SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): July 14, 1999
THE PENN TRAFFIC COMPANY
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(Exact name of registrant as specified in its charter)
Delaware 1-9930 25-0716800
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(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification No.)
incorporation)
1200 State Fair Boulevard, Syracuse, New York 13221-4737
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (315) 457-9460
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Item 5. OTHER EVENTS
On June 29, 1999 (the "Effective Date"), pursuant to an order of the
United States Bankruptcy Court for the District of Delaware entered on May 27,
1999 confirming the Joint Plan of Reorganization (the "Plan") of The Penn
Traffic Company (the "Company") and certain of its subsidiaries, the Company
consummated its Plan. The Company's press release announcing the consummation of
the Plan is attached hereto as exhibit 99.1.
Pursuant to the Plan, previously filed as Exhibit 2.1 to the Company's
Current Report on Form 8-K dated May 27, 1999, the Company's Informal
Noteholders Committee added the following seven (7) members to the Company's
Board of Directors: Peter Zurkow (Chairman), Byron Allumbaugh, Kevin P. Collins,
Thomas W. Harberts, Gabriel Nechamkin, Lief Rosenblatt and Mark Sonnino. Gary D.
Hirsch, (Chairman of the Executive Committee), Martin A. Fox (Vice Chairman of
the Executive Committee) and Joseph V. Fisher (President and Chief Executive
Officer) continue as directors of the Company. After the Effective Date, the
holders of the new common stock will be entitled to elect all of the directors
of the Company.
On the Effective Date, the Company also entered into a $320 million
Revolving Credit and Term Loan Credit Facility with a syndicate of lenders lead
by Fleet Capital Corporation, as Administrative Agent and a related Collateral
and Security Agreement, each of which are attached hereto as exhibits 10.1 and
10.2, respectively, and are incorporated herein by reference thereto.
Item 7. FINANCIAL STATEMENTS AND EXHIBITS
(c) Exhibits
10.1 Revolving Credit and Term Loan Agreement, dated as of June 29,
1999, by and among the Company, certain subsidiaries of the
Company, the several lenders from time to time party thereto, and
Fleet Capital Corporation, as Administrative Agent, GMAC Business
Credit LLC, as Documentation Agent and AmSouth Bank and Bank of
America, NT&SA, as co-agents.
10.2 Collateral and Security Agreement, dated as of June 29, 1999, made
by the Company and certain of its subsidiaries in favor of Fleet
Capital Corporation, as Collateral Agent.
99.1 Press Release, dated June 29, 1999.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
THE PENN TRAFFIC COMPANY
Date: July 14, 1999 By: /s/ Martin A. Fox
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Name: Martin A. Fox
Title: Vice Chairman of the
Executive Committee and
Chief Financial Officer
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EXHIBIT INDEX
Exhibit
Number Exhibit
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10.1 Revolving Credit and Term Loan Agreement, dated as of
June 29, 1999, by and among the Company, certain
subsidiaries of the Company, the several lenders from
time to time party thereto, and Fleet Capital
Corporation, as Administrative Agent, GMAC Business
Credit LLC, as Documentation Agent and AmSouth Bank
and Bank of America, NT&SA, as co-agents.
10.2 Collateral and Security Agreement, dated as of June
29, 1999, made by the Company and certain of its
subsidiaries in favor of Fleet Capital Corporation,
as Collateral Agent.
99.1 Press Release, dated June 29, 1999.
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REVOLVING CREDIT AND TERM LOAN AGREEMENT
among
THE PENN TRAFFIC COMPANY,
DAIRY DELL, INC.,
BIG M SUPERMARKETS, INC.,
and
PENNY CURTISS BAKING COMPANY INC.
