created in favor of GMACBC or any Issuing Bank for the
benefit of the Secured Parties with respect to Letters of Credit;
(g) (i) Liens existing on the date of this Agreement and set forth in
Schedule 7.01 annexed hereto, (ii) Liens existing after the date of this
Agreement with respect to the property described on Schedule 7.01 annexed
hereto established pursuant to refinancings permitted under Section
7.03(ii) (but only to the extent that the Indebtedness being refinanced was
secured by the property described on Schedule 7.01), or (iii) Liens set
forth in Schedule B to each of the title policies referred to in Section
3.03 hereof;
(h) Liens created in favor of the Agent for the benefit of the Secured
Parties;
(i) Liens securing the performance of bids, tenders, leases, contracts
(other than for the repayment of borrowed money, statutory obligations,
surety, customs and appeal bonds and other obligations of like nature,
incurred as an incident to and in the ordinary course of business);
(j) Liens (excluding Liens on inventory or accounts receivable)
securing no more than $50,000; or
(k) consigned inventory in display cases owned by the consignor.
SECTION 7.02. Sale and Lease-Back Transactions. Enter into any
arrangement, directly or indirectly, with any person whereby the Parent or any
of its Subsidiaries shall sell or transfer any property, real or personal, and
used or useful in its business, whether now owned or hereafter acquired, and
thereafter rent or lease such property or other property which the Parent or
such Subsidiary intends to use for substantially the same purpose or purposes as
the property being sold or transferred.
SECTION 7.03. Indebtedness. Incur, create, assume or permit to exist any
Indebtedness other than (i) Indebtedness secured by Liens permitted under
Section 7.01; provided, however, that (x) Adjusted Indebtedness shall not exceed
the sum of (1) Adjusted Indebtedness for the acquisition of equipment at a
single New/Replacement Store Project (the "Alternative Capex
Financing") incurred at any time during the Capital Expenditure Facility
Availability Period; provided, however, that (a) the Alternative Capex Financing
shall be limited to the lesser of $4,000,000 and the unused principal amount of
the Total Capital Expenditure Facility Commitment; (b) such Alternative Capex
Financing shall be incurred pursuant to documents reasonably satisfactory to
Agent; (c) no portion of such Alternative Capex Financing shall be guaranteed by
Wakefern; (d) the Agent shall be notified in writing prior to the incurrence of
any such Alternative Capex Financing, which notice shall designate such
borrowing as the "Alternative Capex Financing" and indicate the date on which
such borrowing shall occur; (e) the Borrowers shall be permitted to incur only
one borrowing with the Alternative Capex Financing; and (f) simultaneously with
the incurrence of such Alternative Capex Financing, the Total Capital
Expenditure Facility Commitment shall be immediately and permanently reduced by
$4,000,000 and (2) (a) $550,000 in new Adjusted Indebtedness incurred during
Fiscal Year 1999; (b) $1,250,000 in new Adjusted Indebtedness incurred during
Fiscal Year 2000; (c) $8,000,000 in new Adjusted Indebtedness incurred during
Fiscal Year 2001 (provided, however, that such Indebtedness shall be incurred in
connection with no more than two store locations and the amount of Indebtedness
incurred with respect to each individual store shall not exceed $4,000,000); (d)
$250,000 in new Adjusted Indebtedness incurred during Fiscal Year 2002; (e)
$250,000 in new Adjusted Indebtedness incurred during Fiscal Year 2003, and (f)
$250,000 in new Adjusted Indebtedness incurred during Fiscal Year 2004, in each
case for the Parent and its Subsidiaries, and provided, further, that to the
extent the full amount of permitted Indebtedness as set forth in clauses (a)
through (f) above is not incurred in any particular Fiscal Year, such unused
amount may be "carried over" and utilized in the immediately
succeeding Fiscal Year only (but not in any subsequent Fiscal Year), provided,
however, that any Indebtedness incurred in such immediately succeeding Fiscal
Year shall first be applied to the reduction of the regularly scheduled amount
of permitted Indebtedness as set forth in the foregoing clauses (a) through (f),
as the case may be and secondly to any such carryover amount; and provided,
further, that the Adjusted Indebtedness described in the foregoing clause (2)
shall be incurred pursuant to documents reasonably satisfactory to Agent and (y)
Indebtedness attributable to Capitalized Lease Obligations in connection with
real estate leases shall not exceed on aggregate amount of (a) $5,865,000 in new
Indebtedness incurred during Fiscal Year 1999; (b) $35,073,000 in new
Indebtedness incurred during Fiscal Year 2000; (c) $38,729,000 in new
Indebtedness incurred during Fiscal Year 2001; (d) $0 in new Indebtedness
incurred during Fiscal Year 2002; (e) $0 in new Indebtedness incurred during
Fiscal Year 2003 and (f) $0 in new Indebtedness incurred during Fiscal Year
2004, in each case for the Parent and its Subsidiaries and provided, further,
that to the extent the full amount of permitted Indebtedness as set forth in
clauses (a) through (f) above is not incurred in any particular Fiscal Year,
such unused amount may be "carried over" and utilized in the
immediately succeeding Fiscal Year only (but not in any subsequent Fiscal Year),
provided, however, that any Indebtedness incurred in such immediately succeeding
Fiscal Year shall first be applied to the reduction of the regularly scheduled
amount of permitted Indebtedness as set forth in the foregoing clauses (a)
through (f), as the case may be and secondly to any such carryover amount, (ii)
Indebtedness (including, without limitation, Guarantees) existing on the date
hereof and listed in Schedule 7.03 annexed hereto, but not the increase,
extension, renewal or refunding thereof if, pursuant to such increase,
extension, renewal or refunding, (x) the amount of the relevant Indebtedness is
increased, (y) the terms thereof and the related interest rate do not fairly
reflect market conditions for companies in businesses and with credit standing
similar to the Parent or (z) such Indebtedness is more senior in rank than that
being so extended, renewed or refunded, (iii) Indebtedness incurred hereunder
and under the other Loan Documents, (iv) Indebtedness of the Parent to Wakefern
and affiliates of Wakefern required to be incurred under the Wakefern
Shareholder Agreement, the Certificate of Incorporation of Wakefern and/or the
bylaws of Wakefern, (v) Guarantees constituting the endorsement of negotiable
instruments for deposit or collection in the ordinary course of business, (vi)
Guarantees of the Obligations, (vii) Subordinated Indebtedness, but not the
increase, extension, renewal or refunding thereof except as consented to by
Agent in writing, (viii) Indebtedness to banks with whom Borrowers regularly
bank with respect to uncollected funds in accordance with past practices; (ix)
Intercompany Indebtedness to the extent permitted under Section 7.06 and (x)
Indebtedness relating to up to a $7 million potential construction loan in or
subsequent to Fiscal Year 2001 at the Bricktown New/Replacement Store Project,
provided that such loan be permitted only under the condition that the loan be
outstanding no longer than 24 months, that the landlord has permanent take-out
financing in place at the time such loan is entered into and that the terms and
conditions of such construction loan financing, permanent take-out financing and
all lease arrangements with respect to the Bricktown New/Replacement Store
Project be in conformity in all material respects with the terms and conditions
approved by Agent in writing prior to Borrower entering into any material
undertaking with respect to such Bricktown New/Replacement Store Project;
provided, however, that Agent agrees to make reasonable efforts to communicate
with Borrowers on a reasonably prompt basis regarding terms and conditions that
are acceptable to Agent and/or the Lenders.
SECTION 7.04. Dividends, Distributions and Payments. Declare or pay,
directly and indirectly, any cash dividends or make any other distribution,
whether in cash, property, securities or a combination thereof, with respect to
(whether by reduction of capital or otherwise) any shares of its capital stock
or directly or indirectly redeem, purchase, retire or otherwise acquire for
value (or permit any Subsidiary to purchase or acquire) any shares of any class
of its capital stock or set aside any amount for any such purpose, except that
(i) any Subsidiary of the Parent may pay dividends to a Borrower; and (ii)
distributions of Common Stock of the Parent may be made to shareholders of the
Parent other than Wakefern and its Subsidiaries or affiliates. Notwithstanding
the foregoing, no payment referred to herein may be made unless both before and
immediately after giving effect thereto, there shall exist and be continuing no
Default or Event of Default and all other conditions and restrictions with
respect to such payment under this Agreement shall have been satisfied.
SECTION 7.05. Consolidations, Mergers and Sales of Assets. Consolidate
with or merge into any other person, or sell, lease, transfer or assign to any
persons or otherwise dispose of (whether in one transaction or a series of
transactions) any portion of its assets (whether now owned or hereafter
acquired), or permit another person to merge into it, or acquire all or
substantially all the capital stock or assets of any other person except as
otherwise permitted by Section 7.06 hereof, except that (a) the Borrowers may
sell any of their inventory in the normal course of their business, and (b) in
addition to the foregoing, subject to Section 2.09 hereof, the Parent and its
Subsidiaries may sell any of their assets for fair market value, provided that
the aggregate fair market value of all assets sold under this clause (b) during
the period from the Initial 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 Second
Amendment and Restatement Date, but not any additional investments therein;
(f) capital contributions by the Parent or any Subsidiary in Wakefern
or any Affiliate thereof as required under the certificate of incorporation
or bylaws of Wakefern or under the Wakefern Shareholder Agreement;
(g) interest rate protection agreements in a notional amount not
exceeding $20,000,000;
(h) charitable contributions not in excess of $25,000 individually and
$100,000 in the aggregate over the term of this Agreement;
(i) loans for which the indebtedness is otherwise permitted under
Section 7.03 hereof;
(j) cash advances, made subsequent to October 30, 1999, by the
Borrowers to Reading not in excess of an aggregate of $100,000 per year and
cash advances made by a Borrower to another Borrower (collectively,
"Intercompany Indebtedness"); and
(k) capital stock issued by Wakefern Food Corp., Insure-Rite, Ltd.
and/or WFC-1 Realty Corp. described in Schedule 7.06 hereto, but no
additional capital stock in such entities except as issued in connection
with capital contributions made as permitted under Section 7.06(f) above.
provided that, in each case mentioned in (a), (b), (c) and (d) above, such
obligations shall mature not more than one year from the date of acquisition
thereof; and provided, further, that Loans may not be used to purchase or
otherwise fund the investments described in clauses (a) through and including
(e) above.
SECTION 7.07. EBITDA. Permit Adjusted EBITDA of the Parent and
its Subsidiaries for the four most recent consecutive Fiscal Quarters of the
Parent ending on or prior to the date of determination to be less than the
amounts listed below during the periods listed below:
Minimum Adjusted EBITDA:
For the first, second and third Fiscal
Quarters of the Fisca1 Year ended October 2000 $ 13,000,000
At the end of the fourth Fiscal Quarter of Fiscal Year
ended October, 2000 and the first, second and third
Fiscal Quarters of the Fiscal Year ended October 2001 $ 13,500,000
At the end of the fourth Fiscal Quarter of Fiscal Year
ended, October, 2001 and the first, second and third Fiscal
Quarters of the Fiscal Year ended October 2002. $ 16,000,000
At the end of the fourth Fiscal Quarter of Fiscal Year
ended October, 2002 and the first, second and third
Fiscal Quarters of the Fiscal Year ended October 2003. $ 16,500,000
At the end of the fourth Fiscal Quarter of Fiscal Year
ended Otober, 2003 and the first, second and third
Fiscal Quarters of the Fiscal Year ended October 2004. $ 17,500,000
For each Fiscal Quarter including and after the fourth
Fisca1 Quarter of the Fiscal Year ended October 2004. $ 18,000,000
SECTION 7.08. Leverage Ratio. Permit the ratio of (a) Adjusted
Indebtedness at the date of determination of the Parent and its Subsidiaries to
(b) Adjusted EBITDA of the Parent and its Subsidiaries for the four most recent
consecutive Fiscal Quarters ending on or prior to the date of determination to
exceed the following ratios as of the end of any Fiscal Quarter of Parent.
For each Fiscal Quarter in Fiscal Year 2000 3.0:1.00
For each Fiscal Quarter in Fiscal Year 2001 3.5:1.00
For each Fiscal Quarter in Fiscal Year 2002 3.2:1.00
For each Fiscal Quarter in Fiscal Year 2003 and thereafter 2.5:1.00
SECTION 7.09. Debt Service Coverage Ratio. Permit the Debt
Service Coverage Ratio of the Parent and its Subsidiaries for the four most
recent consecutive Fiscal Quarters of the Parent ending on or prior to the date
of determination to be less than the following ratios as of the end of any
Fiscal Quarter of Parent; provided, however, that for the first three Fiscal
Quarters of Fiscal Year 2000, regularly scheduled principal payments made in
Fiscal Year 1999 or in the first Fiscal Quarter of Fiscal Year 2000 on loans
from Heller Financial shall not be included as principal payments in subsection
(D) of the definition of Debt Service Coverage Ratio:
For each Fiscal Quarter in Fiscal Year 2000 1.10:1.00
For each Fiscal Quarter in Fiscal Year 2001 1.20:1.00
For each Fiscal Quarter in Fiscal Year 2002 and for 1.00:1.00
the first two Fiscal Quarters of Fiscal Year 2003
For the third and fourth Fiscal Quarters of Fiscal 1.10:1.00
Year 2003 and thereafter
SECTION 7.10. Capital Expenditures Contract for, purchase or make any
expenditure or commitments for (a) Adjusted Capex in any Fiscal Year in an
aggregate amount in excess of the following amounts for the Parent and its
Subsidiaries on a Consolidated basis:
Adjusted Capex
Fiscal Year 2000 6,750,000
Fiscal Year 2001 9,250,000
Fiscal Year 2002 7,100,000
Fiscal Year 2003 6,500,000
Fiscal Year 2004 and each Fiscal Year thereafter 6,600,000
(b) Capital Expenditures relating to New/Replacement Store Projects
(excluding Capital Expenditures for real estate assets acquired pursuant to
Capitalized Lease Obligations, hereinafter referred to as "Store Project
Capex") in any Fiscal Year in an aggregate amount in excess of the
following amounts for the Parent and its Subsidiaries on a Consolidated
basis:
Store Project Capex
Fiscal Year 2000 14,800,000
Fiscal Year 2001 23,600,000
Fiscal Year 2002 and each Fiscal Year thereafter 0
provided, however, that to the extent the full amount of permitted Store Project
Capex is not incurred in any particular Fiscal Year, such unused amount may be
"carried over" and utilized in the immediately succeeding Fiscal
Year only (but not in any subsequent Fiscal Year), provided, however, that any
such Store Project Capex incurred in such immediately succeeding Fiscal Year
shall first be applied to the reduction of the amount of permitted Store Project
Capex for the fiscal year in which such Store Project Capex is made and secondly
to any such carryover amount.
SECTION 7.11 Business . Alter the nature of its business as
operated on the date of this Agreement in any material respect.
SECTION 7.12. Sales of Receivables. Sell, assign, discount,
transfer, or otherwise dispose of any accounts receivable, promissory notes,
drafts or trade acceptances or other rights to receive payment held by it, with
or without recourse, except for the purpose of collection or settlement in the
ordinary course of business.
SECTION 7.13. Use of Proceeds. Permit the proceeds of any Credit
Event to be used for any purpose which entails a violation of, or is
inconsistent with, Regulation T, U or X of the Board, or for any purpose other
than those set forth in Section 6.16 hereof.
SECTION 7.14. ERISA. (a) Engage in any transaction in connection
with which any Borrower or any ERISA Affiliate could be subject to either a
material civil penalty assessed pursuant to the provisions of Section 502 of
ERISA or a material tax imposed under the provisions of Section 4975 of the
Code.
(b) Terminate any Pension Plan in a "distress termination" under
Section 4041 of ERISA which could result in a material liability of any
Borrower or any ERISA Affiliate to the PBGC, or take any other action which
could result in a material liability of any Borrower or any ERISA Affiliate
to the PBGC.
(c) Fail to make payment when due of all amounts which, under the
provisions of any Plan, any Borrower or any ERISA Affiliate is required to
pay as contributions thereto, or, with respect to any Pension Plan, permit
to exist any "accumulated funding deficiency" (within the meaning of
Section 302 of ERISA and Section 412 of the Code), whether or not waived,
with respect thereto.
(d) Adopt an amendment to any Pension Plan requiring the provision of
security under Section 307 of ERISA or Section 401(a)(29) of the Code.
SECTION 7.15. Accounting Changes. Make, or permit any Subsidiary
to make any material change in its accounting treatment or financial reporting
practices except as required or permitted by this Agreement or generally
accepted accounting principles in effect from time to time.
SECTION 7.16. Prepayment or Modification of Indebtedness;
Modification of Charter Documents. (a) Directly or indirectly prepay, redeem,
purchase or retire in advance of its scheduled maturity any Indebtedness other
than Indebtedness incurred hereunder. Nothing herein contained shall be deemed
to prevent the refinancing of Indebtedness otherwise permitted under Section
7.03(ii) of this Agreement.
(b) Directly or indirectly modify, amend or otherwise alter the terms
and provisions of any Subordinated Indebtedness or any Adjusted
Indebtedness with a principal amount in excess of $25,000. Nothing herein
contained shall be deemed to prevent the refinancing of Indebtedness
otherwise permitted under Section 7.03(ii) of this Agreement.
(c) Directly or indirectly modify, amend or alter their certificates
or articles of incorporation, preferred stock/certificates of designations
or by-laws, other than the amendment dated April 4, 1996 to the certificate
of incorporation of Parent and filed with the Secretary of State of New
Jersey on May 20, 1996.
SECTION 7.17. 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 7.18. Consulting Fees. Pay any management, consulting or
other fees of any kind to any Affiliate of Parent or any Subsidiary thereof,
other than salaries to employees consistent with industry practice, legal fees
and consulting and investment banking fees, but only to the extent that the
payment of the foregoing legal, consulting and investment banking fees complies
with Section 7.17.
SECTION 7.19. Limitations on Dividends and Other Payments. Create
or otherwise cause or suffer to exist or become effective any encumbrance or
restriction on the ability of any Subsidiary of Parent to (a) pay dividends or
make any other distributions on its capital stock or any other equity interest
or participation in, or measured by, its profits, owned by Parent or any
Subsidiary of Parent, or pay any indebtedness owed to, Parent or any Subsidiary
of Parent, (b) make loans or advances to Parent, or any Subsidiary of Parent, or
(c) transfer any of its properties or assets to Parent, except for such
encumbrances or restrictions existing under or by reason of (i) applicable law
or (ii) this Agreement.
VIII. EVENTS OF DEFAULT
In case of the happening of any of the following events (herein
called "Events of Default"):
(a) any representation or warranty made or deemed made in or in
connection with this Agreement, any of the Security Documents, the Notes or
other Loan Documents or any Credit Events hereunder, shall prove to have
been incorrect in any material respect when made or deemed to be made;
(b) default shall be made in the payment of any principal of any Note
when and as the same shall become due and payable, whether at the due date
thereof or at a date fixed for prepayment thereof or by acceleration
thereof or otherwise;
(c) default shall be made in the payment of any interest on any Note,
any fee or any other amount payable hereunder, or under or with respect to
the Notes, Letters of Credit, or any other Loan Document or in connection
with any other Credit Event or any of the Transactions when and as the same
shall become due and payable;
(d) (i) default shall be made in the due observance or
performance of any covenant, condition or agreement (not within
preceding clauses VIII(a) or VIII(b) or within clause VIII(d)(ii)) to be
observed or performed on the part of the Parent or any of its
Subsidiaries pursuant to the terms of this Agreement, any of the Notes,
any of the Security Documents or any other Loan Document; or (ii)
default shall be made on the due observance or performance of Sections
6.01, 6.02, 6.07, 6.09, 6.10, 6.11, 6.12(a), 6.12(b), 6.12(d), 7.11,
7.14 and/or 7.15 of this Agreement, and such default under this clause
(d)(ii) shall not be cured by the Borrowers within a period of 10 days
after the Parent or any of its Subsidiaries becomes aware, or after the
Parent of any of its Subsidiaries should reasonably have become aware,
of such default, whichever is earlier; provided, however, that if such
default under this clause (d)(ii) is not curable within such 10 day
period then such 10 day period shall be extended by twenty (20) days to
a total of thirty (30) days in the event that the Borrowers shall,
within such ten (10) day period and continuously thereafter, diligently
proceed to cure such default;
(e) any Borrower, any Guarantor, any Grantor or any Subsidiary of
any thereof shall (i) voluntarily commence any proceeding or file any
petition seeking relief under Title 11 of the United States Code or any
other Federal, state or foreign bankruptcy, insolvency, liquidation or
similar law, (ii) consent to the institution of, or fail to contravene
in a timely and appropriate manner, any such proceeding or the filing of
any such petition, (iii) apply for or consent to the appointment of a
receiver, trustee, custodian, sequestrator or similar official for such
Borrower, such Guarantor, such Grantor or such Subsidiary or for a
substantial part of its property or assets, (iv) file an answer
admitting the material allegations of a petition filed against it in any
such proceeding, (v) make a general assignment for the benefit of
creditors, (vi) become unable, admit in writing its inability or fail
generally to pay its debts as they become due or (vii) take corporate
action for the purpose of effecting any of the foregoing;
(f) an involuntary proceeding shall be commenced or an
involuntary petition shall be filed in a court of competent jurisdiction
seeking (i) relief in respect of any Borrower, any Guarantor, any
Grantor or any Subsidiary of any thereof, or of a substantial part of
the property or assets of any Borrower, any Guarantor, any Grantor or
any Subsidiary of any thereof, under Title 11 of the United States Code
or any other Federal state or foreign bankruptcy, insolvency,
receivership or similar law, (ii) the appointment of a receiver,
trustee, custodian, sequestrator or similar official for any Borrower,
any Guarantor, any Grantor or any Subsidiary of any thereof or for a
substantial part of the property of any Borrower, any Guarantor, any
Grantor or any Subsidiary of any thereof or (iii) the winding-up or
liquidation of any Borrower, any Guarantor, any Grantor or any
Subsidiary of any thereof; and such proceeding or petition shall
continue undismissed for 45 days or an order or decree approving o
ordering any of the foregoing shall continue unstayed and in effect for
45 days;
(g) default shall be made with respect to any Indebtedness or
obligations under a capitalized lease of any Borrower, any Guarantor, any
Grantor or any Subsidiary of any thereof, whose unpaid principal payments
exceed in the aggregate $100,000 at any time (excluding Indebtedness
outstanding hereunder) if the effect of any such default shall be to
accelerate, or to permit the holder or obligee of any such Indebtedness or
obligations under a capitalized lease (or any trustee on behalf of such
holder or obligee) at its option to accelerate, the maturity of such
Indebtedness or obligations under a capitalized lease, or if any such
Indebtedness or obligations under a capitalized lease shall not be paid
when scheduled to be due and payable (taking into account any grace
periods);
(h) (i) a Reportable Event shall have occurred with respect to a
Pension Plan, (ii) the filing by any Borrower, any ERISA Affiliate, or
an administrator of any Plan of a notice of intent to terminate such a
Plan in a "distress termination" under the provisions of
Section 4041 of ERISA, (iii) the receipt of notice by any Borrower, any
ERISA Affiliate, or an administrator of a Plan that the PBGC has
instituted proceedings to terminate (or appoint a trustee to administer)
such a Pension Plan, (iv) any other event or condition exists which
might, in the opinion of the Agent, constitute grounds under the
provisions of Section 4042 of ERISA for the termination of (or the
appointment of a trustee to administer) any Pension Plan by the PBGC,
(v) a Pension Plan shall fail to maintain the minimum funding standard
required by Section 412 of the Code for any plan year or a waiver of
such standard is sought or granted under the provisions of Section
412(d) of the Code, (vi) except for the withdrawal set forth on Schedule
4.10 with respect to the Tri-State Pension Fund incur a partial or
complete withdrawal from a Multiemployer Plan that results in any
liability to any Borrower or any ERISA Affiliate; (vii) any Borrower or
any ERISA Affiliate has incurred, or is likely to incur, a liability
under the provisions of Section 4062, 4063, 4064, 4201 or 4203 of ERISA,
(viii) any Borrower or any ERISA Affiliate fails to pay the full amount
of an installment required under Section 412(m) of the Code, (ix) the
occurrence of any other event or condition with respect to any Plan
which would constitute an event of default under any other agreement
entered into by any Borrower or any ERISA Affiliate, and in each case in
clauses (i) through (ix) of this subsection (h), such event or
condition, together with all other such events or conditions, if any,
could subject any Borrower or any ERISA Affiliate to any taxes,
penalties or other liabilities which, in the opinion of the Agent, could
have a Material Adverse Effect on the financial condition of the
Borrowers and the ERISA Affiliates taken as a whole;
(i) any Borrower or any ERISA Affiliate (i) shall have been notified
by the sponsor of a Multiemployer Plan that it has incurred any material
withdrawal liability to such Multiemployer Plan, and (ii) does not have
reasonable grounds for contesting such withdrawal liability and is not in
fact contesting such withdrawal liability in a timely and appropriate
manner;
(j) a judgment (not reimbursed by insurance policies of any Borrower,
any Guarantor, any Grantor or any Subsidiary of any thereof or, if an
admission of coverage by the applicable insurance company has been issued
and delivered to the Agent, if not reimbursable within 45 days of such
judgment) or decree for the payment of money, a fine or penalty which when
taken together with all other such judgments, decrees, fines and penalties
shall exceed $500,000 shall be rendered by a court or other tribunal
against any Borrower, any Guarantor, any Grantor or any Subsidiary of any
thereof;
(k) this Agreement, any Note, any of the Security Documents or other
Loan Documents shall for any reason cease to be, or shall be asserted by
any Borrower, any Guarantor or any Grantor not to be, a legal, valid and
binding obligation of such Borrower, such Guarantor or such Grantor, as
applicable, enforceable in accordance with its terms, or the security
interest or Lien purported to be created by any of the Security Documents
shall for any reason cease to be, or be asserted by any Borrower, any
Guarantor or any Grantor not to be, a valid, first priority perfected
security interest in any Collateral (except to the extent otherwise
permitted under this Agreement or any of the Security Documents);
(l) a Change of Control shall occur;
(m) any violation by the Parent, New Linden or any other Person of any
Intercreditor Agreement;
(n) any violation by the Parent, New Linden or Wakefern of any
agreements in favor of Agent with respect to any charge card or credit card
arrangements involving Parent or any Subsidiary. or
(o) default shall be made with respect to (x) any operating lease of
any Borrower, any Grantor, any Guarantor or any Subsidiary thereof, with
respect to real property (y) any operating lease of any Borrower, any
Grantor, any Guarantor or any Subsidiary thereof where the regularly
scheduled monthly payment exceeds $10,000 if the effect of such default
shall be to accelerate, or to permit the lessor with respect to such
operating lease, at its option, to terminate such operating lease,
then, and in any such event (other than an event described in paragraph (e) or
(f) above), and at any time thereafter during the continuance of such event, the
Agent may, and upon the written request of the Required Lenders shall, by
written notice (or facsimile notice promptly confirmed in writing) to the
Borrowers, take any or all of the following actions at the same or different
times: (i) terminate forthwith all or any portion of the Total Commitment and
the obligations of GMACBC to issue or arrange for the issuance of Letters of
Credit hereunder; and (ii) declare the Notes, any amounts then owing to the
Lenders, any Issuing Bank or GMACBC on account of drawings under any Letters of
Credit and all other Obligations to be forthwith due and payable, whereupon the
principal of such Notes, together with accrued interest and fees thereon and any
amounts then owing to the Lenders, any Issuing Bank or GMACBC on account of
drawings under any Letters of Credit and other liabilities of the Borrowers
accrued hereunder and all other Obligations, shall become forthwith due and
payable, without presentment, demand, protest or any other notice of any kind,
all of which are hereby expressly waived by Borrowers and each Guarantor,
anything contained herein or in the Notes to the contrary notwithstanding;
provided, however, that with respect to a default described in paragraph (e) or
(f) above, the Total Commitment and the obligation of GMACBC to issue or arrange
for the issuance of Letters of Credit shall automatically terminate and the
principal of the Notes, together with accrued interest and fees thereon and any
amounts then owing to the Lenders, any Issuing Bank and GMACBC on account of
drawings under any Letters of Credit and any other liabilities of Borrowers
accrued hereunder and all other Obligations shall automatically become due and
payable, without presentment, demand, protest or other notice of any kind, all
of which are hereby expressly waived by Borrowers and each Guarantor, anything
contained herein o 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), Section
VIII(f) and/or Section VIII(k), in recognition of the obligations of the Parent
and its Subsidiaries under the Wakefern Shareholder Agreement, the Agent and the
Lenders agree that if the Borrowers promptly after such Event of Default
institutes and maintains asset deployment programs or other actions intended to
sell assets of the Parent and Subsidiaries (which program and actions shall be
sufficient to repay all Obligations under this Agreement and shall be otherwise
acceptable to the Agent and the Lenders in their good faith judgment), then the
Agent and the Lenders shall not foreclose on any Collateral at any time prior to
the date that is sixty days after the Default which gave rise to such Event of
Default; provided, however, that all Obligations under this Agreement shall be
repaid no later than the expiration of such sixty day period, and provided,
further, that the foregoing proviso shall not affect any other rights or
remedies of the Agent or any Lender during such sixty day period (including the
right to terminate the Commitment and to accelerate all Obligations).