and
THE LENDERS PARTY HERETO
and
FLEET CAPITAL CORPORATION,
as Administrative Agent
and
GMAC BUSINESS CREDIT, LLC,
as Documentation Agent
and
AMSOUTH BANK
and
BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION,
as Co-Agents
dated as of June 29, 1999
================================================================================
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REVOLVING CREDIT AND TERM LOAN AGREEMENT, dated as of June 29, 1999
among THE PENN TRAFFIC COMPANY, a Delaware corporation ("Penn Traffic"), with
offices at 1200 State Fair Boulevard, Syracuse, New York 13221, DAIRY DELL,
INC., a Pennsylvania corporation ("Dairy Dell"), with offices at 1200 State Fair
Boulevard, Syracuse, New York 13221, BIG M SUPERMARKETS, INC., a New York
corporation ("Big M"), with offices at 1200 State Fair Boulevard, Syracuse, New
York 13221, and PENNY CURTISS BAKING COMPANY INC., a New York corporation
("Penny Curtiss"), with offices at 1810 Le Moyne Avenue, Syracuse, New York
13208 (each individually, a "Borrower" and collectively, the "Borrowers"), FLEET
CAPITAL CORPORATION, a Rhode Island corporation ("Fleet Capital"), THE OTHER
FINANCIAL INSTITUTIONS PARTY HERETO AS LENDERS, THE OTHER FINANCIAL INSTITUTIONS
THAT HEREAFTER BECOME PARTIES HERETO AS LENDERS (individually, a "Lender" and
collectively, the "Lenders"), Fleet Capital, with offices at 60 East 42nd
Street, New York, New York 10017, as administrative agent for the Lenders (in
such capacity together with any successor thereto in such capacity, the
"Agent"), GMAC BUSINESS CREDIT, LLC, with offices at 767 Fifth Avenue, New York,
N.Y. 10153, as documentation agent (in such capacity, the "Documentation
Agent"), AMSOUTH BANK, with offices at 350 Park Avenue, New York, N.Y. 10022, as
co-agent, and BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, with
offices at 40 East 52nd Street, New York, N.Y. 10022, as co- agent (in such
capacities, the "Co-Agents").
W I T N E S S E T H:
WHEREAS, each Borrower has filed in the United States Bankruptcy
Court for the District of Delaware (the "Bankruptcy Court") a voluntary petition
for relief under Chapter 11 of the Bankruptcy Code (as hereinafter defined);
WHEREAS, the Borrowers, as debtors and debtors in possession,
certain lenders (the "DIP Lenders") and Fleet Capital, as agent for such lenders
(the "DIP Agent"), entered into a Loan and Security Agreement, dated as of March
2, 1999 (the "DIP Loan Agreement"), and certain related documents (together with
the DIP Loan Agreement, collectively, the "DIP Credit Agreements"), pursuant to
which the DIP Lenders agreed, subject to the terms and conditions therein
contained, to make available to the Borrowers a revolving line of credit for
loans and letters of credit (collectively, the "DIP Letters of Credit"), in an
aggregate amount not to exceed $300,000,000;
WHEREAS, in connection with the implementation of the Borrowers'
Plan of Reorganization (as hereinafter defined), the Borrowers have requested
that the Lenders make available to the Borrowers a revolving line of credit for
loans and letters of credit in an aggregate amount not to exceed $205,000,000,
and term loans in an aggregate amount not to exceed $115,000,000, which
extensions of credit the Borrowers will use (a) (i) to repay in full all
outstanding amounts under the DIP Credit Agreements and (ii) to refinance all
outstanding DIP Letters of Credit, (b) to pay administrative claims under the
Plan of Reorganization, (c) for their working capital and capital expenditure
needs, and (d) for other general corporate purposes; and
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WHEREAS, the Lenders have agreed to make available to the Borrowers
such credit facility upon the terms and conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements set forth in this Agreement, and for good and valuable consideration,
the receipt of which is hereby acknowledged, the Borrowers, the Lenders and the
Agent hereby agree as follows:
ARTICLE 1. DEFINITIONS
1.1 Specific Definitions. In addition to certain terms defined
elsewhere in this Agreement, the following terms shall have the meanings
specified below:
"Account" means a Borrower's right to payment for a sale or lease of
goods or rendition of services in the ordinary course of such Borrower's
business.
"Account Debtor" means each Person obligated in any way on or in
connection with an Account.
"Additional Senior Notes" means "Securities" (as defined in the
Senior Notes Indenture) issued by Penn traffic pursuant to Section 4.01 of the
Senior Notes Indenture, representing "payment-in-kind" of interest on the Senior
Notes, as the same may be amended, modified and supplemented from time to time
in a manner not prohibited hereunder.
"Adjustment Date" as defined on Annex B in connection with the
Pricing Grid.