The Agent shall have the right, in its sole discretion, to
determine which rights, Liens or remedies it shall at any time pursue,
relinquish, subordinate, modify or take any other action with respect thereto,
without in any way modifying or affecting any of them or any of the
Lenders', GMACBC's or the Agent's rights hereunder or under
any other Loan Documents; and any moneys, deposits, accounts, balances or other
property which may come into any Lender's, GMACBC's or the
Agent's hands at any time or in any manner, may be retained by such
Lender, GMACBC or the Agent and applied to any of the Obligations.
In case any one or more Events of Default shall occur and be
continuing, the Agent may proceed to protect and enforce its rights or remedies
either by suit in equity or by action at law, or both, whether for the specific
performance of any covenant, agreement or other provision contained herein or in
any document or instrument delivered in connection with or pursuant to this
Agreement or any other Loan Document, or to enforce the payment of the
Obligations or any other legal or equitable right or remedy.
No right or remedy herein conferred upon the Lenders, GMACBC or
the Agent is intended to be exclusive of any other right or remedy contained
herein or in any instrument or document delivered in connection with or pursuant
to this Agreement or any other Loan Document, and every such right or remedy
shall be cumulative and shall be in addition to every other such right or remedy
contained herein and therein or now or hereafter existing at law or in equity or
by statute, or otherwise.
No course of dealing between any Borrower or any Grantor or
Guarantor and any Lender, GMACBC or the Agent or any failure or delay on the
part of any Lender, GMACBC or the Agent in exercising any rights or remedies
hereunder or under any other Loan Document shall operate as a waiver of any
rights or remedies of the Lenders, GMACBC or the Agent and no single or partial
exercise of any rights or remedies hereunder or under any other Loan Document
shall operate as a waiver or preclude the exercise of any other rights or
remedies hereunder or under any other Loan Document or of the same right or
remedy on a future occasion.
After the occurrence of an Event of Default and acceleration of
the Obligations as herein provided, the proceeds of the Collateral and of
property of persons other than the Borrowers and the Grantors securing the
Obligations and collections from each Guarantee of the Obligations shall be
applied by the Agent to payment of the Obligations in the following order,
unless a court of competent jurisdiction shall otherwise direct or if otherwise
provided in a Security Document:
(i) FIRST, to payment of all reasonable costs and expenses of the
Agent, the Issuing Bank, GMACBC and the Lenders incurred in connection with
the preservation, collection and enforcement of the Obligations or any
Guarantee thereof, or of any of the Liens granted to the Agent pursuant to
the Security Documents or otherwise, including, without limitation, any
amounts advanced by the Agent, GMACBC or the Lenders to protect or preserve
the Collateral;
(ii) SECOND, to payment of that portion of the Obligations
constituting accrued and unpaid interest and fees and indemnities due and
payable under Section 2 hereof, ratably amongst the Agent, GMACBC and the
Lenders in accordance with the proportion which the accrued interest and
fees and indemnities due and payable under Section 2 hereof constituting
the Obligations owing to the Agent, GMACBC and each such Lender at such
time bears to the aggregate amount of accrued interest and fees and
indemnities payable under Section 2 hereof constituting the Obligations
owing to the Agent, GMACBC and all of the Lenders at such time until such
interest, fees and indemnities shall be paid in full;
(iii) THIRD, to the Agent on behalf of GMACBC in an amount
equal to 105% of the then aggregate undrawn amount of all outstanding Letters of
Credit to be held by the Agent for the payment of the Obligations with respect
thereto when and if due and payable;
(iv) FOURTH, to payment of the principal of the Obligations (which
shall exclude all Obligations with respect to the undrawn amount of Letters
of Credit), ratably amongst the Lenders and GMACBC in accordance with the
proportion which the principal amount of the Obligations (which shall
exclude all Obligations with respect to the undrawn amount of Letters of
Credit) owing to each such Lender and GMACBC bears to the aggregate
principal amount of the Obligations (which shall exclude all Obligations
with respect to the undrawn amount of Letters of Credit) owing to all of
the Lenders and GMACBC until such principal of the Obligations shall be
paid in full;
(v) FIFTH, to the payment of all other Obligations, ratably amongst
the Lenders in accordance with the proportion which the amount of such
other Obligations owing to each such Lender bears to the aggregate
principal amount of such other Obligations owing to all of the Lenders
until such other Obligations shall be paid in full; and
(vi) SIXTH, the balance, if any, after all of the Obligations have
been satisfied, shall, except as otherwise provided in the Security
Documents, be refunded by Agent to the Borrowers or pursuant to the
Borrowers' joint written instructions, or paid over to such other person or
persons as may be required by law.
In the event that the amount of monies received by the Agent
under clause (iii) above with respect to a Letter of Credit for which there are
undrawn amounts at the time of the Agent's receipt of such monies shall
exceed the amount of actual payments GMACBC or the Issuing Bank shall have made
with respect to drawings under such Letter of Credit after the Agent's
receipt of such monies, which determination shall be made after such Letter of
Credit has been terminated or has expired, then the Agent shall apply such
excess monies and cash collateral in accordance with the preceding paragraphs
(i) through (vi).
The Borrowers and the Guarantors acknowledge and agree that they
shall remain liable to the extent of any deficiency between the amount of the
proceeds of the Collateral and collections under the Guarantees of the
Obligations and the aggregate amount of the sums referred to in the first
through fifth clauses above.
IX. AGENT
In order to expedite the transactions contemplated by this
Agreement, GMAC Business Credit LLC is hereby appointed to act as Agent on
behalf of the Lenders. Each of the Lenders and each subsequent holder of any
Note or issuer of any Letter of Credit by its acceptance thereof, irrevocably
authorizes the Agent to take such action on its behalf and to exercise such
powers hereunder and under the Security Documents and other Loan Documents as
are specifically delegated to or required of the Agent by the terms hereof and
the terms thereof together with such powers as are reasonably incidental
thereto. Neither the Agent nor any of its directors, officers, employees or
agents shall be liable as such for any action taken or omitted to be taken by it
or them hereunder or under any of the Security Documents and other Loan
Documents or in connection herewith or therewith (a) at the request or with the
approval of the Required Lenders (or, if otherwise specifically required
hereunder or thereunder, the consent of all the Lenders) or (b) in the absence
of its or their own gross negligence, bad faith or willful misconduct.
The Agent is hereby expressly authorized on behalf of the
Lenders, without hereby limiting any implied authority, (a) to receive on behalf
of each of the Lenders any payment of principal of or interest on the Notes
outstanding hereunder and all other amounts accrued hereunder paid to the Agent,
and promptly to distribute to each Lender its proper share of all payments so
received, (b) to distribute to each Lender copies of all notices, agreements and
other material as provided for in this Agreement or in the Security Documents
and other Loan Documents as received by such Agent and (c) to take all actions
with respect to this Agreement and the Security Documents and other Loan
Documents as are specifically delegated to the Agent.
In the event that (a) the Borrowers fail to pay when due the
principal of or interest on any Note, any amount payable under or with respect
to any Letter of Credit, or any fee payable hereunder or (b) the Agent receives
written notice of or otherwise becomes aware of the occurrence of a Default or
an Event of Default, the Agent shall promptly give written notice thereof to the
Lenders, and shall take such action with respect to such Event of Default or
other condition or event as it shall be directed to take by the Required Lenders
(but shall not be required to take any such actions which violate any law or any
term of this Agreement or any other Loan Document); provided, however, that,
unless and until the Agent shall have received such directions, the Agent may
take such action or refrain from taking such action hereunder or under the
Security Documents or other Loan Documents with respect to a Default or Event of
Default as it shall deem advisable in the best interests of the Lenders.
The Agent shall not be responsible in any manner to any of the
Lenders for the effectiveness, enforceability, perfection, value, genuineness,
validity or due execution of this Agreement, the Notes or any of the other Loan
Documents or Collateral or any other agreements or certificates, requests,
financial statements, notices or opinions of counsel or for any recitals,
statements, warranties or representations contained herein or in any such
instrument or be under any obligation to ascertain or inquire as to the
performance or observance of any of the terms, provisions, covenants,
conditions, agreements or obligations of this Agreement or any of the other Loan
Documents or any other agreements on the part of any Borrower or any Guarantor
and, without limiting the generality of the foregoing, the Agent shall, in the
absence of knowledge to the contrary, be entitled to accept any certificate
furnished pursuant to this Agreement or any of the other Loan Documents as
conclusive evidence of the facts stated therein and shall be entitled to rely on
any note, notice, consent, certificate, affidavit, letter, telegram, teletype
message, statement, order or other document which it believes in good faith to
be genuine and correct and to have been signed or sent by the proper person or
persons. It is understood and agreed that the Agent may exercise its rights and
powers under other agreements and instruments to which it is or may be a party,
and engage in other transactions with any Borrower or any Guarantor, as though
it were not Agent of the Lenders hereunder.
Neither the Agent nor any of its directors, officers, employees
or agents shall have any responsibility to any Borrower or any Guarantor on
account of the failure or delay in performance or breach by any Lender other
than the Agent of any of its obligations hereunder or to any Lender on account
of the failure of or delay in performance or breach by any other Lender or any
Borrower or any Guarantor of any of their respective obligations hereunder or in
connection herewith.
The Agent may consult with legal counsel selected by it in
connection with matters arising under this Agreement or any of the other Loan
Documents and any action taken or suffered in good faith by it in accordance
with the opinion of such counsel shall be full justification and protection to
it. The Agent may exercise any of its powers and rights and perform any duty
under this Agreement or any of the other Loan Documents through agents or
attorneys.
The Agent and the Borrowers may deem and treat the payee of any
Note as the holder thereof until written notice of transfer shall have been
delivered as provided herein by such payee to the Agent and the Borrowers.
With respect to the Loans made hereunder, the Notes issued to it
and any other Credit Event applicable to it, the Agent in its individual
capacity and not as an Agent shall have the same rights, powers and duties
hereunder and under any other Loan Document executed in connection herewith as
any other Lender and may exercise the same as though it were not the Agent, and
the Agent and its affiliates may accept deposits from, lend money to and
generally engage in any kind of business with any Borrower, any Guarantor or
other affiliate thereof as if it were not the Agent.
Each Lender agrees (i) to reimburse the Agent in the amount of
such Lender's pro rata share (based on its Total Commitment hereunder) of
any expenses incurred for the benefit of the Lenders by the Agent, including
counsel fees and compensation of agents paid for services rendered on behalf of
the Lenders, not reimbursed by the Borrowers and (ii) to indemnify and hold
harmless the Agent and any of its directors, officers, employees or agents, on
demand, in the amount of its pro rata share, from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements of any kind or nature whatsoever which may be
imposed on, incurred by or asserted against it or such directors, officers,
employees or agents in its or their capacity as, or acting on behalf of, the
Agent in any way relating to or arising out of this Agreement or any of the
other Loan Documents or any action taken or omitted by it or any of them under
this Agreement or any of the other Loan Documents, to the extent not reimbursed
by the Borrowers; provided, however, that no Lender shall be liable to the Agent
for any portion of such liabilities, obligations, losses, damages, penalties,
actions, judgment, suits, costs, expenses or disbursements resulting from the
gross negligence or willful misconduct of the Agent or any of its directors,
officers, employees or agents.
Each Lender acknowledges that it has, independently and without
reliance upon the Agent, GMACBC or any other Lender and based on such documents
and information as it has deemed appropriate, made its own credit analysis and
decision to enter into this Agreement and any other Loan Document to which such
Lender is party. Each Lender also acknowledges that it will, independently and
without reliance upon the Agent, GMACBC or any other Lender and based on such
documents and information as it shall deem appropriate at the time, continue to
make its own decisions in taking or not taking action under or based upon this
Agreement, any other Loan Document, any related agreement or any document
furnished hereunder. Each Lender further acknowledges that Agent does not, and
shall not, have (i) a fiduciary duty or (ii) any other duties toward any Lender,
except such duties as are expressly delineated in this Agreement.
Subject to the appointment and acceptance of a successor Agent as
provided below, the Agent may resign at any time by notifying the Lenders and
the Borrowers. Upon any such resignation, the Lenders shall have the right to
appoint a successor Agent. If no successor Agent shall have been so appointed by
such Lenders and shall have accepted such appointment within 30 days after the
retiring Agent gives notice of its resignation, then the retiring Agent may, on
behalf of the Lenders, appoint a successor Agent which shall be a bank with an
office (or an affiliate with an office) in New York, New York, having a combined
capital and surplus of at least $500,000,000. Upon the acceptance of any
appointment as Agent hereunder by a successor bank, such successor shall
thereupon succeed to and become vested with all the rights, powers, privileges
and duties of the retiring Agent and the retiring Agent shall be discharged from
its duties and obligations hereunder and under each of the other Loan Documents.
After any Agent's resignation hereunder, the provisions of this Article
shall continue in effect for its benefit in respect of any actions taken or
omitted to be taken by it while it was acting as Agent.
The Lenders hereby acknowledge that the Agent shall be under no
duty to take any discretionary action permitted to be taken by the Agent
pursuant to the provisions of this Agreement or any of the other Loan Documents
unless it shall be requested in writing to do so by the Required Lenders (and
the Agent shall not be obligated to take any such requested action which
violates applicable law or any terms of this Agreement or any other Loan
Document).
X. CASH RECEIPTS COLLECTION
SECTION 10.01. Collection of Cash. (a) The Parent and its
Subsidiaries will, at their own cost and expense, cause all payments received by
them from any source, whether in the form of cash, checks, notes, drafts, bills
of exchange, money orders, credit card payments, debit card payments or
otherwise (referred to herein as "Payments"), (i) (net of ordinary
course petty cash payments and ordinary course payroll check cashing payments
made at the stores of the Parent and its Subsidiaries to employees of the Parent
and its Subsidiaries) to be deposited daily (or, with respect to checks received
at the offices of the Parent and its Subsidiaries, pursuant to the ordinary
course of business of the Parent, but no less often than weekly) in precisely
the form received (but with any endorsements of the Parent and its Subsidiaries
necessary for deposit or collection) in one or more bank accounts maintained by
the Parent and its Subsidiaries and acceptable to the Agent in which only the
Payments will be deposited, (ii) to be transferred (net of any rights of setoff
in favor of any depository institutions to the extent agreed to in writing by
Agent and the Parent) daily from the accounts referred to in clause (i) to one
or more concentration accounts designated by the Agent with a bank acceptable to
the Agent in which only the Payments will be deposited, and (iii) cause the
Payments to be transferred daily from the concentration accounts referred to in
clause (ii) to Agent's Account, such Payments to be subject to withdrawal
by the Agent only, as hereinafter provided. Until such Payments are deposited
with the Agent in accordance with the prior sentence, such Payments shall be
deemed to be held in trust by the Parent and its Subsidiaries for and as the
Lenders' property and shall not be commingled with the other funds of the
Parent and its Subsidiaries. All Payments that are transferred to Agent in
accordance with the foregoing will, if transferred and cleared as good funds by
1:00 p.m. (New York time), be applied by the Agent to reduce the outstanding
balance of the Revolving Loans and thereafter other Obligations then due and
payable, subject to Section 2.09. Each bank requested by the Agent at which an
account referred to in clause (i) of the first sentence of this Section 10.01(a)
is maintained and each bank at which a concentration account referred to in
clause (ii) of such sentence shall execute and deliver to the Agent such
agreements, in form and substance satisfactory to the Agent, as the Agent shall
request with respect to such accounts, including, without limitation, with
respect to prohibitions on the Parent and its Subsidiaries withdrawing funds
from such accounts or otherwise directing or modifying actions with respect to
such accounts.
Upon the occurrence and continuance of an Event of Default, the
Agent may send a notice of assignment and/or notice of the Agent's
security interest to any and all third parties holding or otherwise concerned
with any of the Collateral, and thereafter the Agent shall have the sole right
to collect and/or take possession of the Collateral and the books and records
relating thereto.
(b) (i) Each Borrower hereby constitutes the Agent or the
Agent's designee as such person's attorney-in-fact with power to
endorse its name upon any notes, acceptances, checks, drafts, money orders or
other evidences of payment or Collateral that may come into its possession; upon
the occurrence and during the continuation of an Event of Default, to open and
dispose of all mail received by the Parent and its Subsidiaries and to notify
the Postal Service authorities to change the address for delivery of mail
addressed to such person to such address as the Agent may designate; and to do
all other acts and things necessary to carry out this Agreement. All acts of
said attorney or designee are hereby ratified and approved, and said attorney or
designee shall not be liable for any acts of omission or commission, for any
error of judgment or for any mistake of fact or law, provided that the Agent or
its designee shall not be relieved of liability to the extent it is determined
by a final judicial decision that its act, error or mistake constituted gross
negligence, bad faith or willful misconduct. This power of attorney being
coupled with an interest is irrevocable until all of the Obligations are paid in
full and this Agreement and the Total Commitment is terminated.
(ii) The Agent, without notice to or consent of any Borrower, upon the
occurrence and during the continuance of an Event of Default, shall have
the right to receive, endorse, assign and/or deliver in its name or the
name of the Borrowers any and all checks, drafts and other instruments for
the payment of money relating to the Collateral, and the Borrowers hereby
waive notice of presentment, protest and non-payment of any instrument so
endorsed.
(c) Nothing herein contained shall be construed to constitute any
Borrower as agent of the Agent for any purpose whatsoever, and the Agent shall
not be responsible or liable for any shortage, discrepancy, damage, loss or
destruction of any part of the Collateral wherever the same may be located and
regardless of the cause thereof (except to the extent it is determined by a
final judicial decision that the Agent's or a Lender's act or
omission constituted gross negligence, bad faith or willful misconduct). The
Agent and the Lenders shall not, under any circumstances or in any event
whatsoever, have any liability for any error or omission or delay of any kind
occurring in the settlement, collection or payment of any of the Collateral or
for any damage resulting therefrom (except to the extent it is determined by a
final judicial decision that the Agent's or such Lender's error,
omission or delay constituted gross negligence, bad faith or willful
misconduct). The Agent and the Lenders do not, by anything herein or in any
assignment or otherwise, assume any Borrower's obligations under any
contract or agreement assigned to the Agent or the Lenders, and the Agent and
the Lenders shall not be responsible in any way for the performance by any
Borrower of any of the terms and conditions thereof.
(d) If any of the Collateral includes a charge for any tax payable to
any governmental tax authority, the Agent is hereby authorized (but in no
event obligated) in its discretion to pay the amount thereof to the proper
taxing authority for the account of any Borrower and to charge the
Borrowers' account 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 any Borrower by reason of the sale of any of the Collateral.
(e) The parties hereto acknowledge that the cash collection procedures
instituted in connection with the Previous Loan Agreement will remain in
place pending the institution of cash collection procedures acceptable to
Agent pursuant to documents in form and substance satisfactory to Agent.
The Grantors agree to enter into such documentation no later than ninety
(90) days after the Second Amendment and Restatement Date.
SECTION 10.02. Monthly Statement of Account. The Agent shall
render to the Borrowers each month a statement of the Borrowers' account,
which shall constitute an account stated and shall be deemed to be correct and
accepted by and be binding upon the Borrowers unless the Agent receives a
written statement of the Borrowers' exceptions within 30 days after such
statement was rendered to the Borrowers.
SECTION 10.03. Collateral Custodian. Upon the occurrence and
continuance of an Event of Default, the Agent may at any time and from time to
time employ and maintain in the premises of the Borrowers' a custodian
selected by the Agent who shall have full authority to do all acts necessary to
protect the Agent's and Lenders' interests and to report to the
Agent thereon. The Borrowers each hereby agrees to cooperate with any such
custodian and to do whatever the Agent may reasonably request to preserve the
Collateral. All costs and expenses incurred by the Agent by reason of the
employment of the custodian shall be charged to the Borrowers' account
and added to the Obligations.
XI. MISCELLANEOUS
SECTION 11.01. Notices. Notices, consents and other
communications provided for herein shall be in writing and shall be delivered or
mailed by certified mail return receipt requested (or in the case of facsimile
communication, delivered by telecopier with receipt confirmed by means of a
signed telecopy or with a copy mailed as aforesaid) addressed,
(a) if to any Borrower, Guarantor, or Grantor, at 922 Highway 33,
Building 6, Suite 1, Freehold, New Jersey 07728, Attention: Mr. Joseph
Saker, President and Mr. Michael Shapiro, Senior Vice President, with a
copy to Giordano, Halleran & Ciesla, P.C., 125 Half Mile Road, Middletown,
New Jersey 07748, Attention: John A. Aiello, Esq.;
(b) if to the Agent, at GMAC Business Credit, LLC, 630 Fifth Avenue,
30th Floor, New York, New York 10111, Attention: Richard Peller, with a
copy to Hahn & Hessen LLP, 350 Fifth Avenue, New York, New York 10118,
Attention: Daniel J. Krauss, Esq.; and
(c) if to any Lender, at the address set forth below its name in
Schedule 2.01 annexed hereto.
All notices and other communications given to any party hereto in accordance
with the provisions of this Agreement shall be deemed to have been given on the
date of receipt if hand delivered or three days after being sent by registered
or certified mail, postage prepaid, return receipt requested, if by mail, or
upon receipt if by facsimile, in each case addressed to such party as provided
in this Section 11.01 or in accordance with the latest unrevoked direction from
such party.