"Affiliate" of a specified Person means any other Person which,
directly or indirectly, controls, is controlled by or is under common control
with, the specified Person, including, without limitation, any Person: (a) which
beneficially owns or holds, directly or indirectly, five percent (5%) or more of
(i) any class of voting stock of the specified Person, or (ii) the equity
interests (with voting capacity) of a Person whose equity interests are not
represented by shares, or (b) who (i) is a director or officer of the specified
Person or (ii) has regular management responsibility if the Person does not have
directors or officers. The term "control" (including, with correlative meanings,
the terms "controlled by" and "under common control with") means the possession,
directly or indirectly, of the power to direct or cause the direction of the
management and policies of the specified Person.
"Agency and Collateral Monitoring Fee" has the meaning given to such
term in Section 3.6.
"Agent" means Fleet Capital, as administrative agent for the Lenders
in the manner and to the extent described in this Agreement, the Security
Agreement and any other Loan Document, and any successor agent.
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"Aggregate Exposure" means, with respect to any Lender at any time,
an amount equal to (a) until the Closing Date, the aggregate amount of such
Lender's Commitments at such time and (b) thereafter, the sum of (i) the
aggregate then unpaid principal amount of such Lender's Term Loans and (ii) the
amount of such Lender's Revolving Credit Commitment then in effect or, if the
Revolving Credit Commitments have been terminated, the amount of such Lender's
Revolving Extensions of Credit then outstanding.
"Agreement" means this Revolving Credit and Term Loan Agreement, as
amended, supplemented or otherwise modified from time to time.
"Applicable Margin" means, (a) during the period from and including
the Closing Date to the first Adjustment Date, (i) 1.375% per annum with respect
to Revolving Loans, Swing Line Loans and amounts of Term Loans A, in each case
specified to bear interest at the Prime-Based Rate and 2.0% per annum with
respect to amounts of Term Loans B specified to bear interest at the Prime-Based
Rate, and (ii) 2.375% per annum with respect to Revolving Loans and amounts of
Term Loans A, in each case specified to bear interest at the Eurodollar Rate and
(iii) 3% per annum with respect to amounts of Term Loans B, in each case
specified to bear interest at the Eurodollar Rate and (b) on and after the first
Adjustment Date, the Applicable Margin determined pursuant to the Pricing Grid.
"Approved Officer" means, as to any Borrower, (i) the chief
executive officer, the chief financial officer, the Vice Chairman - Finance, and
the Chairman or Vice-Chairman of the Executive Committee of such Borrower, and
(ii) any other officer of such Borrower designated by an officer specified in
clause (i) hereof.
"Asset Transfer" means any Disposition of any Property (excluding
the Capital Stock of Penn Traffic and Vehicles) of a Borrower or a Subsidiary
(including, without limitation, any capital stock of any Subsidiary, but
excluding sales of inventory in the ordinary course of business and Casualty
Events), without regard to the consideration, if any, received therefor,
including, without limitation, any Sale and Leaseback Transaction and any
disposition effected through a merger or consolidation.
"Available Revolving Credit Commitment" means as to any Revolving
Credit Lender at any time, an amount equal to the excess, if any, of (a) such
Lender's Revolving Credit Commitment then in effect over (b) such Lender's
Revolving Extensions of Credit then outstanding.
"Availability" means, at the time of determination, the amount by
which the Combined Revolving Borrowing Capacity exceeds the Total Revolving
Extensions of Credit.
"Bank" means Fleet Bank, N.A.
"Bankruptcy Code" means the United States Bankruptcy Code (11 U.S.C.
ss. 101 et seq.), as amended, and any successor statute.
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"Bankruptcy Court" has the meaning specified in the recitals to this
Agreement.
"Board" means the Board of Governors of the Federal Reserve System
of the United States (or any successor).
"Borrowing Base Certificate" has the meaning given to such term in
Section 2.7 of the Security Agreement.
"Borrowing Date" means any Business Day or Eurodollar Business Day,
as appropriate, specified by a Borrower as a date on which such Borrower
requests the relevant Lenders to make Revolving Loans, or the Swing Line Lender
to make a Swing Line Loan.
"Business Day" means any day that is not a Saturday, Sunday, or day
on which banks in New York, New York or Boston, Massachusetts are required or
permitted to close.
"Business Plan" means the Business Plan Summary dated May 12, 1999,
as heretofore delivered to the Agent, setting forth the business plan of Penn
Traffic.