SECTION 11.02. Survival of Agreement. All covenants, agreements,
representations and warranties made by the Parent or any of its Subsidiaries
herein and in the certificates or other instruments prepared or delivered in
connection with this Agreement, any of the Security Documents or any other Loan
Document, shall be considered to have been relied upon by the Lenders and shall
survive the making by the Lenders of the Loans and the execution and delivery to
the Lenders of the Notes and occurrence of any other Credit Event and shall
continue in full force and effect as long as the principal of or any accrued
interest on the Notes or any other fee or amount payable under the Notes or this
Agreement or any other Loan Document is outstanding and unpaid and so long as
the Total Commitment has not been terminated.
SECTION 11.03. Successors and Assigns; Participations. (a)
Whenever in this Agreement any of the parties hereto is referred to, such
reference shall be deemed to include the successors and assigns of such party;
and all covenants, promises and agreements by or on behalf of any Borrower, any
Guarantor, any Grantor, any ERISA Affiliate, any Subsidiary of any thereof, the
Agent or the Lenders, that are contained in this Agreement shall bind and inure
to the benefit of their respective successors and assigns. Without limiting the
generality of the foregoing, each Borrower specifically confirms that any Lender
may at any time and from time to time pledge or otherwise grant a security
interest in any Loan or any Note (or any part thereof) to any Federal Reserve
Bank. The Borrowers may not assign or transfer any of their rights or
obligations hereunder without the written consent of all the Lenders.
(b) Each Lender, without the consent of the Borrowers, may sell
participations to one or more banks or other entities in all or a portion of its
rights and obligations under this Agreement (including, without limitation, all
or a portion of its Commitment and the Loans owing to it and interest in undrawn
Letters of Credit and the Notes held by it); provided, however, that (i) such
Lender's obligations under this Agreement (including, without limitation,
its Commitment), shall remain unchanged, (ii) such Lender shall remain solely
responsible to the other parties hereto for the performance of such obligations,
(iii) the banks or other entities buying participations shall be entitled to the
cost protection provisions contained in Sections 2.10(a) (except to the extent
that application of such Section 2.10(a) to such banks and entities would cause
Borrowers to make duplicate payments thereunder), and 2A.04 hereof, but only to
the extent any of such Sections would be available to the Lender which sold such
participation, (iv) each such participation shall be in a minimum amount of
$5,000,000 and shall be of a constant, and not a varying, percentage of all of
the selling Lender's rights and obligations under this Agreement, which
shall include the same percentage interest in the Revolving Loan, Term Loan and
Capital Expenditure Loans, interest in undrawn and unreimbursed Letters of
Credit and Notes, and (v) the Borrowers, the Agent and the other Lenders shall
continue to deal solely and directly with such Lender in connection with such
Lender's rights and obligations under this Agreement; provided, further,
however, that each Lender shall retain the sole right and responsibility to
enforce the obligations of the Borrowers, Grantors and the Guarantors relating
to the Loans, including, without limitation, the right to approve any amendment,
modification or waiver of any provision of this Agreement, other than
amendments, modifications or waivers with respect to any fees payable hereunder
or the amount of principal or the rate of interest payable on, or the dates
fixed for any payment of principal of or interest on, the Loans in which such
entity is participating or the release of all Collateral.
(c) Each Lender may assign and delegate to any one or more banks
or other entities with the prior written consent of the Borrowers (which shall
not be unreasonably withheld or delayed) and the Agent (which shall not be
unreasonably withheld or delayed), all or a portion of its interests, rights and
obligations under this Agreement and the other Loan Documents (including,
without limitation, all or a portion of its Commitment and the same portion of
the Loans and interest in undrawn Letters of Credit at the time owing to it and
the Note or Notes held by it), provided, however, that (i) each such assignment
shall be of a constant, and not a varying, percentage of all of the assigning
Lender's rights and obligations under this Agreement, which shall include
the same percentage interest in the Revolving Loans, Term Loan and Capital
Expenditure Loans, interest in undrawn and unreimbursed Letters of Credit and
Notes, (ii) the amount of the Commitment of the assigning Lender being assigned
pursuant to each such assignment (determined as of the date the Assignment and
Acceptance with respect to such assignment is delivered to the Agent) shall be
in a minimum principal amount of $10,000,000 (provided that this clause (ii)
shall have no force and effect in the event that an Event of Default shall have
been in existence for greater than sixty (60) days after written notice by the
Agent to the Borrowers of such Event of Default, unless such Event of Default
shall have been waived) and (iii) the parties to each such assignment shall
execute and deliver to the Agent, for its acceptance and recording in the
Register (as defined below), an Assignment and Acceptance, together with any
Note subject to such assignment and a processing and recordation fee of $2,500.
Upon such execution, delivery, acceptance and recording and after receipt of the
written consent of the Agent, from and after the effective date specified in
each Assignment and Acceptance, which effective date shall be at least five (5)
Business Days after the execution thereof, (x) the assignee thereunder shall be
a party hereto and, to the extent provided in such Assignment and Acceptance,
have the rights and obligations of a Lender hereunder and under the other Loan
Documents and (y) the Lender which is assignor thereunder shall, to the extent
provided in such Assignment and Acceptance, be released from its obligations
under this Agreement with respect to the period after the date of such
assignment (and, in the case of an Assignment and Acceptance covering all or the
remaining portion of an assigning Lender's rights and obligations under
this Agreement, such Lender shall cease to be a party hereto). Notwithstanding
the foregoing, each Lender may pledge it rights hereunder to any Federal Reserve
Bank as collateral security without the consent of Agent, Lenders and Borrowers.
(d) By executing and delivering an Assignment and Acceptance, the
Lender which is assignor thereunder and the assignee thereunder confirm to, and
agree with, each other and the other parties hereto as follows: (i) other than
the representation and warranty that it is the legal and beneficial owner of the
interest being assigned thereunder free and clear of any adverse claim, such
Lender makes no representation or warranty and assumes no responsibility with
respect to any statements, warranties or representations made in or in
connection with this Agreement or the execution, legality, validity,
enforceability, perfection, genuineness, sufficiency or value of this Agreement,
the other Loan Documents or any Collateral with respect thereto or any other
instrument or document furnished pursuant hereto or thereto; (ii) such Lender
makes no representation or warranty and assumes no responsibility with respect
to the financial condition of any Borrower, or any Grantor or Guarantor or the
performance or observance by any Borrower, Grantor or the Guarantor of any of
their respective obligations under this Agreement, any of the other Loan
Documents or any other instrument or document furnished pursuant hereto or
thereto; (iii) such assignee confirms that it has received a copy of this
Agreement and of the other Loan Documents, together with copies of financial
statements and such other documents and information as it has deemed appropriate
to make its own credit analysis and decision to enter into such Assignment and
Acceptance; (iv) such assignee will, independently and without reliance upon the
Agent, such Lender or any other Lender and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit decisions in taking or not taking action under this Agreement; (v) such
assignee appoints and authorizes the Agent to take such action as the Agent on
its behalf and to exercise such powers under this Agreement as are delegated to
the Agent by the terms hereof, together with such powers as are reasonably
incidental thereto; and (vi) such assignee agrees that it will perform in
accordance with their terms all of the obligations which by the terms of this
Agreement are required to be performed by it as a Lender.
(e) The Agent may, at its option, maintain at its address referred to
in Section 11.01 hereof a copy of each Assignment and Acceptance delivered
to it and a register for the recordation of the names and addresses of the
Lenders and the Commitment of, and principal amount of the Loans owing to,
each Lender from time to time (the "Register"). The entries in the Register
shall be conclusive, in the absence of manifest error, and the Borrowers,
the Agent and the Lenders may treat each person whose name is recorded in
the Register as a Lender hereunder for all purposes of this Agreement. The
Register shall be available for inspection by the Borrowers at any
reasonable time and from time to time upon reasonable prior notice.
--------
(f) Upon its receipt of an Assignment and Acceptance executed by
an assigning Lender and an assignee together with any Note or Notes subject to
such assignment and the written consent to such assignment, the Agent shall, if
such Assignment and Acceptance has been completed and is precisely in the form
of Exhibit F annexed hereto, (i) accept such Assignment and Acceptance, (ii)
record the information contained therein in the Register and (iii) give prompt
notice thereof to Borrowers. Within five (5) Business Days after receipt of such
notice, each Borrower, at its expense, shall execute and deliver to the Agent in
exchange for each surrendered Note or Notes a new Note or Notes to the order of
such assignee in an amount equal to its portion of the Commitment assumed by it
pursuant to such Assignment and Acceptance and, if the assigning Lender has
retained any Commitment hereunder, a new Note or Notes to the order of the
assigning Lender in an amount equal to the Commitment retained by it hereunder.
Such new Note or Notes shall be in an aggregate principal amount equal to the
aggregate principal amount of such surrendered Note or Notes, shall be dated the
effective date of such Assignment and Acceptance and shall otherwise be in
substantially the form of Exhibit A, Exhibit B-1, or Exhibit B-2 as the case may
be. Notes surrendered to the Borrowers shall be canceled by the Borrowers.
(g) Notwithstanding any other provision herein, any Lender may,
in connection with any assignment or participation or proposed assignment or
participation pursuant to this Section 11.03, disclose to the assignee or
participant or proposed assignee or participant, any information, including,
without limitation, any Information, relating to any Borrower, any Grantor or
any Guarantor furnished to such Lender by or on behalf of Borrowers in
connection with this Agreement; provided, however, that prior to any such
disclosure, each such assignee or participant or proposed assignee or
participant shall agree to preserve the confidentiality of any confidential
Information relating to the Borrowers received from such Lender. The Borrowers
and the Guarantors agree to cooperate with, and assist, each Lender with respect
to the syndication of the Commitments both prior to and after the Second
Amendment and Restatement Date. Such cooperation and assistance shall include,
without limitation, making available senior officers of the Borrowers for
meetings with prospective assignees.
SECTION 11.04. Expenses; Indemnity. (a) Each Borrower agrees to
pay all reasonable out-of-pocket expenses incurred by the Agent in connection
with the preparation of this Agreement, the Security Documents, the Notes and
the other Loan Documents or with any amendments, modifications, waivers,
extensions, renewals, renegotiations or work-outs of the provisions hereof or
thereof (whether or not the transactions hereby contemplated shall be
consummated) or incurred by the Agent, Issuing Bank, GMACBC or any of the
Lenders in connection with the enforcement or protection of its rights in
connection with this Agreement or any of the other Loan Documents or with the
Loans made or the Notes or Letters of Credit issued hereunder, or in connection
with any pending or threatened action, proceeding, or investigation relating to
the foregoing, including but not limited to the reasonable fees and
disbursements of counsel for the Agent, GMACBC and each Lender and ongoing field
examination expenses and charges. Without limitation of the foregoing, each
Borrower hereby agrees to reimburse the Agent for any and all costs and expenses
incurred in connection with audits, field exams and appraisals of the
Parents' and its Subsidiaries' property, assets, business and
operations performed at the request of the Agent by an independent party
selected by the Agent, provided, however, that prior to the occurrence of a
Default or an Event of Default, Borrowers shall not be required to reimburse
Agent for appraisals of any store and/or fixed asset more often than once every
thirty months. Each Borrower further indemnifies the Lenders and GMACBC from and
agrees to hold them harmless against any documentary taxes, assessments or
charges made by any governmental authority by reason of the execution and
delivery of this Agreement, the Notes or the making of any Credit Events.
(b) Each Borrower indemnifies the Agent, Issuing Bank, GMACBC and
each Lender and their respective directors, officers, employees and agents
against, and agrees to hold the Agent, Issuing Bank, GMACBC, each Lender and
each such person harmless from, any and all losses, claims, damages, liabilities
and related expenses, including reasonable counsel fees and expenses, incurred
by or asserted against the Agent, Issuing Bank, GMACBC, the Lender or any such
person arising out of, in any way connected with, or as a result of (i) the use
of any of the proceeds of the Loans or of any Letter of Credit, (ii) this
Agreement, any of the Security Documents, or the other documents contemplated
hereby or thereby, except, as to any Lender, as a result of a breach thereof by
such Lender (iii) the performance by the parties hereto and thereto of their
respective obligations hereunder and thereunder (including but not limited to
the making of the Total Commitment) and consummation of the transactions
contemplated hereby and thereby, (iv) breach of any representation or warranty,
or (v) any claim, litigation, investigation or proceedings relating to any of
the foregoing, whether or not the Agent, Issuing Bank, GMACBC, any Lender or any
such person is a party thereto; provided, however, that such indemnity shall
not, as to the Agent, Issuing Bank, GMACBC or any Lender, apply to any such
losses, claims, damages, liabilities or related expenses to the extent that they
result from the gross negligence, bad faith or willful misconduct of the Agent,
Issuing Bank, GMACBC or any Lender.
(c) Each Borrower indemnifies, and agrees to defend and hold harmless
the Agent, Issuing Bank, GMACBC and the Lenders and their respective
officers, directors, shareholders, agents and employees (collectively, the
"Indemnitees") from and against any loss, cost, damage, liability, lien,
deficiency, fine, penalty or expense (including, without limitation,
reasonable attorneys' fees and reasonable expenses for investigation,
removal, cleanup and remedial costs and modification costs incurred to
permit, continue or resume normal operations of any property or assets or
business of Parent or any Subsidiary thereof) arising from a violation of,
or failure to comply with any Environmental Law and to remove any Lien
arising therefrom except to the extent caused by the gross negligence, bad
faith or willful misconduct of any Indemnitee, which any of the Indemnitees
may incur or which may be claimed or recorded against any of the
Indemnitees by any person.
(d) The provisions of this Section 11.04 shall remain operative and in full
force and effect regardless of the expiration of the term of this Agreement, the
consummation of the transactions contemplated hereby, the repayment of any of
the Loans, the invalidity or unenforceability of any term or provision of this
Agreement or the Notes, or any investigation made by or on behalf of the Agent,
Issuing Bank, GMACBC or any Lender. All amounts due under this Section 11.04
shall be payable on written demand therefor.
SECTION 11.05. Applicable Law. THIS AGREEMENT AND THE NOTES SHALL
BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAW OF THE STATE OF NEW YORK
(OTHER THAN 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 GMACBC shall and is hereby authorized at any time and from time to time, to
the fullest extent permitted by law, to set off and apply any and all deposits
(general or special, time or demand, provisional or final) at any time held and
other indebtedness at any time owing by such Lender or GMACBC to or for the
credit or the account of the Parent or any Subsidiary thereof against any and
all of the Obligations, the Notes held by such Lender or any other Loan
Document, irrespective of whether or not such Lender or GMACBC shall have made
any demand under this Agreement, the Notes or such other Loan Document and
although such obligations may be unmatured. Each Lender agrees to notify
promptly the Agent and the Borrowers after any such setoff and application made
by such Lender, but the failure to give such notice shall not affect the
validity of such setoff and application. The rights of each Lender and GMACBC
under this Section are in addition to other rights and remedies (including,
without limitation, other rights of setoff) which may be available to such
Lender or GMACBC.
SECTION 11.07. Payments on Business Days. (a) Should the
principal of or interest on the Notes or any fee or other amount payable
hereunder become due and payable on other than a Business Day, payment in
respect thereof may be made on the next succeeding Business Day (except as
otherwise specified in the definition of "Interest Period"), and
such extension of time shall in such case be included in computing interest, if
any, in connection with such payment.
(b) All payments by any Borrower and any Guarantor hereunder and all
Loans made by the Lenders hereunder shall be made in lawful money of the
United States of America in immediately available funds to Agent's Account,
or, at the option of Agent upon written notice to Borrowers at the office
of the Agent set forth in Section 2.14 hereof.
SECTION 11.08. Waivers; Amendments; Final Maturity Date. (a) No
failure or delay of the Agent, any Lender or GMACBC in exercising any power or
right hereunder or under any other Loan Document shall operate as a waiver
thereof, nor shall any single or partial exercise of any such right or power, or
any abandonment or discontinuance of steps to enforce such right or power,
preclude any other or further exercise thereof or the exercise of any other
right or power. The rights and remedies of the Agent, the Lenders and GMACBC
hereunder or under any other Loan Document are cumulative and not exclusive of
any rights or remedies which they may otherwise have. No waiver of any provision
of this Agreement or the Notes nor consent to any departure by any Borrower or
any Guarantor therefrom shall in any event be effective unless the same shall be
authorized as provided in paragraph (b) below, and then such waiver or consent
shall be effective only in the specific instance and for the purpose for which
given. No notice to or demand on any Borrower or any Guarantor in any case shall
entitle it to any other or further notice or demand in similar or other
circumstances. Each holder of any of the Notes shall be bound by any amendment,
modification, waiver or consent authorized as provided herein, whether or not
such Note shall have been marked to indicate such amendment, modification,
waiver or consent.
(b) Neither this Agreement nor any provision hereof may be
waived, amended or modified except pursuant to an agreement or agreements in
writing entered into by the Borrowers and the Required Lenders; provided,
however, (i) that no such agreement shall, without the prior written consent of
each Lender (A) change the principal amount of, or extend or advance the
maturity of or the dates for the payment of principal of or interest on, any
Note or fees payable hereunder or reduce the rate of interest on any Note or
fees payable hereunder, (B) change the Commitment of any Lender or amend or
modify the provisions of this Section 11.08, Section 2.11, Section 6.16, or
Section 11.04 hereof or the definition of "Required Lenders," or
(C) release Collateral having a value in excess of $1,000,000 in any calendar
year (not to exceed an aggregate of $3,500,000 during the term of this
Agreement), except that the Agent may, without the prior written consent of any
Lender, release Collateral permitted to be sold pursuant to the terms of Section
7.05 hereof, (D) increase advance rates applicable to the Borrowing Base, or (E)
release the guarantee of any Guarantor and (ii) that no such agreement shall
amend, modify or otherwise affect the rights or duties of the Agent or GMACBC
under this Agreement or the other Loan Documents without the written consent of
the Agent. Each Lender and holder of any Note shall be bound by any modification
or amendment authorized by this Section regardless of whether its Notes shall be
marked to make reference thereto, and any consent by any Lender or holder of a
Note pursuant to this Section shall bind any person subsequently acquiring a
Note from it, whether or not such Note shall be so marked. In the event that
Agent gives any Lender notice of a proposed waiver, amendment or modification of
this Agreement and such Lender does not (x) acknowledge in writing its receipt
of such notice within ten (10) Business Days of such notice and (y) respond in
writing in the affirmative or in the negative within fifteen (15) Business Days
of such notice, then such Lender shall be deemed to have irrevocably consented
to such waiver, amendment or modification; provided, however, that the foregoing
provision shall not apply if there are fewer than four (4) Lenders under this
Agreement.
(c) The Final Maturity Date shall be extended for successive one-year
periods, with the prior written consent of the Borrowers and all of the
Lenders for each such one-year extension (the Parent hereby agreeing to
give the Agent and the Lenders no less than ninety (90) days' prior written
notice of any request for extension). 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 any Borrower, any
Guarantor, any Grantor or any of their respective Subsidiaries or (C) was
available to the Agent or such Lender on a non-confidential basis prior to its
disclosure to the Agent or such Lender by any Borrower, any Guarantor, any
Grantor or any of their respective Subsidiaries; (iv) to the extent any
Borrower, any Guarantor or any of their respective Subsidiaries shall have
consented to such disclosure in writing; (v) in connection with the sale of any
Collateral pursuant to the provisions of any of the other Loan Documents; or
(vi) pursuant to Section 11.03(g) hereof.
SECTION 11.12. Submission to Jurisdiction. (a) Any legal action
or proceeding with respect to this Agreement or the Notes or any other Loan
Document may be brought in state courts located in the City of New York or of
the United States of America for the Southern District of New York, and, by
execution and delivery of this Agreement, each of the Borrowers and each of the
Guarantors hereby accept for themselves and in respect of their property,
generally and unconditionally, the jurisdiction of the aforesaid courts.
(b) The Borrowers and each of the Guarantors hereby irrevocably waive,
in connection with any such action or proceeding, any objection, including,
without limitation, any objection to the laying of venue or based on the
grounds of forum non conveniens, which they may now or hereafter have to
the bringing of any such action or proceeding in such respective
jurisdictions.
(c) The Borrowers and each of the Guarantors hereby irrevocably
consent to the service of process of any of the aforementioned courts in
any such action or proceeding by the mailing of copies thereof by
registered or certified mail, postage prepaid, to each such person, as the
case may be, at its address set forth in Section 11.01 hereof.
(d) Nothing herein shall affect the right of the Agent or any Lender
to serve process in any other manner permitted by law or to commence legal
proceedings or otherwise proceed against any Borrower or any Guarantor in
any other jurisdiction.
SECTION 11.13. Counterparts; Facsimile Signature. This Agreement
may be executed in counterparts, each of which shall constitute an original but
all of which when taken together shall constitute but one contract, and shall
become effective when copies hereof which, when taken together, bear the
signatures of each of the parties hereto shall be delivered to the Agent.
Delivery of an executed counterpart of a signature page to this Agreement by
telecopier shall be effective as delivery of a manually executed signature page
hereto.
SECTION 11.14. Headings. Article and Section headings and the Table of
Contents used herein are for convenience of reference only and are not to
affect the construction of, or to be taken into consideration in
interpreting, this Agreement.
SECTION 11.15. Defaulting Lender. (a) Notwithstanding anything to
the contrary contained herein, in the event that any Lender (x) refuses (which
refusal constitutes a breach by such Lender of its obligations under this
Agreement and which has not been retracted) to make available its portion of any
Loan or (y) notifies the Agent and/or any Borrower that it does not intend to
make available its portion of any Loan (if the actual refusal would constitute a
breach by such Lender of its obligations under this Agreement and which has not
been retracted) (each, a "Lender Default"), all rights and
obligations hereunder of the Lender (a "Defaulting Lender") as to
which a Lender Default is in effect and of the other parties hereto shall be
modified to the extent of express provisions of this Section 11.15 while such
Lender Default remains in effect.
(b) Loans shall be incurred pro rata from the Lenders (the
"Non-Defaulting Lenders") which are not Defaulting Lenders based on their
respective Revolving Commitments and/or Capital Expenditure Facility
Commitments, and no Revolving Commitment or Capital Expenditure Facility
Commitment of any Lender or any pro rata share of any Loans required to be
advanced by any Lender shall be increased as a result of such Lender
Default. Amounts received in respect of principal of the Loans shall be
applied to reduce the Loans of each of the Lenders pro rata based on the
aggregate of the outstanding Loans of all of the Lenders at the time of
such application; provided that, such amount shall not be applied to any
Loan of a Defaulting Lender at any time when, and to the extent that, the
aggregate amount of Loans of any Non-Defaulting Lender exceeds such
Non-Defaulting Lenders' pro rata share of all Loans then outstanding.
(c) The Lenders shall participate in Letters of Credit on the
basis of their respective pro rata shares, and no participation or reimbursement
obligation of any Lender shall be increased as a result of a failure of any
Defaulting Lender to reimburse the Agent on GMACBC's behalf with respect
to any amounts drawn on or otherwise payable with respect to any Letters of
Credit (the amount that any such Defaulting Lender has failed to reimburse is
hereinafter referred to as such Defaulting Lender's "Unreimbursed
Amount"). Until such Defaulting Lender has reimbursed the Agent on
GMACBC's behalf for any Unreimbursed Amount owed by it, all payments and
other amounts received from any source with respect to the Obligations or
otherwise under or in connection with the Agreement (including any letter of
credit fees) which would otherwise be payable to such Defaulting Lender will
instead be paid to the Agent for the benefit of GMACBC for application to such
Unreimbursed Amount until such Unreimbursed Amount has been paid in full. A
Defaulting Lender shall not be entitled to receive any portion of the Commitment
Fee, the letter of credit fees or any other fees payable in connection with this
Agreement, or any indemnity arising from its commitment to make Loans and/or
participate in Letters of Credit.
(d) A Defaulting Lender shall not be entitled to give instructions to
the Agent or to approve, disapprove, consent to or vote on any matters
relating to this Agreement and the Loan Documents. All amendments, waivers
and other modifications of this Agreement and the Loan Documents may be
made without regard to a Defaulting Lender and, for purposes of the
definition of "Required Lenders", a Defaulting Lender shall be deemed not
to be a Lender, not to have a Revolving Commitment, not to have a Term
Commitment, not to have a Capital Expenditure Facility Commitment and not
to have Loans outstanding.
(e) Other than as expressly set forth in this Section 11.15, the
rights and obligations of a Defaulting Lender (including the obligation to
indemnify the Agent) and the other parties hereto shall remain unchanged.
Nothing in this Section 11.15 shall be deemed to release any Defaulting
Lender from its Revolving Commitment or Capital Expenditure Facility
Commitment hereunder, shall alter such Revolving Commitment or Capital
Expenditure Facility Commitment, shall operate as a waiver of any default
by such Defaulting Lender hereunder, or shall prejudice any rights which
any Borrower, the Agent or any Lender may have against any Defaulting
Lender as a result of any default by such Defaulting Lender hereunder.
(f) In the event the Defaulting Lender is able to retroactively cure
to the satisfaction of the Agent the breach which caused a Lender to become
a Defaulting Lender, such Defaulting Lender shall upon notice to Borrowers,
no longer be a Defaulting Lender and shall be treated as a Lender
hereunder.
XII. GUARANTEES
Each Guarantor unconditionally guarantees, as a primary obligor
and not merely as a surety, jointly and severally with each other Guarantor, the
due and punctual payment of the principal of and interest on each of the Notes,
when and as due, whether at maturity, by acceleration, by notice of prepayment
or otherwise, and the due and punctual performance of all other Obligations.
Each Guarantor further agrees that the Obligations may be extended and renewed,
in whole or in part, without notice to or further assent from it, and that it
will remain bound upon its guarantee notwithstanding any extension or renewal of
any Obligations.
Each Guarantor waives presentment to, demand of payment from and
protest to the Borrowers of any of the Obligations, and also waives notice of
acceptance of its guarantee and notice of protest for nonpayment. The
obligations of a Guarantor hereunder shall not be affected by (a) the failure of
any Lender, GMACBC or the Agent to assert any claim or demand or to enforce any
right or remedy against the Borrowers or any other Guarantor under the
provisions of this Agreement, the Notes or any of the other Loan Documents or
otherwise; (b) any rescission, waiver, amendment or modification of any of the
terms or provisions of this Agreement, the Notes, any of the other Loan
Documents, any guarantee or any other agreement; (c) the release of any security
held by the Agent for the Obligations or any of them; or (d) the failure of any
Lender, the Agent or GMACBC to exercise any right or remedy against any other
Guarantor of the Obligations.
Each Guarantor further agrees that its guarantee constitutes a
guarantee of payment when due and not of collection, and waives any right to
require that any resort be had by any Lender, the Agent or GMACBC to any
security (including, without limitation, any Collateral) held for payment of the
Obligations or to any balance of any deposit account or credit on the books of
any Lender, the Agent or GMACBC in favor of Borrowers or any other person.
The obligations of each Guarantor hereunder shall not be subject
to any reduction, limitation, impairment or termination for any reason,
including, without limitation, any claim of waiver, release, surrender,
alteration or compromise, and shall not be subject to any defense or setoff,
counterclaim, recoupment or termination whatsoever by reason of the invalidity,
illegality or unenforceability of the Obligations or otherwise. Without limiting
the generality of the foregoing, the obligations of each Guarantor hereunder
shall not be discharged or impaired or otherwise affected by the failure of the
Agent, GMACBC or any Lender to assert any claim or demand or to enforce any
remedy under this Agreement, the Notes or under any other Loan Document, any
guarantee or any other agreement, by any waiver or modification of any provision
thereof, by any default, failure or delay, willful or otherwise, in the
performance of the Obligations, or by any other act or omission which may or
might in any manner or to any extent vary the risk of such Guarantor or
otherwise operate as a discharge of such Guarantor as a matter of law or equity.
Each Guarantor further agrees that its guarantee shall continue
to be effective or be reinstated, as the case may be, if at any time payment, or
any part thereof, of principal of or interest on any Obligation is rescinded or
must otherwise be returned by the Agent, GMACBC or any Lender upon the
bankruptcy or reorganization of any Borrower or otherwise.
Each Guarantor hereby waives and releases all rights of
subrogation against any Borrower and its property and all rights of
indemnification, contribution and reimbursement from any Borrower and its
property, in each case in connection with this guarantee and any payments made
hereunder, and regardless of whether such rights arise by operation of law,
pursuant to contract or otherwise.
XIII. AMENDMENT AND RESTATEMENT
Each of the parties hereto confirm, acknowledge and agree that
this Agreement is an amendment and restatement of the Existing Loan Agreement
and that the execution, delivery and performance of this Agreement does not
create a novation or any new Indebtedness (other than any Capital Expenditure
Loans). Each of the Borrowers, the Guarantors and the Grantors confirm,
acknowledge and agree that this Agreement benefits from all collateral security
and guarantees executed in connection with the Previous Loan Agreement and/or
the Existing Loan Agreement as fully as such Previous Loan Agreement and such
Existing Loan Agreement and that the "Obligations" under this
Agreement are secured by, and benefit from, all collateral security and
guarantees included in the Loan Documents.
[Signatures appear on following page]
1061112.6/LLP/214516/002 1/24/100
- -
<PAGE>
IN WITNESS WHEREOF, the Borrowers, the Guarantors, the Agent and
the Lenders have caused this Agreement to be duly executed by their respective
authorized officers as of the day and year first above written.
NEW LINDEN PRICE RITE, INC.,
as Borrower and as Guarantor
By:_______________________________
Name:
Title:
FOODARAMA SUPERMARKETS, INC., as
Borrower and as Guarantor
By:_____________________________
Name:
Title:
SHOP RITE OF READING, INC.,
as Guarantor
By:_____________________________
Name:
Title:
SHOP RITE OF MALVERNE, INC., as
Guarantor
By:_____________________________
Name:
Title:
GMAC BUSINESS CREDIT, LLC, as Agent
By:_____________________________
Name:
Title:
GMAC BUSINESS CREDIT, LLC, as Lender
By:_____________________________
Name:
Title:
THE CHASE MANHATTAN BANK, as Lender
By:_____________________________
Name:
Title:
CITIZENS BUSINESS CREDIT COMPANY,
as Lender
By:_____________________________
Name:
Title:
1061112.6/LLP/214516/002 1/24/100
<PAGE>
EXHIBIT A
THIRD AMENDED AND RESTATED REVOLVING NOTE
$________________ New York, New York _________ __, 200__
FOR VALUE RECEIVED, the undersigned, NEW LINDEN PRICE RITE, INC., a New
Jersey corporation and FOODARAMA SUPERMARKETS, INC., a New Jersey corporation
(each, a "Maker") hereby jointly and severally promise to pay to
the order of _____________ (the "Lender"), at the office of GMAC
BUSINESS CREDIT, LLC (the "Agent"), 630 Fifth Avenue, 30th Floor,
New York, New York 10011, on the Termination Date as defined in the Second
Amended and Restated Revolving Credit and Term Loan Agreement dated as of
January __, 2000 among the Makers, the Guarantors named therein, the Lenders
named therein and the Agent (as the same may be amended, restated, modified or
supplemented from time to time in accordance with its terms, the "Credit
Agreement") or earlier as provided for in the Credit Agreement, the
lesser of the principal sum of [TWENTY FIVE MILLION DOLLARS AND NO CENTS
($25,000,000)] or the aggregate unpaid principal amount of all Revolving Loans
from the Lende pursuant to the terms of the Credit Agreement, in lawful money of
the United States of America in immediately available funds, and to pay interest
from the date hereof on the principal amount hereof from time to time
outstanding, in like funds, at said office, at a rate or rates per annum and
payable on such dates as determined pursuant to the terms of the Credit
Agreement.
This Revolving Note amends and restates in its entirety and is given in
substitution for (but not satisfaction of) that certain Second Amended and
Restated Revolving Note in the original principal amount of $20,000,000 dated
March ___, 1999 and issued by New Linden Price Rite, Inc. and Shop Rite of
Reading, Inc. under the Previous Loan Agreement. The obligations evidenced by
this Revolving Note includes obligations outstanding under the Previous Loan
Agreement immediately prior to the issuance of this Revolving Note (including,
without limitation accrued and unpaid interest and fees under the Previous Loan
Agreement as of the date hereof), which continue to be outstanding, and the
issuance of this Revolving Note does not evidence or cause a repayment or
novation with respect to such obligations.
This Revolving Note is subject to the terms of the Credit Agreement,
which terms are hereby incorporated herein by reference. This Revolving Note is
secured pursuant to and the holder is entitled to the benefits of the Credit
Agreement.
Each Maker promises to pay interest, on demand, on any overdue principal
and fees and, to the extent permitted by law, overdue interest from their due
dates at a rate or rates determined as set forth in the Credit Agreement.
Each Maker hereby waives diligence, presentment, demand, protest and
notice of any kind whatsoever. The non-exercise by the holder of any of its
rights hereunder in any particular instance shall not constitute a waiver
thereof in that or any subsequent instance.
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.
As used herein, the term "Previous Loan Agreement" shall
mean and refer to the Amended and Restated Loan and Security Agreement dated as
of May 2, 1997, as amended, restated, modified and supplemented to date, among
Makers, certain affiliates of Makers, Agent and certain lenders.
NEW LINDEN PRICE RITE, INC.
By:_________________________
Name:
Title:
FOODARAMA SUPERMARKETS, INC.
By:_________________________
Name:
Title:
<PAGE>
Loans and Payment
Unpaid
Principal Name of
Amount and Payments of Balance of Person Making
Date Type of Loan Principal/Interest Note Notation
<PAGE>
EXHIBIT B-1
SECOND AMENDED AND RESTATED TERM NOTE
$_______________ New York, New York _________ __, 200__
FOR VALUE RECEIVED, the undersigned, NEW LINDEN PRICE RITE, INC., a New
Jersey corporation and FOODARAMA SUPERMARKETS, INC. a New Jersey corporation,
(each, a "Maker") hereby jointly and severally promise to pay to
the order of ______________ ________________________ (the
"Lender"), at the office of GMAC BUSINESS CREDIT, LLC (the
"Agent"), 630 Fifth Avenue, 30th Floor, New York, New York 10011,
in installments and as otherwise provided in Section 2.01 of the Second Amended
and Restated Revolving Credit and Term Loan Agreement dated as of January __,
2000 among the Makers, the Guarantors named therein, the Lenders named therein
and the Agent (as the same may be amended, restated, modified or supplemented
from time to time in accordance with its terms, the "Credit
Agreement") or earlier as provided for in the Credit Agreement, the
lesser of the principal sum of [TEN MILLION DOLLARS AND NO CENTS ($10,000,000)]
or the unpaid principal amount of the Term Loan loaned by the Lender pursuant to
the terms of the Credit Agreement, in lawful money of the United States of
America in immediately available funds, and to pay interest from the date hereof
on the principal amount hereof from time to time outstanding, in like funds, at
said office, at a rate or rates per annum and payable on such dates as
determined pursuant to the terms of the Credit Agreement.
This Term Note amends and restates in its entirety and is given in
substitution for (but not satisfaction of) that certain Amended and Restated
Term Note C in the original principal amount of $12,500,000 dated May 2, 1997
and issued by New Linden Price Rite, Inc. and Shop Rite of Reading, Inc. under
the Previous Agreement. The obligations evidenced by this Term Note include
obligations outstanding under the Previous Loan Agreement immediately prior to
the issuance of this Term Note (including, without limitation accrued and unpaid
interest and fees under the Previous Loan Agreement as of the date hereof),
which continue to be outstanding, and the issuance of this Term Note does not
evidence or cause a repayment or novation with respect to such obligations.
This Term Note is subject to the terms of the Credit Agreement, which
terms are hereby incorporated herein by reference. This Term Note is secured
pursuant to and the holder is entitled to the benefits of the Credit Agreement.
Each Maker promises to pay interest, on demand, on any overdue principal
and fees and, to the extent permitted by law, overdue interest from their due
dates at a rate or rates determined as set forth in the Credit Agreement.
Each Maker hereby waives diligence, presentment, demand, protest and
notice of any kind whatsoever. The non-exercise by the holder of any of its
rights hereunder in any particular instance shall not constitute a waiver
thereof in that or any subsequent instance.
All borrowings evidenced by this Term Note and all payments and
prepayments of the principal hereof and interest hereon and the respective dates
thereof shall be endorsed by the holder hereof on the schedule attached hereto
and made a part hereof, or on a continuation thereof which shall be attached
hereto and made a part hereof, or otherwise recorded by such holder in its
internal records; provided, however, that the failure of the holder hereof to
make such a notation or any error in such a notation shall not in any manner
affect the obligations of the Makers to make payments of principal and interest
in accordance with the terms of this Term Note and the Credit Agreement.
This Term Note is one of the Notes referred to in the Credit Agreement,
which, among other things, contains provisions for the acceleration of the
maturity hereof upon the happening of certain events, for optional and mandatory
prepayment of the principal hereof prior to the maturity hereof and for the
amendment or waiver of certain provisions of the Credit Agreement, all upon the
terms and conditions therein specified. THIS NOTE SHALL BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK AND ANY
APPLICABLE LAWS OF THE UNITED STATES OF AMERICA.
As used herein, the term "Previous Loan Agreement" shall
mean and refer to the Amended and Restated Loan and Security Agreement dated as
of May 2, 1997, as amended, restated, modified and supplemented to date, among
Makers, certain affiliates of Makers, Agent and certain lenders.
NEW LINDEN PRICE RITE, INC.
By:_________________________
Name:
Title:
FOODARAMA SUPERMARKETS, INC.
By:_________________________
Name:
Title:
<PAGE>
Loans and Payment
Unpaid
Principal Name of
Amount and Payments of Balance of Person Making
Date Type of Loan Principal/Interest Note Notation
<PAGE>
EXHIBIT B-2
CAPITAL EXPENDITURE NOTE
$_____________ New York, New York _________ __, 200__
FOR VALUE RECEIVED, the undersigned, NEW LINDEN PRICE RITE, INC., a
New Jersey corporation and FOODARAMA SUPERMARKETS, INC., a New Jersey
Corporation (each, a "Maker") hereby jointly and severally promise to pay
to the order of ____________________ (the "Lender"), at the office of GMAC
BUSINESS CREDIT, LLC (the "Agent"), 630 Fifth Avenue, 30th Floor, New York,
New York 10011, in installments and as otherwise provided in Section 2.01
of the Second Amended and Restated Revolving Credit and Term Loan Agreement
dated as of December __, 1999 among the Makers, the Guarantors named
therein, the Lenders named therein and the Agent (as the same may be
amended, restated, modified or supplemented from time to time in accordance
with its terms, the "Credit Agreement") or earlier as provided for in the
Credit Agreement, the lesser of the principal sum of
__________________________________ ($___________) or the aggregate unpaid
principal amount of all Capital Expenditure Loans from the Lender pursuant
to the terms of the Credit Agreement, in lawful money of the United States
of America in immediately available funds, and to pay interest from the
date hereof on the principal amount hereof from time to time outstanding,
in like funds, at said office, at a rate or rates per annum and payable on
such dates as determined pursuant to the terms of the Credit Agreement.
This Capital Expenditure Note is subject to the terms of the Credit
Agreement, which terms are hereby incorporated herein by reference. This Capital
Expenditure Note is secured pursuant to and the holder is entitled to the
benefits of the Credit Agreement.
Each Maker promises to pay interest, on demand, on any overdue principal
and fees and, to the extent permitted by law, overdue interest from their due
dates at a rate or rates determined as set forth in the Credit Agreement.
Each Maker hereby waives diligence, presentment, demand, protest and
notice of any kind whatsoever. The non-exercise by the holder of any of its
rights hereunder in any particular instance shall not constitute a waiver
thereof in that or any subsequent instance.
All borrowings evidenced by this Capital Expenditure Note and all
payments and prepayments of the principal hereof and interest hereon and the
respective dates thereof shall be endorsed by the holder hereof on the schedule
attached hereto and made a part hereof, or on a continuation thereof which shall
be attached hereto and made a part hereof, or otherwise recorded by such holder
in its internal records; provided, however, that the failure of the holder
hereof to make such a notation or any error in such a notation shall not in any
manner affect the obligations of the Makers to make payments of principal and
interest in accordance with the terms of this Capital Expenditure Note and the
Credit Agreement.
This Capital Expenditure Note is one of the Notes referred to in the
Credit Agreement, which, among other things, contains provisions for the
acceleration of the maturity hereof upon the happening of certain events, for
optional and mandatory prepayment of the principal hereof prior to the maturity
hereof and for the amendment or waiver of certain provisions of the Credit
Agreement, all upon the terms and conditions therein specified. THIS NOTE SHALL
BE CONSTRUED IN ACCORDANCE WITH
<PAGE>
AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK AND ANY APPLICABLE LAWS OF THE
UNITED STATES OF AMERICA.
NEW LINDEN PRICE RITE, INC.
By:_________________________
Name:
Title:
FOODARAMA SUPERMARKETS, INC.
By:_________________________
Name:
Title:
<PAGE>
Loans and Payment
Unpaid
Principal Name of
Amount and Payments of Balance of Person Making
Date Type of Loan Principal/Interest Note Notation
<PAGE>
EXHIBIT C
Form of Opinion of Counsel
GIORDANO, HALLERAN & CIESLA
A PROFESSIONAL CORPORATION
ATTORNEYS AT LAW
- --------------------------------
GMAC Business Credit L.L.C.
January 7, 2000
Page 1
January 7, 2000
GMAC Business Credit, LLC, as Agent
630 Fifth Avenue, 30th Floor
New York, NY 10111
Re: Foodarama Supermarkets, Inc.
---------------------------
Gentlemen:
We have acted as counsel to Foodarama Supermarkets, Inc., a New Jersey
corporation ("Foodarama"), New Linden Price Rite, Inc., a New Jersey
corporation ("New Linden"), Shop Rite of Reading, Inc., a Pennsylvania
corporation ("Reading") and Shop-Rite of Malverne, Inc., a New York
corporation ("Malverne") (collectively the "Loan Parties") in connection
with the execution and delivery of:
(1) a Second Amended and Restated Revolving Credit and Term Loan
Agreement dated as of January 7, 2000 (the "Second Amendment") by and among
Foodarama and New Linden, as borrowers ("Borrowers"), Reading, and Malverne, as
guarantors, certain lenders a party thereto ("Lenders") and GMAC Business
Credit, LLC ("GMACBC") , as a lender and as agent (in such capacity, "Agent"),
in an aggregate principal amount up to $55,000,000;
(2) one or more Second Amended and Restated Revolving Notes in the
maximum aggregate principal amount of $25,000,000 made by Borrowers, payable to
the Lenders dated January7, 2000 (the "Revolving Note");
(3) one or more Capital Expenditure Notes in an aggregate principal
amount up to $20,000,000 made by Borrowers, payable to the Lenders dated as of
January7, 2000 (the "Capital Expenditure Note");
(4) one or more Second Amended and Restated Term Notes in the
original aggregate principal amount of $10,000,000 made by Borrowers, payable to
the Lenders dated January7, 2000 (the "Term Note");
(5) Second Modifications of Leasehold Mortgage and Security
Agreements dated as of January7, 2000 (collectively the "Second Modifications")
modifying the mortgages described on Schedule A, attached hereto;
(6) Modifications of Leasehold Mortgage and Security Agreements
dated as of January 7, 2000 (the "First Modifications") modifying the mortgages
described on Schedule A, attached hereto;
<PAGE>
GIORDANO, HALLERAN & CIESLA
A PROFESSIONAL CORPORATION
ATTORNEYS AT LAW
- --------------------------------
GMAC Business Credit L.L.C.
January 7, 2000
Page 2
(7) a Modification of Mortgage and Security Agreement dated as of
January7, 2000 (the "Linden Modification") modifying the fee mortgage described
on Schedule A, attached hereto;
(8) Leasehold Mortgage and Security Agreements dated as of January7, 2000
(the "New Leasehold Mortgages") described on Schedule A, attached hereto;
(9) Mortgage and Security Agreement dated as of January7, 2000 (the
"Linden Mortgage") made by Foodarama, as mortgagor, in favor of Agent, as
mortgagee, to be filed for record in the Office of the County Clerk, Union
County, New Jersey (collectively with the First and Second Modifications, the
Linden Modification and the New Leasehold Mortgages, the "Mortgage Documents");
(10) Reaffirmation, Ratification and Amendment Agreement dated as of
January7, 2000 by the Loan Parties in favor of Agent (the "Reaffirmation
Agreement"); and
(11) financing statements on Form UCC-1 described on Schedule C to
be filed pursuant to Chapter 9 of the Uniform Commercial Code, as enacted in New
Jersey (the "UCC") in the filing offices listed on Schedule C (the "Financing
Statements").
The Revolving Note, the Capital Expenditure Note and the Term Note are
hereinafter collectively referred to as the "Notes" and individually as a
"Note".
In rendering this opinion, we have examined only:
(1) the Second Amendment;
the Notes;
the Mortgage Documents;
the Reaffirmation Agreement;
the Financing Statements;
(6) certificates of existence issued by the New Jersey Department of
Treasury as of December 8, 1999 with respect to Foodarama and New Linden and
subsisting certificates issued by the Pennsylvania Secretary of State as of
December 7, 1999 with respect to Reading and by the New York Secretary of State
as of December 8, 1999 with respect to Malverne
<PAGE>
GIORDANO, HALLERAN & CIESLA
A PROFESSIONAL CORPORATION
ATTORNEYS AT LAW
- --------------------------------
GMAC Business Credit L.L.C.
January 7, 2000
Page 3
(collectively the "Certificates of Existence");
(7) certificates of incorporation certified by the Secretaries of
State of the jurisdiction of incorporation of each Loan Party and further
certified as true and complete by an officer of each Loan Party (the
"Certificates of Incorporation");
(8) bylaws of each Loan Party certified as true and complete by an
officer of each Loan Party (the "Bylaws"); and
(9) secretary's certificates of each secretary of each Loan Party
(the "Secretary's Certificates").
The Second Amendment, the Notes, the Mortgage Documents, the Reaffirmation
Agreement and the Financing Statements are hereinafter collectively referred to
as the "Amendment Documents". Other than the Factual Certificate described
below, we have not examined any other documents executed in connection with the
Amendment Documents. We have not examined any records of any court,
administrative tribunal or other similar entity in connection with our opinions.
We have been furnished with, and with your consent have relied upon, a
certificate of an officer of each Loan Party with respect to certain factual
matters (the "Factual Certificate"). As to matters of fact material to the
opinions set forth therein, we have relied upon the accuracy of the matters
addressed in the Factual Certificate and upon the representations and warranties
of the Loan Parties contained in the Loan Documents (as defined in the Second
Amendment). We have assumed, without independent investigation, that such
statements and representations are true, correct and complete, in all material
respects and we have no actual knowledge that such matters of fact are untrue.
In basing the opinions and other matters set forth herein on "our
knowledge," such phrases signify that, in the course of our representation of
the Loan Parties in the matters with respect to which we have been engaged by
the Loan Parties as counsel and as to which the lawyers in our firm who have had
active involvement in the preparation of this opinion letter or are primarily
responsible for providing the response concerning a particular opinion issue
(the "Primary Lawyer Group") have recently devoted substantive legal attention,
no information has come to the attention of the Primary Lawyer Group, without
investigation or inquiry, that would give them actual knowledge that any such
opinions or other matters are not accurate or that any of the documents,
certificates, reports and/or other information referenced herein on which we
have relied are not accurate and complete.
<PAGE>
GIORDANO, HALLERAN & CIESLA
A PROFESSIONAL CORPORATION
ATTORNEYS AT LAW
- --------------------------------
GMAC Business Credit L.L.C.
January 7, 2000
Page 4
In rendering the opinions set forth herein, with your permission, we have
assumed the following:
(a) (i) that each of the parties thereto (other than the Loan Parties
solely as to the Amendment Documents) has duly and validly executed and
delivered each Loan Document to which such party is a signatory, (ii) that the
obligations of each party to any Loan Document (other than the Amendment
Documents, solely as to the Loan Parties) are its legal, valid and binding
obligations, enforceable in accordance with their respective terms, (iii) the
absence or satisfaction of any requirement of consent, approval or other
authorization by any person or entity with respect to the actions of each party
to any Loan Document (other than the Amendment Documents, solely as to the Loan
Parties), (iv) the existence and good standing of each party to any Loan
Document (other than the Loan Parties), (v) the legal right and power of each
party to any Loan Document (other than the corporate power of the Loan Parties)
under all applicable laws and regulations to perform its obligations thereunder,
and (vi) that the Loan Documents (other than the Amendment Documents) contain
adequate default and remedial provisions for the practical realization by Agent
of the benefits afforded thereby;
(b) the legal capacity of all natural persons;
(c) that (other than the Amendment Documents) there have been no oral or
written modifications of or amendments to any Loan Document and there has been
no waiver or modification of any of the provisions thereof by actions or conduct
of the parties or otherwise;
(d) the genuineness of all signatures of all persons signing any
document or agreement;
the authenticity of all documents and agreements submitted to us as
originals and the conformity to original documents and agreements of all
documents or agreements submitted to us as copies;
that the Financing Statements will be duly filed and indexed in the
filing offices indicated on Schedule C hereto. ;
that the Assignment and Assumption Agreement between Heller Financial,
Inc. and GMACBC dated January 7, 2000 has been consummated and is valid,
binding and enforceable in accordance with its terms; and
(i) the execution and delivery of a Confirmation of Transfer of Agency
with respect to each of the existing mortgages described on Schedule A,
(ii) that each such
<PAGE>
GIORDANO, HALLERAN & CIESLA
A PROFESSIONAL CORPORATION
ATTORNEYS AT LAW
- --------------------------------
GMAC Business Credit L.L.C.
January 7, 2000
Page 5
Confirmation of Transfer of Agency has been duly recorded and
properly indexed and (iii) that the upon such recording and indexing
GMACBC, as agent, will be the holder of record, for the benefit of
the Lenders, of the mortgages to which each such Confirmation of
Transfer of Agency pertains.