"Capital Expenditures" means all expenditures by a Borrower or a
Subsidiary to acquire any fixed asset or improvement, or a replacement,
substitution, or addition thereto, which has a useful life of more than one
year, including, without limitation, those arising in connection with Capital
Leases; provided, however, that Capital Expenditures shall not include any
expenditures in connection with a Capital Lease of real property from which is
operated a Borrower's retail store or distribution facility.
"Capital Lease" means any lease of Property by a Borrower or a
Subsidiary that, in accordance with GAAP, should be reflected as a liability on
the balance sheet of such Borrower or such Subsidiary.
"Capital Lease Obligations" means as to any Person, the obligations
of such Person to pay rent or other amounts under any lease of (or other
arrangement conveying the right to use) real or personal property, or a
combination thereof, which obligations are required to be classified and
accounted for as capital leases on a balance sheet of such Person under GAAP,
and, for the purposes of this Agreement, the amount of such obligations at any
time shall be the capitalized amount thereof at such time determined in
accordance with GAAP.
"Capital Stock" means any and all shares, interests, participations
or other equivalents (however designated) of capital stock of a corporation, any
and all equivalent ownership interests in a Person (other than a corporation)
and any and all warrants, rights or options to purchase any of the foregoing.
"Carryover Cash Capex" means, for any Fiscal Year, the amount of
unused Cash Capital Expenditures carried over from the prior Fiscal Year in
accordance with Section 8.13 hereof.
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"Cash Capital Expenditures" means any Capital Expenditures of the
Borrowers or their Subsidiaries other than a Financed Capital Expenditure,
including without limitation, in the case of a Capital Expenditure made in part
as a Financed Capital Expenditure and in part with other funds, the part thereof
made with other funds.
"Casualty Event" means the damage, destruction or condemnation, as
the case may be, of Property of a Borrower or any Subsidiary.
"Change of Control" means, with respect to Penn Traffic, an event or
series of events by which (i) any "person" (as such term is used in Sections
13(d) and 14(d) of the Exchange Act) is or becomes the "beneficial owner" (as
defined in Rules 13d3 and 13d5 under the Exchange Act, except that a person
shall be deemed to have "beneficial ownership" of all shares that any such
person has the right to acquire, whether such right is exercisable immediately
or only after the passage of time), directly or indirectly, of 50% or more of
the outstanding shares of common stock of Penn Traffic or securities
representing 50% or more of the combined voting power of Penn Traffic's Voting
Stock, (ii) Penn Traffic consolidates with or merges into another Person or
conveys, transfers, sells or leases all or substantially all of its assets to
any Person, or any Person consolidates with or merges into Penn Traffic, in
either event pursuant to a transaction in which the outstanding Voting Stock of
Penn Traffic is changed into or exchanged for cash, securities or other
Property, other than any such transaction between Penn Traffic and its Wholly
Owned Subsidiaries (which Wholly Owned Subsidiaries are United States
corporations), with the effect that any "person" becomes the "beneficial owner,"
directly or indirectly, of 50% or more of the outstanding shares of common stock
of Penn Traffic or securities representing 50% or more of the combined voting
power of Penn Traffic's Voting Stock or (iii) during any consecutive two-year
period from and after the date hereof, individuals who at the beginning of such
period constituted Penn Traffic's Board of Directors (together with any new
directors whose election by Penn Traffic's Board of Directors, or whose
nomination for election by Penn Traffic's shareholders, was approved by a vote
of at least a majority of the directors then still in office who were either
directors at the beginning of such period or whose election or nomination for
election was previously so approved) cease for any reason to constitute a
majority of the directors then in office.
"Chapter 11 Cases" means the cases under Chapter 11 of the
Bankruptcy Code commenced on the Filing Date by the Borrowers pending in the
Bankruptcy Court.
"Closing Date" means the date on which the conditions precedent set
forth in Section 5.1 shall have been satisfied.
"Code" means the Internal Revenue Code of 1986, as amended.
"Collateral" means all Property of the Loan Parties, now owned or
hereafter acquired, upon which a Lien is purported to be created by any Security
Document.
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"Combined Revolving Borrowing Capacity" means, at any time, the sum
of the Revolving Borrowing Capacities of all of the Borrowers at such time.
"Commitment" means, for each Lender, the amount (i) set forth
opposite such Lender's name on the signature pages of this Agreement (with
respect to Revolving Loans, Swing Line Loans and Term Loans) or (ii) pursuant to
a written assignment agreement pursuant to Section 11.13(b) or other agreement,
under which a Person becomes a Lender, the amount of Commitment so agreed to by
such new Lender, in each case as may be reduced from time to time in accordance
with the terms hereof.