(i) the execution and delivery of an Assignment of Mortgage (the
"Assignment") among Heller Financial, Inc. ("Heller") and GMACBC
pursuant to which Heller assigns the Linden Mortgage to GMACBC, (ii)
that the Assignment has been duly recorded and properly indexed and
(iii) that the upon such recording and indexing GMACBC, as agent,
will be the holder of record, for the benefit of the Lenders, of the
Linden Mortgage.
We have made no investigation as to whether GMACBC is authorized, in the
State of New Jersey or otherwise, to make the loan contemplated by the Loan
Documents (the "Loan") or perform their obligations thereunder or whether any
person or entity is authorized to do business in any state (other than the Loan
Parties in the State of New Jersey) and express no opinion as to whether any
such authorization is required in connection therewith. We assume that if any
such authorization is required, that each such person or entity is so
authorized.
The opinions expressed herein are subject to and are limited by:
(a) bankruptcy, insolvency, reorganization, fraudulent conveyance,
fraudulent transfer, moratorium or other similar laws of general application,
now or hereafter in effect, affecting the enforcement of creditors' rights in
general;
judicial discretion and general principles of equity (regardless of
whether considered in a proceeding in equity or at law), including,
without limitation, principles that (i) include a requirement that a
creditor act in good faith and deal fairly with its debtors, (ii)
limit a creditor's right to accelerate maturity of a debt upon the
occurrence of a default deemed immaterial, or (iii) might render
certain waivers unenforceable, and we wish to advise you that the
remedy of specific performance or injunctive relief (whether
considered in a proceeding in equity or at law) is subject to the
exercise of judicial discretion;
the qualification that certain provisions in the Mortgage Documents, in
addition to those expressly qualified by the phrase "to the extent
permitted by law" or comparable provisions (as to which no opinion
is expressed herein), may be unenforceable in whole or in part, but
the inclusion of such provisions does not render the other
<PAGE>
GIORDANO, HALLERAN & CIESLA
A PROFESSIONAL CORPORATION
ATTORNEYS AT LAW
- --------------------------------
GMAC Business Credit L.L.C.
January 7, 2000
Page 6
provisions thereof invalid or preclude, subject to the other
exceptions and limitations expressed herein, (i) the judicial
enforcement of the obligation of the Borrowers to repay the
principal, together with interest thereon as provided in the Notes,
(ii) the acceleration of the obligation of the Borrowers to repay
such principal or interest, upon a material default by the Borrowers
in the payment of such principal or interest, and (iii) the judicial
foreclosure in accordance with applicable law of the lien on and
security interest in the collateral created thereby (to the extent
we have expressly opined thereto) upon maturity or upon the
acceleration pursuant to (ii) above;
the qualification that certain provisions in the Amendment Documents
other than the Mortgage Documents, in addition to those expressly
qualified by the phrase "to the extent permitted by law" or
comparable provisions (as to which no opinion is expressed herein),
may be unenforceable in whole or in part, but the inclusion of such
provisions does not render the other provisions thereof invalid, and
collectively, the Amendment Documents other than the Mortgage
Documents contain adequate remedial provisions for the practical
realization of the rights and benefits afforded thereby (except for
the economic consequences of any delay that arises from such lack of
enforceability);
the rights of any person or entity which is a party to any agreement
between such person or entity and the Loan Parties (including
without limitation, licensors, lessees or account debtors) in any of
the collateral, the terms of such agreements, and any claims or
defenses of any such person or entity against the Loan Parties
arising under or outside such agreements;
the provisions of the New Jersey Industrial Site Recovery Act (ISRA) in
the event there occurs a closing, terminating or transferring of
ownership or operations within the meaning thereof (which provisions
may prevent foreclosure of any lien on any collateral pending
compliance with the requirements of ISRA);
the qualification that any provision requiring the payment of attorney's
fees and costs of suit or payment of interest in connection with the
exercise of remedies may be unenforceable except to the extent that
such fees and costs are reasonable and are permitted by applicable
Court Rules of the State of New Jersey;
the nonenforceability of provisions providing for "interest on interest"
(or compound interest), payment of late charges, post-default
increased interest rates, liquidated
<PAGE>
GIORDANO, HALLERAN & CIESLA
A PROFESSIONAL CORPORATION
ATTORNEYS AT LAW
- --------------------------------
GMAC Business Credit L.L.C.
January 7, 2000
Page 7
damages and prepayment premiums, to the extent they are deemed to be
penalties or forfeitures or are otherwise violative of public policy;
the nonenforceability of provisions permitting the Agent or Lenders to
exercise rights under a power of attorney granted in connection with
the Amendment Documents after all amounts due thereunder have been
paid and the obligation to make further advances has terminated;
the nonenforceability of provisions requiring amendments or waivers of
the provisions of agreements or documents to be written (other than as
provided pursuant to N.J.S.A.ss.25:1-5);
the nonenforceability of any provision imposing increased interest rates
and/or late payment charges upon the occurrence of an event of
default to the extent they are deemed to be penalties or forfeitures
or are otherwise violative of public policy;
the nonenforceability of any provision imposing an additional charge in
connection with any prepayment of principal where such prepayment
arises out of the occurrence of an event beyond the control of a
Loan Party or the condemnation or the complete or partial
destruction of any collateral;
the nonenforceability of provisions requiring a Loan Party to indemnify
the Agent or Lenders or their agents, officers, directors or any
other person or entity or of any provisions exculpating any person
or entity from liability for its actions or inaction to the extent
such indemnification or exculpation is deemed inequitable,
unconscionable or contrary to public policy;
the nonenforceability, under certain circumstances, of provisions to the
effect that failure to exercise or delay in exercising rights or
remedies will not operate as a waiver of the rights or remedies;
the nonenforceability of provisions purporting to entitle the Agent or
any Lender to the appointment of a receiver to the extent that such
provisions contravene public policy; and
the nonenforceability of provisions providing for the cumulation of, or
selection among, remedies, to the extent that the cumulation or
selection would put the aggrieved party in a better position than it
would have been in had there been full
<PAGE>
GIORDANO, HALLERAN & CIESLA
A PROFESSIONAL CORPORATION
ATTORNEYS AT LAW
- --------------------------------
GMAC Business Credit L.L.C.
January 7, 2000
Page 8
performance by the other party.
The opinions hereinafter set forth are subject to the further
qualification that no opinion is expressed as to:
(1) any lien or security interest that purports to secure any future
obligations or liabilities of a Loan Party to the Agent or any Lender that
are determined not to constitute "future advances" within the meaning of
Section 9-204(3) of the UCC, are determined not to have been within the
contemplation of the Loan Parties and the Agent or any Lender at the time
the Amendment Documents were executed, or are determined not to be of the
same character or class as the obligations and liabilities to the Agent or
any Lender created or arising under the Amendment Documents;
(2) the adequacy of the description of any collateral in any Loan
Document or Amendment Document;
(3) whether the description of any real property covered by any
Amendment Document or financing statement (including without limitation the
identity of the record owner thereon) is accurate, correct or complete and
whether any such description, in fact, describes the property intended to
by covered thereby;
(4) the Loan Parties' rights in and title to any collateral;
(5) the priority of any lien or security interest;
(6) any lien or security interest to the extent that the grant,
creation or perfection thereof is governed exclusively by any law other
than the UCC;
(7) any law other than the UCC, to the extent that such other law is
applicable to the grant, creation or perfection of any security interest in
personal property;
(8) any guaranty or other Loan Document (other than the Amendment
Documents);
(9) provisions which purport to constitute or provide for the waiver
or release of the rights of a Loan Party, including, without limitation,
the waiver or
<PAGE>
GIORDANO, HALLERAN & CIESLA
A PROFESSIONAL CORPORATION
ATTORNEYS AT LAW
- --------------------------------
GMAC Business Credit L.L.C.
January 7, 2000
Page 9
release of (i) the benefit of a statute of limitation or
moratorium laws, (ii) the benefits of any exemption from civil process or
extension of time for payment, (iii) the right to trial by jury, (iv) rights to
notice, (v) rights to assert claims for punitive damages, (vi) appraisal or
valuation rights, and (vii) rights to marshalling of assets;
(10) whether any fees, sums or other benefits, direct or indirect,
which could constitute interest, including any capital adequacy or compensating
balance or return requirements or fees in lieu thereof, payable to or receivable
by the Lenders may be includable as interest; and
(11) the perfection of any security interest in (i) equipment used
in farming operations, (ii) farm products, (iii) accounts or general intangibles
arising from or relating to the sale of farm products by a farmer, (iv) consumer
goods, (v) crops (growing or to be grown), (vi) timber to be cut, (vii) minerals
or the like (including oil and gas), (viii) accounts resulting from the sale of
an interest in minerals or the like (including oil and gas) before extraction
and which attaches thereto as extracted at the wellhead or minehead and (ix)
fixtures or goods which are to become fixtures, other than the fixtures of
Foodarama located at the real estate described on the Financing Statements to be
filed in Middlesex, Monmouth, Ocean, Union and Somerset Counties described on
Schedule C and other than the fixtures of New Linden located at the real estate
described on the Financing Statements to be filed in Monmouth County as
described on Schedule C.
We call your attention to the fact that the perfection of the security
interests in the collateral with respect to which we have opined herein will be
terminated (1) as to any collateral acquired by the grantor of such security
interest more than four months after such grantor so changes its name, identity
or corporate structure as to make the financing statements seriously misleading,
unless new appropriate financing statements indicating, among other things, the
new name, identity or corporate structure of such grantor are duly filed and
indexed before the expiration of such four month period, (2) as to any
collateral consisting of "accounts" (as defined in the UCC), four months after
the grantor changes its chief executive offices to a new jurisdiction outside
the State of New Jersey unless such security interests are perfected in such new
jurisdiction before such termination, and (3) as to any collateral consisting of
"money" or "instruments" (as defined under the UCC), other than instruments whic
constitute a part of "chattel paper" (as defined under the UCC), twenty-one days
after the security interest therein attaches, unless the secured party takes
possession of such instruments.
The opinions set forth herein are subject to the following further
qualifications:
(a) in the case of the collateral consisting of proceeds, continuation
of perfection of the security interest therein is limited to the extent set
forth in Section 9-306 of the UCC;
(b) in the case of the collateral consisting of accessions, the
ability of a secured party to remove its collateral from the whole is
limited to the extent set forth in Section 9-314 of the UCC;
(c) the UCC requires the filing of continuation statements within the
period of six months prior to the expiration of five years from the date of
the original filing or the filing of any continuation statement, in order
to maintain the effectiveness of the filings referred to herein;
(d) buyers in the ordinary course and other buyers may take certain
collateral free of a secured party's security interest pursuant to Section
9-307 and 9-308 of the UCC; and
(e) security interests in after acquired property are subject to the
limitations set forth in Section 9-108 of the UCC.
We have investigated such questions of law for the purpose of rendering
this opinion as we have deemed necessary. The members of this firm are engaged
in the practice of law in the State of New Jersey. We are opining herein only as
to applicable provisions of New Jersey law and, subject to the exceptions set
forth below, United States federal law. We express no opinion as to any other
laws, statutes, ordinances, rules or regulations (such as those identified in
Section 19 of the Legal Opinion Accord of the ABA Section of Business Law (1991)
(the "Accord"), except to the extent that we have expressly opined as to matters
addressed in Section 19(h) of the Accord. To the extent that the Loan Documents
are governed by the laws of the State of New York and to the extent that the
legal matters addressed by our opinions expressed herein related to the laws of
a jurisdiction other than New Jersey, we have assumed, with your permission,
that the laws of such other jurisdiction are identical to the laws of the State
of New Jersey.
In rendering the opinions expressed in paragraph 1, below, as to the
existence and good standing of the Loan Parties, we have relied solely on the
Certificates of Incorporation, the Certificates of Existence, the Secretary's
Certificates and the Factual Certificate. In rendering the opinions expressed in
paragraph 2, below, as to due authorization we have relied on the Secretary's
Certificates.
In rendering the opinions expressed in paragraph 3, below, we have relied
upon the Secretary's Certificates, the Factual Certificate, the Certificates of
Incorporation and the Bylaws.
In rendering the opinions expressed in paragraph 4, below, as to pending
or threatened actions, suits or proceedings, if any Loan Party is not
represented by this law firm in a particular matter or if a Loan Party is
represented by another law firm or other legal counsel in a particular matter,
although we may have knowledge of such matter, we render no opinion as to such
matters and have made no comments or reference in this opinion or on the
litigation schedule attached hereto with respect thereto. We recommend that you
communicate with the Loan Parties with respect to any such matters.
In rendering the opinions expressed in paragraph 5, below, we have relied
on the Factual Certificate.
Furthermore, to the extent that the opinions rendered herein encompass
laws relating to usury, we opine only as to New Jersey State law without regard
to those provisions which refer to federal law and we have assumed, with your
permission, that the interest rate charged to the Borrower will not exceed fifty
percent (50%).
On the basis of and subject to the foregoing, and in reliance thereon, and
subject to the further assumptions, limitations, qualifications and exceptions
set forth below, we are of the opinion that:
1. Each Loan Party is validly existing and in good standing as a
corporation under the laws of its jurisdiction of formation. Each Loan
Party has the requisite corporate power to enter into and perform its
obligations under the Amendment Documents to which it is a party.
2. The execution, delivery and performance by each Loan Party of each
Amendment Document to which it is a party has been duly authorized by all
requisite corporate action. Each Amendment Document has been duly executed
and delivered and is valid, binding and enforceable against each Loan Party
which is a party thereto in accordance with its terms.
3. Neither the execution and delivery of the Amendment Documents by
the Loan Parties, nor the Loan Parties' compliance with any of the
provisions thereof, will violate any New Jersey state or federal law or
regulation applicable to the Loan Parties or violate any provisions of the
Certificates of Incorporation or Bylaws. To our knowledge, no Loan Party is
a party to any order or decree of any court or governmental agency.
4. Except as identified on Schedule B attached hereto and as otherwise
disclosed in the Second Amendment and the attachments thereto, to our
knowledge, there are no actions, suits or proceedings pending or threatened
against any Loan Party before any court, arbitrator or governmental or
administrative body or agency.
5. No action (with regard to the Loan Parties) of, or filing by the
Loan Parties with, any New Jersey or federal governmental or public body or
authority is required to authorize, or is otherwise required in connection
with, each Loan Party's execution, delivery and performance of the
Amendment Documents to which it is a party, other than the filing of a
Current Report on Form 8-K with the Securities and Exchange Commission and
the recording and proper indexing of the Mortgage Documents in the mortgage
records of the counties in which the real estate subject to such Mortgage
Documents is located.
6. Each of the Mortgage Documents, when executed and acknowledged will
be in proper form for recording in the office of the clerk of the county in
which such real estate is located.
7. Each Mortgage Document is valid, binding and enforceable against
the Loan Party which is a party thereto and each Mortgage Document which is
a First Modification, Second Modification or the Linden Modification will
not render the mortgages which they amend unenforceable or preclude (i) the
judicial enforcement of the obligation of the Loan Parties to repay the
principal, together with interest thereon (to the extent not deemed a
penalty) as provided in the Notes, (ii) the acceleration of the obligation
of the Loan Parties to repay such principal, together with such interest,
upon a material default by the Loan Parties in the payment thereof, and
(iii) the judicial foreclosure in accordance with applicable state law of
the lien on the real estate created by such mortgage upon maturity or upon
such acceleration.
8. Upon the due recording and proper indexing of the Mortgage
Documents, such recording and indexing will be sufficient to provide
constructive notice to third parties of the terms thereof. No state or
local mortgage tax, stamp tax or other similar fee is required to be paid
in connection with the execution, delivery or recording of New Jersey other
than customary per document filing and recording fees.
9. The Financing Statements are in the proper form for filing in the
filing offices indicated on Schedule C hereto. Upon the due filing and
indexing of the Financing Statements, the security interests in such
collateral in favor of the Lenders will be perfected to the extent that
such security interest therein is governed by the UCC and may be perfected
by the filing of a financing statement pursuant to the UCC.
All assumptions have been made without independent investigation and sole
or exclusive reliance on certificates or documents identified herein have been
without independent investigation. We have no actual knowledge that assumptions
as to matters of fact are untrue.
This opinion is provided to you as a legal opinion only and not as a
guaranty or warranty of the matters discussed herein. This opinion is for your
reliance only in connection with the Second Amendment and is not intended for
reliance of, and shall not be relied upon by, any other person or entity without
our express written consent, other than assignees of or participants under the
Loan Documents in connection with such assignment or participation. This opinion
is not to be quoted in whole or in part or referred to, nor is it to be filed
with or disclosed to any governmental agency without our prior written consent,
except to the extent required by laws or regulations. No opinion is to be
implied or inferred beyond the opinions expressly stated herein. We undertake no
obligation to inform you of any matters which may subsequently come to our
attention or subsequently occur which affect, in any way, the opinions rendered
herein.
Very truly yours,
GIORDANO, HALLERAN & CIESLA
A Professional Corporation
<PAGE>
GIORDANO, HALLERAN & CIESLA
A PROFESSIONAL CORPORATION
ATTORNEYS AT LAW
- --------------------------------
GMAC Business Credit L.L.C.
January 7, 2000
Page 10
SCHEDULE A
Description of Existing Mortgages and New Mortgages
Existing Mortgages modified by the Second Modifications:
1. Brick Term Loan - Leasehold Mortgage and Security Agreement dated
as of February 15, 1995, made by Foodarama Supermarkets, Inc., as
Mortgagor, in favor of NatWest Bank N.A., as Mortgagee, filed for record on
May 26, 1995 in the Office of the County Clerk, Ocean County in Mortgage
Book 4083, Page 190 as amended by that certain Modification of Leasehold
Mortgage and Security Agreement dated as of May 14, 1997 and filed for
record on May 23, 1997 in the Office of the County Clerk, Ocean County in
Mortgage Book 451, Page 46.
2. Brick Revolving Loan - Leasehold Mortgage and Security Agreement
dated as of February 15, 1995, made by Foodarama Supermarkets, Inc., as
Mortgagor, in favor of NatWest Bank N.A., filed for record on May 26, 1995
in the Office of the County Clerk, Ocean County in Mortgage Book 4083, Page
234 as amended by that certain Modification of Leasehold Mortgage and
Security Agreement dated as of May 14, 1997 and filed for record on May 23,
1997 in the Office of the County Clerk, Ocean County in Mortgage Book 451,
Page 55.
3. Edison (Oak Tree Road) Term Loan - Leasehold Mortgage and Security
Agreement dated as of February 15, 1995, made by Foodarama Supermarkets,
Inc., as Mortgagor, in favor of NatWest Bank N.A., as Mortgagee, filed for
record on August 14, 1995 in the Office of the County Clerk, Middlesex
County in Mortgage Book 4938, Page 705 as amended by that certain
Modification of Leasehold Mortgage and Security Agreement dated as of May
14, 1997 and filed for record on May 22, 1997 in the Office of the County
Clerk, Middlesex County in Mortgage Book 74, Page 698.
4. Edison (Oak Tree Road) Revolving Loan - Leasehold Mortgage and
Security Agreement dated as of February 15, 1995, made by Foodarama
Supermarkets, Inc., as Mortgagor, in favor of NatWest Bank N.A., as
Mortgagee, filed for record on August 14, 1995 in the Office of the County
Clerk, Middlesex County in Mortgage Book 4938, Page 754 as amended by that
certain Modification of Leasehold Mortgage and Security Agreement dated as
of May 14, 1997 and filed for record on May 22, 1997 in the Office of the
County Clerk, Middlesex County in Mortgage Book 74, Page 707.
5. Freehold (3559) Term Loan - Leasehold Mortgage and Security
Agreement dated as of February 15, 1995, made by New Linden Price Rite,
Inc., as Mortgagor, in favor of NatWest Bank N.A., as Mortgagee, filed for
record on March 6, 1995 in the Office of the County Clerk, Monmouth County
in Mortgage Book 5761, Page 139 amended by that certain Modification of
Leasehold Mortgage and Security Agreement dated as of May 14, 1997 and
filed for record on June 20, 1997 in the Office of the County Clerk,
Monmouth County in Mortgage Book 6222, Page 70.
6. Freehold (3559) Revolving Loan. - Leasehold Mortgage and Security
Agreement dated as of February 15, 1995, made by New Linden Price Rite,
Inc., as Mortgagor, in favor of NatWest Bank N.A., as Mortgagee, filed for
record on March 6, 1995 in the Office of the County Clerk, Monmouth County
in Mortgage Book 5761, Page 181 amended by that certain Modification of
Leasehold Mortgage and Security Agreement dated as of May 14, 1997 and
filed for record on June 20, 1997 in the Office of the County Clerk,
Monmouth County in Mortgage Book 6222, Page 85.
7. Freehold (Liquor Store) Term Loan - Leasehold Mortgage and Security
Agreement dated as of February 15, 1995, made by New Linden Price Rite,
Inc., as Mortgagor, in favor of NatWest Bank N.A. as Mortgagee, filed for
record on March 6, 1995 in the office of the County Clerk, Monmouth County
in Mortgage Book 5761, Page 231 amended by that certain Modification of
Leasehold Mortgage and Security Agreement dated as of May 14, 1997 and
filed for record on June 20, 1997 in the Office of the County Clerk,
Monmouth County in Mortgage Book 6222, Page 93.
8. Freehold (Liquor Store) Revolving Loan - Leasehold Mortgage and
Security Agreement dated as of February 15, 1995, made by New Linden Price
Rite, Inc., as Mortgagor, in favor of NatWest Bank N.A., as Mortgagee,
filed for record on March 6, 1995 in the office of the County Clerk,
Monmouth County in Mortgage Book 5761, Page 273 amended by that certain
Modification of Leasehold Mortgage and Security Agreement dated as of May
14, 1997 and filed for record on June 20, 1997 in the Office of the County
Clerk, Monmouth County in Mortgage Book 6222, Page 101.
9. Neptune Term Loan - Leasehold Mortgage and Security Agreement dated
as of February 15, 1995, made by Foodarama Supermarkets, Inc., as
Mortgagor, in favor of NatWest Bank N.A., as Mortgagee, filed for record on
March 6, 1995 in the Office of the County Clerk, Monmouth County in
Mortgage Book 5761, Page 418 amended by that certain Modification of
Leasehold Mortgage and Security Agreement dated as of May 14, 1997 and
filed for record on May 22, 1997 in the Office of the County Clerk,
Monmouth County in Mortgage Book 6200, Page 691.
10. Neptune Revolving Loan - Leasehold Mortgage and Security Agreement
dated as of February 15, 1995, made by Foodarama Supermarkets, Inc., as
Mortgagor, in favor of Natwest Bank N.A., as Mortgagee, filed for record on
March 6, 1995 in the Office of the County Clerk, Monmouth County in
Mortgage Book 5761, Page 461 amended by that certain Modification of
Leasehold Mortgage and Security Agreement dated as of May 14, 1997 and
filed for record on May 22, 1997 in the Office of the County Clerk,
Monmouth County in Mortgage Book 6200, Page 700.
Existing Mortgages Modified by the First Modifications:
West Long Branch Term Loan - Leasehold Mortgage and Security Agreement dated as
of February 15, 1995, made by Foodarama Supermarkets, Inc., as Mortgagor, in
favor of Natwest Bank N.A., as Mortgagee, filed for record on March 6, 1995 in
the Office of the County Clerk, Monmouth County in Mortgage Book 5761, Page 323.
West Long Branch Revolving Loan - Leasehold Mortgage and Security Agreement
dated as of February 15, 1995, made by Foodarama Supermarkets, Inc., as
Mortgagor, in favor of Natwest Bank N.A., as Mortgagee, filed for record on
March 6, 1995 in the Office of the County Clerk, Monmouth County in Mortgage
Book 5761, Page 367. Sayreville Term Loan - Leasehold Mortgage and Security
Agreement dated as of February 15, 1995, made by Foodarama Supermarkets, Inc.,
as Mortgagor, in favor of Natwest Bank N.A., as Mortgagee, filed for record on
March 6, 1995 in the Office of the County Clerk, Middlesex County in Mortgage
Book 4869, Page 292.
Sayreville Revolving Loan - Leasehold Mortgage and Security Agreement dated as
of February 15, 1995, made by Foodarama Supermarkets, Inc., as Mortgagor, in
favor of Natwest Bank N.A., as Mortgagee, filed for record on March 6, 1995 in
the Office of the County Clerk, Middlesex County in Mortgage Book 4869, Page
335.
Middletown Term Loan (Lease #1) - Leasehold Mortgage and Security Agreement
dated as of November 16, 1995, made by Foodarama Supermarkets, Inc., as
Mortgagor, in favor of Natwest Bank N.A., as Mortgagee, filed for record on
November 29, 1995 in the Office of the County Clerk, Monmouth County in Mortgage
Book 5895, Page 97.
Middletown Term Loan (Lease #2) - Leasehold Mortgage and Security Agreement
dated as of November 16, 1995, made by Foodarama Supermarkets, Inc., as
Mortgagor, in favor of Natwest Bank N.A., as Mortgagee, filed for record on
November 29, 1995 in the Office of the County Clerk, Monmouth County in Mortgage
Book 5895, Page 182.
Middletown Revolving Loan (Lease #2) - Leasehold Mortgage and Security Agreement
dated as of November 16, 1995, made by Foodarama Supermarkets, Inc., as
Mortgagor, in favor of Natwest Bank N.A., as Mortgagee, filed for record on
November 29, 1995 in the Office of the County Clerk, Monmouth County in Mortgage
Book 5895, Page 224.
Middletown Revolving Loan (Lease #1) - Leasehold Mortgage and Security Agreement
dated as of November 16, 1995, made by Foodarama Supermarkets, Inc., as
Mortgagor, in favor of Natwest Bank N.A., as Mortgagee, filed for record on
November 29, 1995 in the Office of the County Clerk, Monmouth County in Mortgage
Book 5895, Page 139.
Aberdeen Term Loan - Leasehold Mortgage and Security Agreement dated as of July
24, 1997, made by Foodarama Supermarkets, Inc., as Mortgagor, in favor of Heller
Financial, Inc., as Mortgagee, filed for record on August 20, 1997 in the Office
of the County Clerk, Monmouth County in Mortgage Book 6268, Page 669.
Aberdeen Revolving Loan - Leasehold Mortgage and Security Agreement dated as of
July 24, 1997, made by Foodarama Supermarkets, Inc., as Mortgagor, in favor of
Heller Financial, Inc., as Mortgagee, filed for record on August 20, 1997 in the
Office of the County Clerk, Monmouth County in Mortgage Book 6268, Page 718.
Montgomery Term Loan - Leasehold Mortgage and Security Agreement dated as of
July 24, 1997, made by Foodarama Supermarkets, Inc., as Mortgagor, in favor of
Heller Financial, Inc., as Mortgagee, filed for record on August 20, 1997 in the
Office of the County Clerk, Somerset County in Mortgage Book 2806, Page 240.
Montgomery Revolving Loan - Leasehold Mortgage and Security Agreement dated as
of July 24, 1997, made by Foodarama Supermarkets, Inc., as Mortgagor, in favor
of Natwest Bank N.A., as Mortgagee, filed for record on August 20, 1997 in the
Office of the County Clerk, Somerset County in Mortgage Book 2806, Page 200.
Edison (Route 1) Tern Loan - Leasehold Mortgage and Security Agreement dated as
of February 15, 1995, made by Foodarama Supermarkets, Inc., as Mortgagor, in
favor of NatWest Bank N.A., as Mortgagee, filed for record on March 6, 1995 in
the Office of the County Clerk, Middlesex County in Mortgage Book 4869, Page
379.
Edison (Route 1) Revolving Loan - Leasehold Mortgage and Security Agreement
dated as of February 15, 1995, made by Foodarama Supermarkets, Inc., as
Mortgagor, in favor of NatWest Bank N.A., as Mortgagee, filed for record on
March 6, 1995 in the Office of the County Clerk, Middlesex County in Mortgage
Book 4869, Page 421.
Existing Fee Mortgage Modified by the Linden Modification:
Linden Revolving, Term and Capital Expenditure Loan - Mortgage and Security
Agreement dated as of November 14, 1997, made by Foodarama Supermarkets, Inc.,
as Mortgagor, in favor of Heller Financial, Inc., as Mortgagee, filed for record
on November 17, 1997 in the Office of the County Clerk, Union County in Mortgage
Book 6459, Page 281.
New Leasehold Mortgages:
Lakewood Term and Capital Expenditure Loan -- Leasehold Mortgage and Security
Agreement dated as of January 7, 2000, made by Foodarama Supermarkets, Inc., as
Mortgagor, in favor of GMACBC, as Mortgagee, to be filed for record in the
Office of the County Clerk, Ocean County.
Lakewood Revolving Loan -- Leasehold Mortgage and Security Agreement dated as of
January 7, 2000, made by Foodarama Supermarkets, Inc., as Mortgagor, in favor of
GMACBC, as Mortgagee, to be filed for record in the Office of the County Clerk,
Ocean County.
North Brunswick Term and Capital Expenditure Loan -- Leasehold Mortgage and
Security Agreement dated as of January 7, 2000, made by Foodarama Supermarkets,
Inc., as Mortgagor, in favor of GMACBC, as Mortgagee, to be filed for record in
the Office of the County Clerk, Middlesex County.
North Brunswick Revolving Loan -- Leasehold Mortgage and Security Agreement
dated as of January7, 2000, made by Foodarama Supermarkets, Inc., as Mortgagor,
in favor of GMACBC, as Mortgagee, to be filed for record in the Office of the
County Clerk, Middlesex County.
Wall Term and Capital Expenditure Loan -- Leasehold Mortgage and Security
Agreement dated as of January7, 2000, made by Foodarama Supermarkets, Inc., as
Mortgagor, in favor of GMACBC, as Mortgagee, to be filed for record in the
Office of the County Clerk, Monmouth County.
Wall Revolving Loan -- Leasehold Mortgage and Security Agreement dated as of
January7, 2000, made by Foodarama Supermarkets, Inc., as Mortgagor, in favor of
GMACBC, as Mortgagee, to be filed for record in the Office of the County Clerk,
Monmouth County.
Branchburg Term and Capital Expenditure Loan -- Leasehold Mortgage and Security
Agreement dated as of January7, 2000, made by Foodarama Supermarkets, Inc., as
Mortgagor, in favor of GMACBC, as Mortgagee, to be filed for record in the
Office of the County Clerk, Somerset County.
Branchburg Revolving Loan -- Leasehold Mortgage and Security Agreement dated as
of January7, 2000, made by Foodarama Supermarkets, Inc., as Mortgagor, in favor
of GMACBC, as Mortgagee, to be filed for record in the Office of the County
Clerk, Somerset County.
Bound Brook Term and Capital Expenditure Loan -- Leasehold Mortgage and Security
Agreement dated as of January7, 2000, made by Foodarama Supermarkets, Inc., as
Mortgagor, in favor of GMACBC, as Mortgagee, to be filed for record in the
Office of the County Clerk, Somerset County.
Bound Brook Revolving Loan -- Leasehold Mortgage and Security Agreement dated as
of January7, 2000, made by Foodarama Supermarkets, Inc., as Mortgagor, in favor
of GMACBC, as Mortgagee, to be filed for record in the Office of the County
Clerk, Somerset County.
Piscataway Term and Capital Expenditure Loan -- Leasehold Mortgage and Security
Agreement dated as of January7, 2000, made by Foodarama Supermarkets, Inc., as
Mortgagor, in favor of GMACBC, as Mortgagee, to be filed for record in the
Office of the County Clerk, Middlesex County.
Piscataway Revolving Loan -- Leasehold Mortgage and Security Agreement dated as
of January7, 2000, made by Foodarama Supermarkets, Inc., as Mortgagor, in favor
of GMACBC, as Mortgagee, to be filed for record in the Office of the County
Clerk, Middlesex County.
<PAGE>
GIORDANO, HALLERAN & CIESLA
A PROFESSIONAL CORPORATION
ATTORNEYS AT LAW
- --------------------------------
GMAC Business Credit L.L.C.
January 7, 2000
Page 11
SCHEDULE B
Litigation
1. Foodarama Supermarkets, Inc. v. Oak Tree Road Associates.
2. Foodarama Supermarkets, Inc. adv. Pennsauken Solid Waste Management
Authority, et al. plaintiff v. Quick-Way, inc. defendant and third party
plaintiff.
3. 1163 R34 Associates, L.L.C. v. Foodarama Supermarkets, Inc. et. al.
<PAGE>
GIORDANO, HALLERAN & CIESLA
A PROFESSIONAL CORPORATION
ATTORNEYS AT LAW
- --------------------------------
GMAC Business Credit L.L.C.
January 7, 2000
Page 12
Schedule C
Filing Jurisdictions
Debtor Secured Party Filing Office Foodarama Supermarkets,
Inc.GMACoBusiness)Credit, LLC (StateBof)New Jersey, Department of Treasury
("NJDOS") Foodarama GMACBC Office of the County Clerk of Middlesex County,
New Jersey Foodarama GMACBC Office of the County Clerk of Monmouth County,
New Jersey ("Monmouth") New Linden Price Rite, Inc. GMACBCLinden") NJDOS
New Linden GMACBC Monmouth Foodarama GMACBC Office of the County Clerk of
Ocean County, New Jersey Foodarama GMACBC Office of the County Clerk of
Somerset County, New Jersey Foodarama GMACBC Office of the County Clerk of
Union County, New Jersey
::ODMA\PCDOCS\ghcdocs\129899\1
<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 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,
<PAGE>
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 discretion) to transfer to or to register
the Pledged Securities in its own name or the name of its nominee. In
addition, the Agent shall at all times have the right to exchange the
certificates representing Pledged Securities for certificates of smaller or
larger denominations for any purpose consistent with this Agreement.
5. Voting Rights; Dividends; etc. (a) Unless and until an Event of
Default 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. delivere to the Agent in the same
form as so received (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 (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
othe 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
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 t 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 court 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,
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 act-4--n 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 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 thereo
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
th Agent or the Lenders in the. absence of the bad faith, gross negligence or
willful misconduct of the Aget 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 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 W the administration of this
Agreement, (ii) the custody or preservation of, or the sale of, collection
from, or other realization upon, any of the Collateral, (iii) the exercise
or enforcement of any of the rights of the Agent hereunder or (iv) the
failure by the Grantors to perform or observe any of the provisions hereof.
In addition, the Grantors will indemnify the Agent and hold the Agent
harmless from and against any and all liability incurred by the Agent
hereunder or in connection herewith, unless such liability shall be due to
the gross negligence, bad faith or willful misconduct of the Agent. Any
such amounts payable as provided hereunder or thereunder shall be
additional Obligations secured hereby and by the Security Documents.
14. Termination. This Agreement shall terminate when all Obligations
have been paid fully and indefeasibly in cash or in a manner otherwise
satisfactory to the Agent and the Lenders have no further commitment to make
Loans or open or cause to be opened Letters of Credit under the Credit
Agreement, at which time the Agent shall reassign and deliver to the Grantors,
or to such person or persons as the Grantors shall designate, against receipt,
such of the Collateral (if any) as shall not have been sold or otherwise still
be held by it hereunder, together with appropriate instruments of reassignment
and release; provided, however, that all indemnities of the Grantors contained
in this Agreement shall survive, and remain operative and in full force and
effect regardless of, the termination of this Agreement. Upon any such
termination, the Agent will, at the Grantors' expense, execute and deliver to
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 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 SECITURITY 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 beer the signature of each
Grantor shall have been delivered to the Agent.
21. Section Headings. Section headings used here-in are for
convenience only and are not to affect the construction, 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:
<PAGE>
SCHEDULE I
to Pledge Agreement
Stock Certificate No(s).
Percentage of Outstanding Shares
Number
Grantor Stock Issuer Class of Stock Par Value of Shares
Foodarama SupermShoptRitenof MaCommon, Inc. 3 --- 10 100%
Foodarama SupermNeweLindencPricCommon, Inc. 7 --- 100 100%
Foodarama SupermShoptRitenof ReCommon Inc. 4 $100 3 100%
<PAGE>
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 -J- 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
-1-
<PAGE>
repossessed goods.
(b) "Collateral" shall mean all (i) Accounts Receivable, (ii)
Documents, (iii) Equipment, (iv) General Intangibles, (v) Inventory, and (vi)
Proceeds.
(c) "Documents" shall mean all instruments, files, records,
ledger sheets and documents covering or relating to any of the Collateral.
(d) "Equipment" shall mean all of any Grantor's entire right, title
and interest in and to machinery, equipment, vehicles, furniture and
fixtures and all attachments, accessories and equipment now or hereafter
owned or acquired in any Grantor's businesses or used in connection
therewith, and all substitutions and replacements thereof, wherever
located, whether now owned or hereafter acquired by any Grantor. '
---------
(e) "General Intangibles" shall mean all of any Grantor's present and
future general intangibles of every kind and description, including
(without limitation) patents, patent applications, trade names and
trademarks and the goodwill of the business symbolized thereby, Federal,
State and local tax refund claims of all kinds.
(f) "Inventory" shall mean all of any Grantor's raw materials, work in
process, finished goods and all other inventory (as such term is defined in
the NYUCC), whether now owned or hereafter acquired, and all wrapping,
packaging, advertising and shipping materials, and any documents relating
thereto.
(g) "Proceeds" shall mean any consideration received from the sale,
exchange, lease or other disposition of any asset or property which
constitutes Collateral, any other value received as a consequence of the
possession of any Collateral and any payment received from any insurer or
other person or entity as a result of the destruction, loss, theft or other
involuntary conversion of whatever nature of any asset or property that
constitutes Collateral, and shall include, without limitation, all cash and
negotiable instruments received or held by the Agent and/or any of the
Lenders pursuant to any lockbox or similar arrangement relating to the
payment of Accounts Receivable.
2. Security Interests. As security for the payment or performance, as
the case may be, of the Obligations, each Grantor hereby creates and grants
to the Agent, its successors and its assigns, for the pro rata benefit of
the Lenders, their successors and their assigns, a security interest in the
Collateral (the "Security Interest"). Without limiting the foregoing, the
Agent is hereby authorized to file one or more financing statements,
continuation statements or other documents for the purpose of perfecting,
confirming, continuing, enforcing or protecting the Security Interest,
naming the Grantors as debtors and the Agent as secured party.
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 them 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 pursuant to the foregoing authorization; provided, however,
that nothing in this Section 5 shall be interpreted as excusing a Grantor
from the performance of any covenants or other promises with respect to
taxes, liens, security interests or other encumbrances and 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, re-recording, registration or
re-registration 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 not 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 containe 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 presen 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 I 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 theeof 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 exercising the power of sale herein conferred upon it, the
Agent may proceed by a suit or suits at law or in equity to foreclose this
Agreement and to sell the Collateral or any portion thereof pursuant to a
judgment or decree of a court or courts having competent jurisdiction or
pursuant to a proceeding by a court-appointed receiver.
Upon any sale of the Collateral by the Agent (including, without
limitation, pursuant to a power of sale granted by statute or under a judicial
proceeding), the receipt of the Agent or of the officer making the sale shall be
a sufficient discharge to the purchaser or purchasers of the Collateral so sold
and such purchaser or purchasers shall not be obligated to see to the
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 con firms that its chief executive office is located
as indicated on Schedule I hereto. Each Grantor agrees not to change, or
permit to be changed, the location of its chief executive office unless (i)
such Grantor has given the Agent at least thirty (30) days' prior written
notice of such change, has executed such documents and taken such other
actions as the Agent has requested to perfect and protect the Security
Interest and (ii) such new location is in the continental United States of
America.
17. Security Interest Absolute. All rights of the Agent hereunder, the
Security Interest, and all obligations of the Grantors hereunder, shall be
absolute and unconditional irrespective of (i) any lack of validity or
enforceability of the Credit Agreement, any other Loan Document, any other
agreement with respect to any of the Obligations or any other agreement or
instrument relating to any of the foregoing, (ii) any change in the time, manner
or place of payment of, or in any other term of, all or any of the obligations,
or any other amendment or waiver of or consent to any departure from the Credit
Agreement, any other Loan Document, or any other agreement or instrument
relating to the foregoing, (iii) any exchange, release or nonperfection of any
other Collateral, or any release or amendment or waiver of or consent to or
departure from any guarantee, for all or any of the Obligations, or (iv) any
other circumstance which might otherwise constitute a defense available to, or
discharge of, the Grantors, or any other obligor in respect of the Obligations
or in respect of this Agreement.
18. No Waiver. No failure on the part of the Agent to exercise, and no
delay in exercising, any right, power or remedy hereunder shall operate as
a waiver thereof, nor shall any single or partial exercise of any such
right, power or remedy by the Agent preclude any other or further exercise
thereof or the exercise of any other right, power or remedy. All remedies
hereunder are cumulative and are not exclusive of any other remedies
provided by law. The Agent and the Lenders shall not be deemed to have
waived any rights hereunder unless such waiver shall be in writing and
signed by such parties.
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:
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:
-2-
<PAGE>
Schedule I to the
Security Agreement
LOCATIONS OF COLLATERAL OF EACH GRANTOR
I. Foodarama Supermarkets, Inc.
II. New Linden Price Rite, Inc.
III. Shop Rite of Reading, Inc.
IV. Shop Rite of Malverne, Inc.
CHIEF EXECUTIVE OFFICE OF EACH GRANTOR
I. Foodarama Supermarkets, Inc.
II. New Linden Price Rite, Inc.
III. Shop Rite of Reading, Inc.
IV. Shop Rite of Malverne, Inc.
TRADENAMES OF EACH GRANTOR
I. Foodarama Supermarkets, Inc. None
II. New Linden Price Rite, Inc. None
III. Shop Rite of Reading, Inc. None
IV. Shop Rite of Malverne, Inc. None
1067577.1/DDSs/214516/002 1/25/0
-3-
<PAGE>
EXHIBIT F
ASSIGNMENT AND ACCEPTANCE
Dated ________ __, 200_
Reference is made to the Second Amended and Restated Revolving Credit
and Term Loan Agreement, dated as of January __, 2000 (as amended, restated,
modified or supplemented from time to time in accordance with its terms, the
"Credit Agreement"), among New Linden Price Rite, a New Jersey corporation,
Foodarama Supermarkets, Inc., a New Jersey corporation (individually, each a
"Borrower", collectively, the "Borrowers"), the Guarantors named therein, the
lenders named therein (collectively, the "Lenders"), and GMAC Business Credit,
LLC ("GMAC"), as agent for itself and each of the Lenders (GMAC,
in such capacity "Agent"). Capitalized terms used herein and not
otherwise defined herein shall have the meanings assigned to such terms in the
Credit Agreement.
GMAC (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, a ___% interest in and
to all the Assignor's rights and obligations under the Credit Agreement as of
the Effective Date (as defined below) (including, without limitation, such
percentage interest in the Loan Documents, in the Revolving Commitment of the
Assignor, in the Stock Redemption Facility Commitment of the Assignor and in the
Term Commitment of the Assignor on the Effective Date and/or such percentage
interest in the Revolving Loans, the Term Loan and the Capital Expenditure Loan
owing to the Assignor outstanding on the Effective Date, together with such
percentage interest in all unpaid interest, Commitment Fees and other fees
accrued to the Effective Date and such percentage interest in the Notes held by
the Assignor, as defined herein), except that the Assignor expressly reserves
from such Assignment the right to be indemnified by the Borrowers pursuant to
the term of the Credit Agreement and the other Loan Documents for any loss or
liability which the Assignor may incur to the extent that such right relates to
circumstances or events which occur, exist or arise prior to the Effective Date.
The foregoing sale and assignment is without recourse to the Assignor and is
without representation or warranty except as specifically set forth in Section
2.
2. The Assignor (i) represents that as of the date hereof, its Revolving
Commitment is $___________________, the outstanding balance of its Revolving
Loan is $______________, its Capital Expenditure Facility Commitment is
$_______________, the outstanding balance of its Capital Expenditure Loan is
$________________ and the outstanding balance of its Term Loan is
$__________________; (ii) makes no representation or warranty and assumes no
responsibility with respect to any statements, warranties or representations
made in or in connection with the Credit Agreement or the execution, legality,
validity, enforceability, perfection, genuineness, sufficiency or value of the
Credit Agreement, the Security Documents, any other Loan Document, any
Collateral or any instrument or document furnished pursuant thereto, other than
that it is the legal and beneficial owner of the interest being assigned by it
hereunder and that such interest is free and clear of any adverse claim
attributable to Assignor's acts or omissions; and (iii) makes no representation
or warranty and assumes no responsibility with respect to the financial
condition of any Borrower, any Guarantor or any Grantor or the performance or
observance by any Borrower, any Guarantor or any Grantor, of its obligations
under the Credit Agreement, any of the Security Documents, any other Loan
Document or any other instrument or document furnished pursuant thereto.
3. The Assignee (i) represents and warrants that it is legally
authorized to enter into this Assignment and Acceptance and the other documents
executed and delivered in connection herewith and that this Assignment and
Acceptance constitutes the legal, valid and binding obligation of the Assignee,
enforceable against the Assignee in accordance with its terms; (ii) confirms
that it has received a copy of the Credit Agreement and the other Loan
Documents, together with copies of such financial statements and such other
documents and information as it has deemed appropriate to make its own credit
analysis and decision to enter into this Assignment and Acceptance; (iii) agrees
that it has and will, independently and without reliance upon Agent, the
Assignor or any other Lender and based on such documents and information as it
shall deem appropriate at the time, continue to make its own credit decisions in
taking or not taking action under the Credit Agreement; (iv) appoints and
authorizes Agent to take such action as agent on its behalf and to exercise such
powers under the Credit Agreement as are delegated to Agent by the terms
thereof, together with such powers as are reasonably incidental thereto; (v)
agrees that it will perform in accordance with their terms all of the
obligations which by the terms of the Credit Agreement are required to be
performed by it as a Lender; and (vi) agrees that it will keep confidential all
information with respect to any Borrower, any Guarantor, any Grantor furnished
to it by any Borrower, any Guarantor, any Grantor or the Assignor (other than
information generally available to the public or otherwise available to the
Assignor an a nonconfidential basis).
4. This Assignment and Acceptance is being delivered to Agent together
with the Notes evidencing the Loans included in the interests assigned
hereunder.
5. The effective date for this Assignment and Acceptance shall be
January __, 2000 (the "Effective Date"), subject to the payment by Assignee to
Assignor of an amount (the "Purchase Price") equal to the sum of the outstanding
principal balance of the Assignor's Revolving Loans being assigned pursuant
hereto, the outstanding principal balance of the Assignor's Capital Expenditure
Loan being assigned pursuant hereto, the outstanding principal balance of the
Assignor's Term Loan being assigned pursuant hereto and all unpaid interest,
Commitment Fees and other fees accrued to the Effective Date with respect to the
interests assigned hereunder. Each of the Assignor, the Assignee and Agent
agrees that the Effective Date shall be as set forth in this paragraph 5
notwithstanding the requirement in clause (c) of Section 11.03 of the Credit
Agreement that the effective date of each Assignment and Acceptance shall be at
least five (5) Business Days after the execution thereof. Following the
execution of this Assignment and Acceptance, it will be delivered to Agent for
acceptance and recording by Agent.
6. Upon such acceptance and recording, from and after the Effective
Date, the Assignor shall, to the extent of the interests assigned by this
Assignment and Acceptance, relinquish its rights and be released from its
obligations under the Credit Agreement.
7. Upon such acceptance and recording, from and after the Effective
Date, Agent shall make all payments in respect of the interest assigned
hereby (including payments of principal, interest, fees and other amounts)
to the Assignee. The Assignor and Assignee shall make all appropriate
adjustments in payments for periods prior to the Effective Date by Agent or
with respect to the making of this assignment directly between themselves.
8. Each of the Assignor, the Assignee and Agent agrees that the
processing and recordation fee referred to in clause (c) of Section 11.03
of the Credit Agreement shall for purposes of this Assignment and
Acceptance be waived.
9. THIS ASSIGNMENT AND ACCEPTANCE SHALL BE GOVERNED BY, AND CONSTRUED
IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
GMAC BUSINESS CREDIT, LLC
By: __________________________________
Name:
Title:
[ASSIGNEE]
By:__________________________________
Name:
Title:
ACKNOWLEDGED AND AGREED:
NEW LINDEN PRICE RITE, INC.
By:
Name:
Title:
[SIGNATURES CONTINUED ON FOLLOWING PAGE]
1060508.3/LLP/214516/002 1/24/100
<PAGE>
EXHIBIT F
FOODARAMA SUPERMARKETS, INC.
By:
Name:
Title:
1060508.3/LLP/214516/002 1/24/100
<PAGE>
EXHIBIT G
INTENTIONALLLY OMITTED
<PAGE>
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 DOC #1049059modified 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
1067575.1/DSS/214516/002 1/25/0
<PAGE>
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)DOC #1049059 2or 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;
(1) under no circumstances whatsoever does the Secured Party, by
reason of this Security Agreement, assume any responsibility for, or
obligation with respect to, any of the terms, covenants, conditions,
obligations or liabilities of the Partner under, or with respect to, any
Partnership Agreement or the Obligations, and the Partner shall hold the
Secured Party harmless with respect to any and all claims arising therefrom
or relating thereto, other than actions taken or omitted to be taken solely
through the willful misconduct or gross negligence of the Secured Party;
and
(m) the percentage equity interest owned by the Partner in each
Partnership is set forth on Schedule I hereto.
4. (a) If a Default or an Event of Default- shall have occurred and be
continuing, all payments, proceeds, monies, compensation, property, assets,
instruments or rights thereafter paid, issued or distributed in respect of
the Collateral and any other proceeds of the Collateral shall be paid or
delivered to the Secured Party, to be held by it as hereinafter set forth;
provided, however, that prior to the occurrence of any such . Default or
Event of Default, the Partner shall be entitled to receive and retain such
payments, proceeds, monies, compensation, property, assets, instruments or
rights (except such as result from a dissolution or liquidation of any
Partnership), free and clear of the security interest of the Secured Party
therein.