"Commonly Controlled Entity" means an entity, whether or not
incorporated, which is under common control with a Borrower within the meaning
of Section 4001 of ERISA or is part of a group which includes a Borrower and
which is treated as a single employer under Section 414 of the Code.
"Concentration Account" has the meaning given to such term in
Section 7.8.
"Confirmation Date" means the date on which the Confirmation Order
was entered on the docket of the Bankruptcy Court.
"Confirmation Order" means an Order of the Bankruptcy Court in form
and substance acceptable to the Agent and the Lenders confirming the Plan of
Reorganization in the Chapter 11 Cases in accordance with the provisions of
Chapter 11 of the Bankruptcy Code.
"Consolidated Adjusted Net Income" means, with respect to any fiscal
period of the Borrowers, the net income after provision for income taxes for
such fiscal period for the Borrowers and their consolidated Subsidiaries as
determined in accordance with GAAP and reported on the Financial Statements for
such period, minus any and all of the following included, or plus any and all of
the following deducted, as the case may be, in or from such net income: (a) gain
or loss arising from the sale, abandonment or other disposition of any property
or asset outside of the ordinary course of business or realized on the disposal
of a segment of a business; (b) gain or loss arising from any write-up or
write-down in the book value of any asset; (c) earnings or losses of any
business entity, substantially all the assets of which have been acquired by a
Borrower or any consolidated Subsidiary in any manner, to the extent realized by
such other business entity prior to the date of acquisition; (d) earnings of any
business entity (other than a Subsidiary) in which a Borrower or any
consolidated Subsidiary has an ownership interest unless (and only to the
extent) such earnings shall actually have been received by such Borrower or
Subsidiary in the form of cash distributions; (e) gain or loss arising from the
acquisition of debt or equity securities of a Borrower or any consolidated
Subsidiary or from cancellation or forgiveness of Debt; (f) Restructuring
Charges; and (g) gain or loss arising from items which are (i) extraordinary,
(ii) infrequent in occurrence or (iii) unusual in nature, each of the foregoing
as determined in accordance with GAAP, without duplication. Notwithstanding any
provision of the foregoing to the contrary, in calculating Consolidated Adjusted
Net Income, all gain arising from Sale and Leaseback Transactions shall be
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subtracted from net income, but no loss arising from Sale and Leaseback
Transactions shall be added to net income.
"Consolidated Cash Interest Expense" means for any period
Consolidated Interest Expense for such period less expense for interest not paid
in cash during such period.
"Consolidated EBITDA" means, with respect to any fiscal period of
the Borrowers and their consolidated Subsidiaries: (a) Consolidated Adjusted Net
Income for such fiscal period; plus (b) the sum of any of the following amounts
deducted in determining such Consolidated Adjusted Net Income: (i) depreciation
and amortization expense and any other non-cash expenses; (ii) income and
franchise tax expenses; (iii) interest expense; and (iv) LIFO Provision; all as
deter mined on a consolidated basis in accordance with GAAP; minus or plus (c)
income or loss recognized upon the original implementation of any change in GAAP
as in effect on the date hereof that is required to be implemented after the
date hereof by any Borrower or any of its consolidated Subsidiaries and; plus
(d) any write-downs of assets required by Statement of Financial Accounting
Standards No. 121.
"Consolidated Fixed Charge Coverage Ratio" means for any period, the
ratio of (a) Consolidated EBITDA for such period to (b) Consolidated Fixed
Charges for such period.
"Consolidated Fixed Charges" means with respect to any fiscal period
of the Borrowers and their consolidated Subsidiaries, the sum of: (a)
Consolidated Cash Interest Expense, (b) all scheduled principal amortizations of
Funded Debt (including the Term Loans) for such period, (c) Consolidated Cash
Capital Expenditures and (d) all income, franchise and similar taxes, to the
extent paid in cash, less (i) all Reinvestment Amounts, (ii) all Financing
Proceeds, and (iii) at the Borrowers' election, any Excluded Cash Capital
Expenditures.
"Consolidated Funded Debt" means the Funded Debt of the Borrowers
and their Subsidiaries on a consolidated basis in accordance with GAAP.