(b) If a Default or Event of Default shall have occurred and be
continuing, the Secured Party may, in its sole discretion, at any time and from
time to time, in its name or the name of the Partner, or otherwise, notify the
Borrowers, the Partner or any obligor on, or other person interested in, any of
the Collateral, of this Security Agreement and to make payment or delivery to
the Secured Party of the Collateral, and the Secured Party may, in its sole
discretion and at any time, demand, sue for, collect or receive any money,
rights or property at any time payable or receivable on account of or in
exchange for, or make any compromise or settlement deemed desirable by the
Secured Party with respect to, any of the Collateral, and/or extend the time of
payment or delivery, arrange for payment or delivery in installments, or
otherwise modify the terms of, or release, any of the Collateral, all without
notice to or consent by the Partner or any other person and without otherwise
discharging or affecting the Obligations, the Collateral or the security
interest granted herein.
(c) Any payments, proceeds, monies, compensation, property, assets,
instruments or rights paid, issued or distributed with respect to the Partner's
interests in any of the Partnerships and any other proceeds of the Collateral
received by the Partner, and required to be paid or delivered to the Secured
Party under paragraph 4(a) or 4(b) hereof, shall not be commingled with other
property of the Partner but shall be segregated, held by the Partner in trust as
the exclusive property of the Secured Party and the Partner will immediately
deliver to the Secured Party the identical checks, monies, property or other
proceeds received, duly endorsed, transferred or assigned in blank where
appropriate to effectuate the provisions hereof, the same, together with any
other cash or property received by the Secured Party hereunder, to be held by
the Secured Party as additional Collateral hereunder or, at the Secured Party's
option, to be applied by the Secured Party to the payment of any of the
Obligations, whether or not then due and in any order.
5. Upon the occurrence and during the continuance of any Default, or
Event of Default, in addition to -he 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 whatsoeve 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 evidences of payment or proceeds of
the Collateral that may come into the Secured Party's possession or control; to
sign the name of the Partner on any statements, documents, drafts against and
notices to obligors with respect to the Collateral; to execute proofs of claim
and loss; to execute any endorsements, assignments, or other instruments of
conveyance or transfer; to execute releases; and to do all other acts and things
necessary and advisable in the sole discretion of the Secured Party to carry out
and enforce this Security Agreement, and to obtain the benefits hereof. All acts
of said attorney or designee are hereby ratified and approved and said
attorney-in-fact or designee shall not be liable for any acts of commission or
omission, nor for any error of judgment or mistake of fact or law. This power of
attorney, being coupled with an interest, is irrevocable while any of the
Obligations shall remain outstanding.
7. The Partner hereby agrees that, without notice or further assent,
before, at or after the maturity of the Obligations, expressed or declared, (a)
the liability of the Partner, the Borrowers or any other party, for or upon the
Obligations, may, from time to time, in whole or in part, be renewed, extended,
modified, prematured, compromised or released by the Secured Party, in
bankruptcy proceedings or otherwise, as the Secured Party may deem advisable and
(b) the Secured Party may, from time to time, in its discretion, exchange,
modify, release or surrender, in whole or in part, with or to the Partnerships
and their representatives, the Borrowers or any other appropriate party, as the
case may be, (i) any Collateral or any substitutes or additions thereto, or (ii)
the surplus net proceeds derived from the sale or sales or disposition of the
Collateral by the Secured Party pursuant to the terms of this Security
Agreement. The Partner hereby waives any and all notice of the acceptance of
this Security Agreement, of the creation, accrual or maturity (whether by
declaration or otherwise) of any and all of the Obligations, and of the Secured
Party's reliance upon this Security Agreement.
8. No act, failure or delay by the Secured Party shall constitute a
waiver of its rights and remedies hereunder or otherwise. No single or partial
waiver by the Secured Party of any Default or right or remedy which it may have
shall operate as a waiver of any other Default, right or remedy or of the same
Default, right or remedy on a future occasion. The Partner hereby waives
presentment, notice of dishonor and protest of all instruments included in or
evidencing any of the Obligations or the Collateral, and any and all other
notices and demands whatsoever (except as expressly provided herein). The
Partner agrees to pay, on demand, all reasonable out-of-pocket expenses incurred
by the Secured Party in connection with the negotiation, execution, perfection,
consummation and enforcement of this Security Agreement, the Obligations, and
the transactions contemplated hereunder and thereunder, including but not
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%
<PAGE>
EXHIBIT I
Form of Landlord Waiver
LANDLORD'S WAIVER AND CONSENT dated as of the ___ day of
_____________, 200__ between ______________________ having an address at
___________________________ (hereinafter called "Landlord"), and GMAC BUSINESS
CREDIT, LLC, having an office at 630 Fifth Avenue, New York, New York 10011, 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 FOODARAMA
SUPERMARKETS, INC., having an address at 922 Highway 33, Building 6, Suite 1,
Freehold, New Jersey 07728 (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 _______________________________, 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
prior 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 promptly
repair at its expense any physical damage to said premises which it 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:
Witness: ________________________
__________________________ By: _____________________________
Name:
Title:
<PAGE>
Schedule A to Landlord's Waiver and Consent between
__________________ (the "Landlord")
and GMAC Business Credit, LLC
("Secured Party"),
with respect to Foodarama Supermarkets, Inc.,
a New Jersey corporation ("Debtor")
All of the Debtor's right, title and interest in and to the
Collateral. "Collateral" shall mean all (a) Accounts Receivable, (b) Documents,
(c) Equipment, (d) General Intangibles, (e) Inventory, and (f) Proceeds.
Capitalized terms used herein shall have the following meanings:
(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 Agent 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 Agent at any time
existing, (iii) all of the Debtor's right, title and interest, and all of
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, and (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 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 the Debtor's businesses 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, and
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 the Agent and/or any lenders
pursuant to any lockbox or similar arrangement relating to the payment of
Accounts Receivable.
<PAGE>
Schedule B to Landlord's Waiver and Consent between
__________________ (the "Landlord")
and GMAC Business Credit, LLC
("Secured Party"),
with respect to Foodarama Supermarkets, Inc.,
a New Jersey corporation ("Debtor")
[INSERT PROPERTY DESCRIPTION]
<PAGE>
EXHIBIT J
FORM OF NOTICE OF CONTINUATION/CONVERSION
________________ ___, 200__
GMAC Business Credit, LLC, as Agent
630 Fifth Avenue
New York, New York 10011
FOODARAMA SUPERMARKETS, INC.
Gentlemen:
This notice of continuation/conversion is delivered to you pursuant to
Section 2.02(e) of the Second Amended and Restated Revolving Credit and Term
Loan Agreement (as amended, restated, modified and supplemented, the "Credit
Agreement"), dated as of January __, 2000, among New Linden Price Rite, Inc.,
Foodarama Supermarkets, Inc., the Guarantors named therein, the Lenders named
therein, and GMAC Business Credit, LLC, as agent for the Lenders. Unless
otherwise defined herein or unless the context otherwise requires, terms used
herein have the meanings provided in the Credit Agreement.
The Borrowers hereby request that the Lenders [(a) convert the following
Eurodollar Loans into Base Rate Loans, (b) convert the following Base Rate Loans
into Eurodollar Loans or (c) convert the following Eurodollar Loans into a
subsequent Interest Periods as listed below] [INSERT APPLICABLE PROVISION].
Borrower Type of Loan Principal Amount
Each of the Borrowers hereby certifies that, on the date hereof, and on
the date such Loans are converted and/or continued; the representations and
warranties set forth in Article IV of the Credit Agreement and in any documents
delivered therewith, including, without limitation, the Loan Documents, are true
and correct in all material respects as of the date hereof (except insofar as
such representations and warranties relate expressly to an earlier date).
Each of the Borrowers further certifies that the Parent and its
subsidiaries are in compliance with all the terms and conditions contained in
the Credit Agreement on their part to be observed or performed, and at the time
of and immediately after continuation/conversion of such Loans no Default or
Event of Default has occurred or is continuing.
1065936.2/KME/214516/002 1/24/0
-1-
<PAGE>
Each of the Borrowers further certifies that there shall be sufficient
remaining Term Loans and/or Capital Expenditure Loans, as the case may be, after
giving effect to the continuation/conversion of the Loans specified above, to
repay the next succeeding scheduled principal installment with respect to such
Term Loans and/or Capital Expenditure Loans, as the case may be, without
requiring an indemnity payment under Section 2.10B of the Credit Agreement.
The Borrowers have caused this notice of continuation/conversion to be
executed and delivered, and certification contained herein to be made, by their
respective ______________________ this __ day of ______, ____.
NEW LINDEN PRICE RITE, INC.
By:_________________________
Name:
Title:
FOODARAMA SUPERMARKETS, INC.
By:__________________________
Name:
Title:
<PAGE>
SCHEDULE 2.01
COMMITMENTS
GMAC Business Credit, LLC, as Agent:
Revolving Commitment $11,363,636.36
Term Commitment $ 4,545,454.54
Capital Expenditure Facility Commitment $ 9,090,909.10
--------------
Total: $25,000,000.00
The Chase Manhattan Bank:
Revolving Commitment $ 6,818,181.82
Term Commitment $ 2,727,272.73
Capital Expenditure Facility Commitment $ 5,454,545.45
--------------
Total: $15,000,000.00
Citizens Business Credit Company:
Revolving Commitment $ 6,818,181.82
Term Commitment $ 2,727,272.73
Capital Expenditure Facility Commitment $ 5,454,545.45
--------------
Total: $15,000,000.00
- 1 -
1066484.1/DSS/214516/002 1/25/0
<PAGE>
SCHEDULE 2.02
DOMESTIC LENDING OFFICES
GMAC Business Credit, LLC
300 Galleria Officenter, Suite 110
Southfield, Michigan 48034
The Chase Manhattan Bank
200 Jericho Quad. 1st Fl.
Jericho, New York 11772
Citizens Business Credit Company
Citizens Bank Building
28 State Street
Boston, Massachusetts 02109
- 2 -
1066484.1/DSS/214516/002 1/25/0
<PAGE>
SCHEDULE 2.03
EURODOLLAR LENDING OFFICES
GMAC Business Credit, LLC
300 Galleria Officenter, Suite 110
Southfield, Michigan 48034
The Chase Manhattan Bank
200 Jericho Quad. 1st Fl.
Jericho, New York 11772
Citizens Business Credit Company
Citizens Bank Building
28 State Street
Boston, Massachusetts 02109
- 3 -
1066484.1/DSS/214516/002 1/25/0
<PAGE>
Schedule 2.09 (d)
Notes Receivable
Balance 10/30/99
Valley Advisors (DBA Unclaimed 26,865
Freight)
Brown's Super Stores 80,000
Good Sports USA 8,244
Joseph Troilo 5,000
E.S.C.I. 50,000
Joseph J. Saker 177,256
----------------------
Total 347,364
----------------------
<PAGE>
Schedule 3.03 - Original Mortgages
Neptune, NJ (Term Loan)
Neptune, NJ (Revolving Loan)
Sayreville, NJ (Term Loan)
Sayreville, NJ (Revolving Loan)
Freehold, NJ (supermarket) (Term Loan)
Freehold, NJ (supermarket) (Revolving Loan)
Freehold, NJ (liquor store) (Term Loan)
Freehold, NJ (liquor store) (Revolving Loan)
Edison, NJ (Old Post Road) (Term Loan)
Edison, NJ (Old Post Road) (Revolving Loan)
Edison, NJ (Oak Tree Road) (Term Loan)
Edison, NJ (Oak Tree Road) (Revolving Loan)
Middletown, NJ (Lease #1) (Term Loan)
Middletown, NJ (Lease #1) (Revolving Loan)
Middletown, NJ (Lease #2) (Term Loan)
Middletown, NJ (Lease #2) (Revolving Loan)
Brick, NJ (Term Loan)
Brick, NJ (Revolving Loan)
West Long Branch, NJ (Term Loan)
West Long Branch, NJ (Revolving Loan)
Montgomery, NJ (Term Loan)
Montgomery, NJ (Revolving Loan)
Aberdeen, NJ (Term Loan)
Aberdeen, NJ (Revolving Loan)
- 4 -
<PAGE>
Schedule 4.01
Qualified Jurisdictions
Foodarama Supermarkets, Inc. New Jersey
ShopRite of Reading, Inc. Pennsylvania
New Linden Price Rite, Inc. New Jersey
ShopRite of Malverne, Inc. New York
<PAGE>
Schedule 4.06 (a) Litigation
1. Pennsauken Solid Waste management Authority, et al. v. Foodarama
Supermarkets, Inc. This case involves environmental litigation regarding
liability under the New Jersey "Spill Act" for cleanup up of the Pennsauken
landfill. Foodarama is one of over 250 third-party defendants named in the
third-party complaint named Quick-Way. Quick-Way is a waste hauler who allegedly
took garbage from Foodarama stores in the 1970s and early 1980, and dumped this
garbage at the Pennsauken landfill. The Spill Act is so broadly written that
Foodarama is a proper potentially responsible party even though the garbage was
properly disposed of at the landfill. The court had stayed the entire third
party action by Quick-Way against Foodarama and all of the other third-party
defendants. Recently in September, the court lifted the stay and the discovery
phase of litigation has begun. Discovery will be managed by the court and
liaison counsel for all third-party defendants as there are possibly 1,000
parties. The third-party defendants group is compiling a mutually satisfactory
discovery plan. Meanwhile, the Company's counsel has reviewed possible insurance
coverage claims. At this time no authorization to proceed with litigation
against the insurers, which could be costly, has been given to counsel.
Previously, such was delayed until we had some further direction from the court.
Now that the stay is lifted counsel will provide a litigation plan to the
company, and it is recommended that all insurance companies be notified again,
and a second demand for coverage be made. The Company has investigated its
relationship with Quick-Way to determine the dates during which Quick-Way hauled
for Foodarama. To date, counsel has been advised that no records have been
located. Quick-Way has been advised that it hauled for Foodarama in 1978, and
possibly from that date through 1982. Going forward the defense should proceed
with: (a) dispositive motions to obtain judgment in favor of Foodarama, if
applicable; and (b) potential claims against the insurers that issued policies
during the years is question. The court has appointed a liaison to communicate
for all third-party defendants, including Foodarama, and has ordered the Company
to pay $250 to the liaiso. It had been communicated in January 1998, to counsel
that Quick-Way used at least one other landfill in New Jersey. Quick-Way also
used the Kramer landfill and is involved in litigation regarding that site.
Although the Company is not yet a party, Quick-Way had demanded $20,000 in
settlement of its potential claim against the Company in U.S.A. v. Kramer v.
Quick-Way v. Foodarama, et al, but not the Pennsauken case. This offer was
communicated directly to the Company in late December, 1997, and was then sent
to counsel. No counter offer has been made. Counsel and the third- party
defendants group's liaison counsel had been investigating the settlement demand
and attempting to negotiate a lower demand for settlement of all claims
including Pennsauken. This investigation and negotiation, however, was not
eventful and lead to no additional substantive discussions or settlement. Janet
S. Cole, Esq., attorney for Quick-Way, advised that Quick-Way would not settle
all claims, including the Pennsauken matter, as to all third-party defendants
such as Foodarama, and that the demand only applied to Helen Kramer. Quick- Way
also advised it would be making summary judgment application in the Helen Kramer
and Pennsauken matter; however, to date no such motion has been filed. If
Quick-Way is successful, it would have no liability in the cases, and,
therefore, Foodarama would have no liability unless brought in by another party
<PAGE>
Schedule 4.06 (a) Litigation page-2
2. Foodarama v. Oak Tree Road Associates, et al., Foodarama brought suit against
its landlord, Oak Tree Road Associates and Eshel California Farms alleging
violation of the covenant contained in Foodarama's lease which restricts
landlord from leasing to another supermarket in the shopping center. On February
27, 1998, summary judgment was entered in favor of Eshel California Farms
("Eshel") dismissing the Company's Complaint. A motion for attorney's fees, and
costs based upon a claim that the Company's Complaint was frivolous was filed by
Eshel after the court granted summary judgment. The court initially denied the
motion, however Eshel made a motion to the court for reconsideration. The court
reversed its initial ruling, found the litigation to be frivolous, and awarded
attorney's fees and costs to Eshel. That decision is now on appeal.
Approximately $7,500 in attorney's fees and costs is being sought. Eshel has
also filed a second separate suit against the Company alleging malicious
prosecution, infliction of emotional distress, and interference with contract
and business relations. This suit was served on or about June 17, 1998. The
Company made a motion to have the case dismissed based upon the entire
controversy doctrine and other defenses. That motion was denied by the court and
discovery is continuing. The deposition and medical exam of the Plaintiff have
taken place, and other discovery is continuing. In December, 1999 summary
judgment was granted dismissing Plaintiff's claim for personal injuries.
Plaintiff's claim for damage to his business will be tried after appeal of
judgment for attorneys costs is decided. Plaintiff will settle for $50,000. To
date Foodarama has offered $15,000. Litigation with landlord, Oak Tree
Associates has been settled.
3. DeMarco v. Foodarama Supermarkets, Inc., et al. On or about February 18,1999,
John DeMarco, a former Foodarama Supermarket, Inc. employee, filed a Complaint
and Summons with New Jersey Superior Court alleging that Foodarama Supermarkets,
Inc. had unlawfully terminated his employment on account of his age. Foodarama
was not served the Complaint and Summons until on or about April 2, 1998. On or
about May 5, 1998 counsel filed, on behalf of Foodarama Supermarkets, Inc., a
Motion to Dismiss De Marco's Complaint in lieu of an Answer. The Court denied
the Motion to Dismiss, however, in dictum stated that unless DeMarco presented
additional evidence, if a Motion for Summary Judgment should be filed such
Motion would be granted. On or about June 22, 1998, counsel filed on behalf of
Foodarama Supermarkets, Inc. an Answer denying De Marco's allegations. As part
of the Answer we also set forth a number of Affirmative Defenses to DeMarco's
action, including again noticing DeMarco that his action was a frivolous lawsuit
in violation of the New Jersey Law. Counsel has also corresponded with DeMarco's
attorney informing him of our position that we believe DeMarco's Complaint is
frivolous and that our intent is to seek reimbursement of the costs of suit, and
attorney fees as a result of his frivolous claim. Interrogatories and Demand for
Production of Documents have been served and answered and DeMarco's deposition
has been taken. On or about September 7, 1999, counsel filed on Foodarama's
behalf a Motion for Summary Judgment with costs of suit and attorney fees. In
response to Foodarama's Summary Judgment Motion, De Marco filed a Cross Motion
to depose five of Foodarama's employees which are scheduled for January, 2000.
Upon completion of these depositions, the Court will schedule the due dates for
Foodarama to supplement its Summary Judgment Motion, DeMarco's response thereto
and oral argument on the Summary Judgment Motion. On October 6, 1999 counsel
filed with the Court Frivoous Litigation Motion on Foodarama's behalf. The Court
will rule on this Motion after it decides Foodarama's Summary Judgment Motion.
We are continuing vigorously to defend against the instant action and are unable
to predict the outcome of this matter.
<PAGE>
Schedule 4.06 (a) Litigation page-3
4. Foodarama Supermarkets, Inc. adv. RexGene of Sayreville, Inc. This matter was
commenced by Foodarama Supermarkets, Inc. against RexGene of Sayreville, Inc.
for possession of certain leased property located in Sayreville. Foodarama filed
an action in the Special Civil Part-Tenancy Court to retake possession of the
leased premises due to RexGene's repeated nonpayment of rent. Foodarama also
filed an action in the Law Division to recover past rent amounts due and owing
to it by Rex Gene. The tenancy matter was transferred from the Special Civil
Part, Middlesex County, to the Law Division, Middlesex County, and consolidated
with Foodarama's action to recover the outstanding rents. On or about June 28,
1998, the Court entered an order denying an application by RexGene to compel
Foodarama's consent to an assignment of the lease for the Sayreville property to
a third party, and granting possession of the leased property to Foodarama as a
result of RexGene's repeated failures to pay rent and other breaches of the
lease agreement between Foodarama and RexGene. On or about June 30, 1998,
RexGene filed for bankruptcy. In or about August 1998, RexGene filed an appeal
from the Court's Order dated June 28, 1998. Foodarama applied to Bankruptcy
Court for relief from the automatic stay to gain poss- ession of the leased
property. In October 1998, the Bankruptcy Court lifted the automatic stay and
allowed Foodarama possession of the leased premises. Foodarama's claims for
outstanding rent against RexGene remain pending as part of the Bankruptcy Court
action. In connection with RexGene's appeal of the Court's Order dated June 28,
1998, the parties filed briefs with the Appellate Division. The matter was
argued before the Appellate Division on December 7, 1999. Foodarama is awaiting
a determination from the Appellate Division.
5. 1163 R34 Associates, L.L.C. v. Foodarama Supermarkets, Inc., et al. On
February 17, 1999, Foodarama Supermarkets, Inc. (the "Company") received
preliminary and final major site plan approval with variances from the Aberdeen
Township Planning Board (the "Planning Board"). This approval, which was
memorialized on March 18, 1999, authorizes the Company to construct a 90,852
square foot supermarket and retail building at Lloyd Road, Route 34 and Reids
Hills Road in Aberdeen. This building would replace the Company's existing
Aberdeen supermarket. On April 30, 1999, 1163 R34 Associates, L.L.C. filed a
Complaint in lieu of Prerogative Writs challenging the approval, naming both the
Company and the Planning Board as defendants. Plaintiff identifies itself as a
contract purchaser of a nearby lot. The complaint alleges that there is
insufficient evidence in the record to support the grant of various variances
and waivers as part of the approval. The complaint also alleges that the
Planning Board's resolution fails to adequately explain the reasons for its
decision. Plaintiff also argues that the fact that the existing buildings do not
conform to the ordinance is irrelevant because the existing buildings will be
removed as part of the development approved by the challenged Planning Board
approval. Both the Company and the Planning Board have filed answers, and the
Company is defending the case on the merits. In addition, the Company is
defending the case on the merits. In addition, the Company has raised the
defense that as a contract purchaser, plaintiff lacks standing to prosecute the
lawsuit. A case such as this is typically reviewed by the Superior Court based
on the record before the Planning Board. The plaintiff has arranged for a court
reporting service to prepare a transcript of the tapes of the proceedings before
the Planning Board, but that transcript is of poor quality. As a result, the
pretrial conference was twice adjourned while the Planning Board Secretary
prepared a transcript. The transcript, while far from perfect, appears adequate
for judicial review and has been submitted to the court.
<PAGE>
Schedule 4.06 (a) Litigation page-4
6. Foodarama Supermarkets, Inc. ("Foodarama") is currently serving as
a class representative in the following punitive class action lawsuits: (1)
Foodarama Supermarkets, Inc., et al. v. American Insurance Company, et al.,
in the Court of Common Pleas for Philadelphia County, Pennsylvania (Civil
Division) ("Pennsylvania Case"); (2) Foodarama Supermarkets, Inc. et al. v.
Allianz Insurance Company, et al., in the Superior Court of New Jersey,
Morris County (Law Division) ("New Jersey Case"); and (3) Burnham Services
Corporation, et al. v. National Council on Compensation Insurance, Inc., et
al., in the Supreme Court of the State of New York ("New York Case"). In
each case, Foodarama seeks to represent a class of employers which were
charged illegal fees as part of their premiums for workers' compensation
insurance. Foodarama and other members of the class have alleged, among
other causes of action, claims for breach of contract and fraud. Foodarama
purchased workers' compensation insurance from members of the CIGNA group
(n/k/a the ACE Group) of insurance companies, specifically, Insurance
Company of North America, Atlantic Employers Insurance Company, and Pacific
Employers Insurance Company (collectively "CIGNA"). In the Pennsylvania,
New Jersey, and New York cases, CIGNA has filed an identical counterclaim
for, among other causes of action, breach of contract. CIGNA alleges that
if the policies of insurance it sold Foodarama are interpreted in the
manner in which Foodarama alleges Foodarama will be indebted to CIGNA in
the amount of at least $250,000.00. Foodarama denies any liability to CIGNA
and intends to vigorously defend CIGNA's counterclaims. However, at this
stage of litigation, it is not possible to determine whether an unfavorable
outcome is probable or remote.
<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
ERISA Representation Qualifications
Borrower is the sponsor of the following Pension Plans:
- Foodarama Supermarkets, Incorporated Pension Plan
- Foodarama Local 1360 Employees' Retirement Plan
Borrower contributes to the following Multiemployer Plans:
- UFCW Local 1262 and Employers Pension Fund (includes Locals 1263 &
1265)
- (Local 464 A Pension Fund)*
- (Local 465 Pension Fund)*
Borrower expects to affect a complete withdrawal from the Tri- State Pension
Fund as a result of the sale of its two Pennsylvania stores in May 1995. The
withdrawal liability is estimated to be $860,000 if the purchaser of the stores
discontinues the business prior to May 2000.
The Foodarama Supermarkets, Incorporated Pension Plan has unfunded liability in
the amount of approximately $631,368 as of 09/30/98.
The Foodarama Local 1360 Employees' Retirement Plan has no unfunded liability as
of 12/31/98
* - We have no information regarding these plans.
<PAGE>
Schedule 4.14
Bank Accounts
FIRST UNION BANK ONE FREEHOLD
Store # Location Desc. ABA 021200025 ABA 071000013 SAVINGS &
Foodarama Heller LOAN
Agreements Accounts
193 MARLBORO ........ Deposit 2014-1250-99919 55-82830
299 NEPTUNE ......... Deposit 2002-0061-96095 55-82849
466 BOUND BROOK ..... Deposit 2014-2161-05657 55-90396
506 EAST WINDSOR .... Deposit 2014-1961-40305 55-90221
513 OAK TREE ROAD ... Deposit 2002-0055-46086 55-82695
525 WOODBRIDGE ...... Deposit 2002-0055-45744 55-82709
552 PISCATAWAY ...... Deposit 2002-0055-46992 55-82717
553 SAYREVILLE ...... Deposit 2002-0055-47072 55-82725
573 EDISON .......... Deposit 2002-0000-92072 55-82733
575 FRANKLIN PARK ... Deposit 2002-0055-45825 55-82741
585 EAST BRUNSWICK .. Deposit 2002-0055-45906 55-82768
602 LAKEWOOD ........ Deposit 2002-0068-24587 55-82857
603 ABERDEEN ........ Deposit 2002-0037-96265 55-82776
607 FREEHOLD ........ Deposit 2002-0043-94462 55-82865
617 MONTGOMERY ...... Deposit 2014-1250-99401 55-82784
623 WEST LONG BRANCH Deposit 2002-0037-96346 55-82873
625 HAZLET .......... Deposit 2002-0037-96427 55-82881
627 MIDDLETOWN ...... Deposit 2002-0043-94611 55-82903
629 BRIELLE ......... Deposit 2002-0055-48482 55-82911
637 BELMAR .......... Deposit 2002-0043-94792 55-82938
641 BRICKTOWN ....... Deposit 2002-0037-96184 55-82946
470 BRANCHBURG ...... Deposit 2000-0029-18677
524 NORTH BRUNSWICK . Deposit 2000-0029-18693
630 WALL ............ Deposit 2000-0029-18680
700 HAND CHECKS ..... Disbursement2014-1552-34304
700 PAYABLES ........ Disbursement94-28763
700 CONCENTRATION ... Deposit 2002-0099-01902 55-82822
700 PAYROLL ......... Disbursement2014-1552-31909
700 OFFICE RECEIPTS . Deposit 2014-1552-59541
712 BAKERY COMMISSARY Deposit 2002-0037-96919
735 FREEHOLD LIQUORS Deposit 2002-0061-66054 55-82792
RARITAN Tenant security deposit 01-00-18556
<PAGE>
Schedule 4.15
Subsidiaries
ShopRite of Reading, Inc.
New Linden Price Rite, Inc.
ShopRite of Malverne, Inc.
<PAGE>
Schedule 4.16 (a-1)
Owned Real Property
1. 1930 East Elizabeth Avenue Meat/Prepared Foods Commissary
Linden, New Jersey 07036
2. 1931 Pennsylvania Avenue Meat/Prepared Foods Commissary
Linden, New Jersey 07036
3. 1911 Pennsylvania Avenue Meat/Prepared Foods Commissary
Linden, New Jersey 07036
4. 23 North Park Avenue Unpaved Parking Lot
Linden, New Jersey 07036
<PAGE>
Schedule 4.16 (a-2)
Leased Real Estate
Operating Locations
1. 1700 Madison Avenue, Lakewood, New Jersey 08701- Supermarket/KX
2. South Street & Route 9, Freehold, New Jersey 07728- Supermarket
3. South Street & Route 9, Freehold, New Jersey 07728- Liquor Store
4. South Street & Route 9, Freehold, New Jersey 07728- Garden Center
5. 2200 Highway 66, Neptune, New Jersey 07753- Supermarket/KX- Liquor Store
6. Routes 36 & 71, West Long Branch, New Jersey 07740- Supermarket
7. 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/KX
11. 877 St. George Avenue, Woodbridge, New Jersey 07095- Supermarket
12. 14-22 Prospect Avenue, East Brunswick, New Jersey 08816- Supermarket
13. Route 36, Hazlet, New Jersey 07730- Supermarket
14. Route 35 & Harmony Road, Middletown, New Jersey 07740- Supermarket
15. Route 130, East Windsor, 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. 280 Highway 9, Morganville, NJ 07751-Supermarket/KX
22. Lloyd Road & Route 34, Aberdeen, NJ 07747-Supermarket
23. 611 West Union Avenue, Bound Brook, NJ 08805- Supermarket/KX
24. 1325 Route 206 Skillman, New Jersey 08558- Supermarket
25. Fairfield Industrial Park, Bldg 2, Route 33, Freehold, New Jersey 07728
- Warehouse
26. Fairfield Industrial Park, Bldg 3, Route 33, Freehold, New Jersey 07728
- Warehouse
27. Fairfield Industrial Park, Bldg 8, Route 33, Freehold, New Jersey 07728
- Bakery Commissary
28. Fairfield Industrial Park, Bldg 6, Route 33, Freehold, New Jersey 07728
- Office
29. 3166 Route 22, Somerville, New Jersey 08876- Supermarket Under
Construction
30. 2445 Highway 34, Manasquan, New Jersey 08736- Supermarket Under
Construction
31. 2499 Route 1 South, North Brunswick, New Jersey 08902- Supermarket
Under Construction
Schedule 4.16 (a-2)
Leased Real Estate
page-2
Non-Operating Locations
1. 3500 5th Street, Reading, Pennsylvania, 19605- Sublet- Furniture Store
2. 450 Old York Road, Warminster, Pennsylvania- Sublet- Distribution Center
3. Suffolk & Wheeler Avenue, Central Islip, New York- Sublet- Supermarket
4. Kennedy Blvd., Lakewood, New Jersey 08701- Warehouse
5. 521 Raritan Street, Sayreville, New Jersey- Sublet- Supermarket
6. Route 34 & Route 537, Colts Neck, New Jersey- Ground Lease
7. Hempstead Pike, West Hempstead, NY 11552- Sublet- Supermarket
8. 2450 Jerusalem Avenue, North Bellmore, NY- Sublet- Supermarket
9. 105-38 Rockaway Beach Boulevard, Rockaway Park, NY 11694- Sublet
- Supermarket
10. 3926 Linden Street, Bethlehem, Pa 18017-Sold to Wakefern member
11. 2641 MacArthur Road, Whitehall, Pa 18052-Sold to Wakefern member
Does not include lease locations for which the Grantors have no responsibility.
<PAGE>
Schedule 4.19
Environmental Law Compliance
Between 1976 and 1981, the Parent leased property located at Route 9 and Craig
Road in Manalapan, New Jersey from Vornado/Two Guys. There were two under-
ground storage tanks at the property, one owned and operated by Vornado/Two Guys
and the other operated by the Parent. In 1979, there was a spill from one of the
tanks. The Parent and Vornado/Two Guys promptly remedied the spill to the
satisfaction of the New Jersey Department of Environmental Protection and the
matter was closed.
Since 1987, the Parent has been a ground lease tenant at property located at
Routes 34 and 537 in Colts Neck, New Jersey. The Parent has not developed the
property and has never conducted any operations there. The property was formerly
operated as an auto salvage yard.
There is a suit involving a claim made by Quick-Way, Inc. believed to be a solid
waste disposal hauler for a third-party complaint against Foodarama as a
generator of solid waste and allegations of liability for improper solid waste
disposal at the Pennsauken Solid Waste Management Authority's facility.
<PAGE>
Schedule 4.20
Material Agreements
1. Trademark License Agreement with Wakefern Food Corporation
2. Wakefern Food Corporate Stockholders' Agreement dated 8/20/87- amended
2/20/92
3. Union Contracts:
Local 1360 - Clerks, Hightstown- 02/21/99-02/23/02
Local 464A - Meat, New Jersey- 12/20/98-04/19/03
Local 465 - Meat, Commissary- 10/27/96-10/21/00
Local 1262 - Clerks, New Jersey
except Hightstown- 04/13/97-04/14/01
Local 1263 - Customer Service,
New Jersey except Hightstown- 04/13/97-04/14/01
Local 1265 - Bakery Commissary- 04/19/98-08/17/02
<PAGE>
Schedule 5.01(A)
Capital Expenditure Loans
Store # 630
Location: Wall*
*Note: items listed below are not subject to 45 day limitation as detailed in
Section 5.01A (b)
The 45 day limitation with respect to the items below commences upon the
closing of the Second Amended and Restated Revolving Credit and Term Loan
Agreement.
Invoice Billed
Vendor Invoice Date Amount Description
------ ------- ---- ------ -----------
A & J Fixtures CONTRACT 1,175,079
A & J Fixtures 816 07/01/99 4,415 evaporators
A & J Fixtures 899 09/20/99 23,472 evaporators
A & J Fixtures 811 06/16/99 216,315 compressor, penthouse
A & J Fixtures 812 06/17/99 30,954 penthouse
A & J Fixtures 815 07/01/99 41,918 condensers
A & J Fixtures 900 09/20/99 1,305 evaporators
A & J Fixtures 19002 12/13/99 670,654
Contract Balance 186,047
A & J Refrigeration CONTRACT 320,235
A & J Refrigeration 15042 10/04/99 28,035 refrigeration
A & J Refrigeration 14206 07/27/99 28,035 penthouse
A & J Refrigeration 13653 06/14/09 84,105 refrigeration
A & J Refrigeration 14720 09/02/99 56,070 refrigeration
A & J Refrigeration 15293 11/03/99 28,035 refrigeration
A & J Refrigeration 1006 12/21/99 28,035 refrigeration
A & J Refrigeration 15037 10/04/99 58,194 refrigeration
Contract Balance 9,726
Amigo Mobility Int. 569122 06/30/97 1,990 handi cap carts
Atlantic Food Bars 15342 02/16/99 6,600stainless steel pallet
protectors
Atlantic Food Bars 15291 12/30/98 12,600stainless steel corner
protectors
Atlantic Food Bars 15573 06/23/99 29,740olive, antipasto bar,
salad bar, soup kettle
CMP Refrigeration CONTRACT 194,130
CMP Refrigeration 24623 09/22/99 17,953coolers, walk-in boxes
CMP Refrigeration 24252 07/19/99 107,397coolers, walk-in boxes
CMP Refrigeration 25203 11/12/99 43,054coolers, walk-in boxes
CMP Refrigeration 2088 09/13/99 14,010 meat cases
Contract Balance 11,717
Engo 68368 05/21/99 500 CRC desk
Exact Equipment 9035 02/12/98 4,250 scales
Resnick Supermarket
Equipment 6871 07/16/99 10,250 bakery case, kettle,
patty machine, slicer
Royal Telephones of NJ 2067 12/09/99 3,661 feeder cables
Sign Art Graphics 29026 01/26/99 29,280 hand engraved signs
Sign Art Graphics 12186 03/31/99 29,280 hand engraved signs
Sign Art Graphics 12109 02/12/99 8,953 neon signs
Sun Coast 1575 08/04/99 4,850 rebuilt patty machine
and stand
Sun Coast 133 01/08/99 30,500automatic meat wrapper
Sun Coast 981814 11/06/98 1,495 handi cap cart
Sun Coast 432 02/26/99 6,195 gas Henny penny
Sun Coast 679 04/01/99 4,384 Bizerba slicer
Sun Coast 2342 11/15/99 15,648 tenderizer,grinder,
foot switch,saw
Sun Coast 2341 11/15/99 15,020 grinders
Vaporlux of America 5452 06/18/99 1,230 Vaporlux 4000
cleaning system
Total Requested 1,905,870
<PAGE>
Schedule 5.01(A)
Capital Expenditure Loans
page-2
Store # 470
Location: Branchburg*
*Note: items listed below are not subject to 45 day limitation as
detailed in Section 5.01A (b) The 45 day limitation with respect to the
items below commences upon the closing of the Second Amended and Restated
Revolving Credit and Term Loan Agreement.
Invoice Billed
Vendor Invoice Date Amount Description
------ ------- ---- ------ -----------
A & J Fixtures CONTRACT 1,240,825
A & J Fixtures 19000 12/09/99 179,825 cases
A & J Fixtures 962 11/18/99 561,375 cases
A & J Fixtures 857 08/18/99 47,764 condensers
A & J Fixtures 826 07/13/99 282,332 penthouse
A & J Fixtures 925 10/19/99 23,828 evaporator coils
A & J Fixtures 940 11/01/99 32,663 automatic ice machine
Contract Balance 113,040
A & J Refrigeration CONTRACT 438,925
A & J Refrigeration 14849 09/20/99 77,291 refrigeration
A & J Refrigeration 14397 08/18/99 115,937 refrigeration
A & J Refrigeration 15384 11/18/99 38,646 refrigeration
A & J Refrigeration 1007 12/21/99 38,646 refrigeration
A & J Refrigeration 15139 10/19/99 77,291 refrigeration
Contract Balance 91,115
Atlantic Food Bars 15574 06/23/99 29,740 olive, antipasto bar,
salad bar, soup kettle
CDW Computer Centers AW91704 10/05/99 1,970 computer equipment
CDW Computer Centers AW16486 10/07/99 1,020 computer equipment
Construction
Maintenance Plus 2086 09/13/99 15,762 meat case
Construction Maintenance CONTRACT 257,666
Construction
Maintenance Plus 24622 09/22/99 116,370 walk-in coolers
Construction
Maintenance Plus 24893 10/13/99 54,450 walk-in coolers
Contract Balance 86,846
Engo CONTRACT 727,949
Engo 12842 11/12/99 326,751 racking
Engo 12883 12/21/99 314,367 racking
Contract Balance 86,831
New & Used Bakery
Equipment 5571 06/21/99 5,250 Cleveland
self-contained tilting kettle
Royal Telephones of NJ 2058 11/12/99 2,733 feeder cables
Sign Art Graphics 12347 02/09/99 29,280 hand carved signs
Sign Art Graphics 01/26/99 29,280hand carved signs
Strategic Products
and Services 16486 11/29/99 7,732 front end equipment
Sun Coast 1835 09/01/99 4,850 rebuilt patty machine
Sun Coast 2380 11/01/99 11,598 proof box
Sun Coast 2379 11/01/99 21,979 oven
Sun Coast 2339 11/01/99 15,020 grinders
Sun Coast 2340 11/01/99 15,648 tenderizer, grinder,
foot switch, saw
Sun Coast 2599 12/03/99 4,042 microwave, table top
handwrap,cheese grater
TEC America 141417 09/28/99 65,270 scales
Tintman 1209 11/16/99 7,077 shades
Vaporlux of America 5452 06/18/99 1,230 Vaporlux 4000
cleaning system
Wakefern 21162 10/20/99 6462 printers with cable
Wakefern 50444 10/11/99 450 APC 700 Rack mount
UPS for bay hubs
Total Requested 2,935,943
<PAGE>
Schedule 5.01(A)
Capital Expenditure Loans
page-3
Store # 524 Location: North Brunswick* *Note: items listed below are
not subject to 45 day limitation as detailed in Section 5.01A (b) With
regard to any items purchase for the North Brunswick location, the 45 day
limitation will commence upon installation.
Invoice Billed
Vendor Invoice Date Amount Description
------ ------- ---- ------ -----------
Atlantic Food Bars 15572 06/23/99 29,740olive, antipasto bar,
salad bar, soup kettle
CMP Refrigeration 2085 09/13/99 15,762meat case
Engo Co. 12523 05/21/99 500CRC desk
John Weldon 9185 06/26/99 6,500Baker's Pride pizza
oven
New and Used Bakery Equipment 5571 06/21/99 5,250Cleveland
self-contained tilting kettle
Sign Art 01/26/99 29,280hand carved signs
Sign Art 12208 03/11/99 29,280hand carved signs
Sun Coast 909 04/21/99 12,520rotisserie
Sun Coast 1576 07/30/99 4,500rebuilt patty machine
Sun Coast 312 02/18/99 30,500automatic meat wrapper
Sun Coast 729 04/09/99 5,698hot food drop in
Vaporlux of America 5452 06/18/99 1,230Vaporlux 4000 cleaning
system
Total Requested 170,760
North Brunswick project construction delayed, equipment ordered may be held by
vendor and paid for by Foodarama Supermarkets prior to installation at the
premises.
Wall project previously delayed, certain equipment ordered and may be held by
vendor and paid for by Foodarama Supermarkets prior to installation at the
premises.
<PAGE>
Schedule 5.02
Closing Date Additional Mortgages
Wall Township
2445 Highway 34
Manasquan, NJ 08736
North Brunswick
2499 Route 1 South
North Brunswick, NJ 08902
Branchburg
3166 Route 22
Somerville, NJ 08876
Bound Brook
611 West Union Avenue
Bound Brook, NJ 08805
Piscataway
1306 Centennial Avenue
Piscataway, NJ 08854
Lakewood
1700 Madison Avenue Suite 21
Lakewood, NJ 08701
<PAGE>
Schedule 6.07(a)
ERISA Covenant Qualifications
None.
<PAGE>
Schedule 6.17
Collateral Locations
Landlord Landlord Leasehold
Location Address Waiver Consent Mortgage
Marlboro Supermarket/KX 280 Highway 9
Morganville, NJ 07751 no no no
Neptune Supermarket/KX 2200 Highway 66 yes yes yes
Neptune, NJ 07753
Lakewood Supermarket/KX 1700 Madison Avenue Suite 21 In processyes At
Lakewood, NJ 08701 Closing
Aberdeen Supermarket Lloyd Road & Route 34 yes yes yes
Aberdeen, NJ 07747
Freehold Supermarket South Street & Route 9 yes yes yes
Freehold, NJ 07728
West Long Branch Route 36 & Route 71 yes yes yes
Supermarket West Long Branch, NJ 07740
Hazlet Supermarket Route 36 yes no no
Hazlet, NJ 07730
Middletown Supermarket Route 35 & Harmony Road Will execute
Middletown, NJ 07748 1/4/2000 yes yes
11/28/95
Brielle Supermarket 629 Higgins Avenue no no no
Brielle, NJ 08730
Belmar Supermarket Route 35 no no no
Wall, NJ 07719
Bricktown Supermarket Route 70 & Chambersbridge Road (a) yes
Brick, NJ 08723 5/26/95
Bound Brook 611 West Union Avenue
Supermarket/Kx Bound Brook, NJ 08805 (a) (a) no
East Windsor Route 130
Supermarket/KX East Windsor, NJ 08520 no no no
Oak Tree Road 1665 Oak Tree Road yes yes yes
Supermarket/KX Edison, NJ 08820
Woodbridge Supermarket 877 St. George Avenue
Woodbridge, NJ 07095 (a) no no
Piscataway Supermarket 1306 Centennial Avenue (a) yes At
Piscataway, NJ 08854 Closing
<PAGE>
Schedule 6.17
Collateral Locations
page-2
Location Address
Sayreville Supermarket 2909 Washington Road yes yes yes
Parlin, NJ 08859 3/6/95
Edison Supermarket Route 1 & Old Post Road no yes yes
Edison, NJ 08817 3/10/95
Franklin Supermarket Route 27 & Veronica Road no no no
Franklin, NJ 08873
East Brunswick Supermarket 14-22 Prospect Avenue (a) no no
East Brunswick, NJ 08816
Montgomery Supermarket 1325 Highway 206 yes yes yes
Skillman, NJ 08558 8/20/97
Hightstown Garden Center Route 130 no no no
Hightstown, NJ 07095
Freehold Garden Center South Street & Route 9 no no no
Freehold, NJ 07728
Freehold Liquor Store South Street & Route 9 yes yes yes
Freehold, NJ 07728 3/6/95
Neptune Liquor Store 2200 Highway 66 Part of Neptune Supermarket
Neptune, NJ 07753 lease. No separate lease
Meat/Processed Foods 1930 Elizabeth Avenue Owned by borrower.
Commissary Linden, NJ 07036
Bakery Commissary Fairfield Industrial Park no no no
Building 8
Freehold, NJ 07728
Branchburg Supermarket 3166)Route 22 Not yet yes At
(under construction) Somerville, NJ 08876 returned Closing
Wall Supermarket 2445 Highway 34 no (b) no (b)
(under construction) Manasquan, NJ 08736
Corporate Office Fairfield Industrial Park
922 Highway 33 no no no
Freehold, NJ 07728
Warehouse Route 9 & Kennedy Boulevar no no no
Lakewood, NJ 08701
Warehouse 339 Fairfield Road no no no
Howell, NJ
(a) : Sent to Landlord for execution.
(b) : Landlord approved; sent to Landlords' lender.
<PAGE>
Schedule 7.01
Existing Liens
Expires
October 2000* GE Capital (formerly MetLife Capital)
Specific Equipment as Listed in UCC Financing Statements
Filed
Aberdeen, New Jersey
Lakewood, New Jersey
Freehold, New Jersey
West Long Branch, New Jersey
Bricktown, New Jersey
Corporate Office, New Jersey
July 2000* GE Capital (formerly MetLife Capital)
Specific Equipment as Listed in UCC Financing Statements
Filed
Oak Tree Road, New Jersey
Woodbridge, New Jersey
Hightstown, New Jersey
Franklin , New Jersey
East Brunswick, New Jersey
Hazlet, New Jersey
Brielle, New Jersey
February 2000 Finova
Specific Equipment as Listed in UCC Financing Statements
Filed
Sayreville, New Jersey
Piscataway, New Jersey
Neptune, New Jersey
November 2004 GE Capital (formerly MetLife Capital) Equipment
financing for the new stores Specific Equipment as Listed
in UCC Financing Statements Filed
Marlboro, New Jersey
Montgomery, New Jersey
September 2000 Wakefern (Valley National)
Specific Equipment as Listed in UCC Financing Statements
Filed
Oak Tree Road, New Jersey
Edison, New Jersey
April 2005 Pitney Bowes Capital Services
Specific Equipment as Listed in UCC Financing Statements
Filed
East Windsor, New Jersey
October 2004 CIT
Specific Equipment as Listed in UCC Financing Statements
Filed
Bound Brook, New Jersey
March 2002 IBM (Wakefern)
Specific Equipment as Listed in UCC Financing Statements
Filed
All 21 stores
* NOTE: This equipment was replaced, per Wakefern GE Capital has allowed this
and the payments to be made in accordance with the original agreement until
completed.
<PAGE>
Schedule 7.03
Existing Indebtedness
Balance
10/30/99
Wakefern Food Corporation (Investment) 1,954,286
Pitney Bowes Credit Corporation 2,449,444
GE Capital (formerly Met Life Capital) 121,630
Capitalized Real Property Leases 35,519,677
Finova 408,194
Wakefern (Valley National) 139,971
GE Capital (formerly Met Life Capital)* 4,202,172
CIT 3,333,333
IBM RS6000 Lease 433,015
----------------
48,561,722
----------------
*Total loan comprised of the following balances:
Marlboro 2,100,704
Montgomery 2,101,467
Contingent Liabilities
Assigned Leases Calculated Per Annum 1,582,580
Tri-State Pension 860,000
2,442,580
----------------
<PAGE>
Schedule 7.05
Assets Held For Sale
None.
<PAGE>
Schedule 7.06
Permitted Investments As Of 10/30/99
1. Wakefern Food Corporation- 12.27% of outstanding Capital Stock -
owned by Parent
2. Insure-Rite, Ltd.- Mutual Captive Offshore Insurance Company
- approximately 13% owned by Parent
3. * CIGNA- deposits held by CIGNA for Worker's Compensation Policies
- $2,201,000
4. State of Israel Bonds- $195,000
5. WFC-1 Realty Corporation- $1,300- approximately 13% owned by Parent
*Received $1,426,597 on December 22, 1999.
<PAGE>
Schedule A
Certain Subsidiaries
None.
<PAGE>
Schedule B
Certain Intellectual Property
The parent and the 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.
The following trademarks are common law marks
1. Caribbean Hardwood Grill
2. World Class Kitchens
3. Kosher Experience
<PAGE>
Schedule C
New/Replacement Store Projects
Square Capital New Store/ Maximum Capital
Feet Expenditure Replacement Expenditure Loan
Wall Township 63,734 $4,600,000 Replacement $4,000,000
2445 Highway 34
Manasquan, NJ 08736
North Brunswick 66,246 $5,000,000 Replacement $4,000,000
2499 Route 1 South
North Brunswick, NJ 08902
Branchburg 67,000 $5,195,000 New Location $4,000,000
3166 Route 22
Somerville, NJ 08876
Bricktown 75,000 $6,000,000 Replacement $4,000,000
Woodbridge 85,000 $6,000,000 Replacement $4,000,000
Aberdeen 86,500 $5,600,000 Replacement $4,000,000
Middletown 77,000 $6,000,000 Replacement $4,000,000
Total $38,395,000 $20,000,000 *
*Capped at Total
Capital Expenditure
Facility Commitment
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 12-Mos
<FISCAL-YEAR-END> Oct-30-1999
<PERIOD-START> Nov-01-1998
<PERIOD-END> Oct-30-1999
<CASH> 4,094
<SECURITIES> 0
<RECEIVABLES> 13,027
<ALLOWANCES> (506)
<INVENTORY> 38,113
<CURRENT-ASSETS> 54,728
<PP&E> 158,250
<DEPRECIATION> (76,227)
<TOTAL-ASSETS> 156,186
<CURRENT-LIABILITIES> 52,221
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 156,186
<SALES> 799,693
<TOTAL-REVENUES> 0
<CGS> 591,591
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 199,762
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 5,569
<INCOME-PRETAX> 3,086
<INCOME-TAX> 1,141
<INCOME-CONTINUING> 1,945
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,945
<EPS-BASIC> 1.74
<EPS-DILUTED> 1.74
</TABLE>