"Consolidated Funded Debt Ratio" means, as at the last day of any
period of four consecutive Fiscal Quarters, the ratio of (a) Consolidated Funded
Debt on such day to (b) Consolidated EBITDA for such period.
"Consolidated Interest Coverage Ratio" means, for any period, the
ratio of (a) Consolidated EBITDA for such period to (b) Consolidated Interest
Expense for such period.
"Consolidated Interest Expense" means, for any period, total
interest expense (including that attributable to Capital Lease Obligations but
excluding amortization of deferred financing costs) of the Borrowers and their
consolidated Subsidiaries for such period with respect to all outstanding Debt
of the Borrower and its Subsidiaries (including, without limitation, all
commissions, discounts and other fees and charges owed with respect to letters
of credit and bankers' acceptance financing).
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"Debt" means, with respect to a Borrower and its Subsidiaries: (a)
all obligations of such Person for borrowed money or for the deferred purchase
price of property or services (other than trade payables and other contractual
obligations to suppliers and customers incurred in the ordinary course of
business, and accrued expenses incurred in the ordinary course of business), all
obligations evidenced by bonds, debentures, notes, or similar instruments, and
any other obligation which, in accordance with GAAP, would be shown as a
liability on such Person's balance sheet; (b) all obligations and liabilities of
any Person secured by any Lien on the Property of a Borrower or any Subsidiary,
with respect to which obligations and liabilities neither such Borrowers nor any
of its Subsidiaries shall have assumed or become liable for the payment thereof;
provided, however, that all such obligations and liabilities which are limited
in recourse to such Property shall be included in Debt only to the extent of the
book value of such Property that would be shown on a consolidated balance sheet
of the Borrowers and their consolidated Subsidiaries prepared in accordance with
GAAP; (c) all obligations or liabilities created or arising under any Capital
Lease or conditional sale or other title retention agreement with respect to
Property used or acquired by a Borrower or any of its Subsidiaries, even if the
rights and remedies of the lessor, seller or lender thereunder are limited to
repossession of such Property; provided, however, that all such obligations and
liabilities which are limited in recourse to such Property shall be included in
Debt only to the extent of the book value of such Property that would be shown
on a consolidated balance sheet of the Borrowers and their consolidated
Subsidiaries prepared in accordance with GAAP; (d) all unfunded obligations and
liabilities with respect to Plans and Prior Plans, whether or not reflected in
the Financial Statements, but only to the extent the aggregate amount of such
underfunding in all Plans and Prior Plans exceeds the aggregate amount of
overfunding in all other Plans and Prior Plans; (e) all obligations and
liabilities under Guaranties, indemnities, and for reimbursement in connection
with letters of credit and surety bonds; and (f) all Hedge Obligations.
"Default Rate" has the meaning specified in Section 3.3.
"Development Project" means a project or transaction involving the
development, construction, acquisition, refurbishment or improvement by a
Borrower or a Subsidiary of a retail store, or a warehouse or distribution
facility or Vehicles employed in the distribution operations of such Borrower or
its Subsidiaries, other than a Redevelopment Project.
"Development Sale and Leaseback Transaction" means a Sale and
Leaseback Transaction with respect to a Development Project, which is
consummated within one year from the date of the completion of the Development
Project, as notified to the Agent pursuant to Section 7.3(P).
"DIP Agent" has the meaning specified in the recitals hereto.
"DIP Credit Agreements" has the meaning specified in the recitals
hereto.
"DIP Credit Obligations" means any and all loans, advances,
liabilities, obligations, covenants, duties, and Debts owing by any or all of
the Borrowers to the DIP Lenders or the DIP
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Agent, arising under or pursuant to the DIP Credit Agreements, whether arising
from an extension of credit, DIP Letters of Credit, acceptance, loan, guaranty,
indemnification or otherwise, whether direct or indirect, absolute or
contingent, due or to become due, primary or secondary, as principal or
guarantor, and including, without limitation, all interest, charges, expenses,
fees, attorneys fees, filing fees and any other sums chargeable to a Borrower
under the DIP Credit Agreements, or under any other agreement or instrument with
the DIP Lenders related thereto.
"DIP Lenders" has the meaning specified in the recitals hereto.
"DIP Letters of Credit" has the meaning specified in the recitals
hereto.
"Disposition" means with respect to any Property, any sale, lease,
sale and leaseback, assignment, conveyance, transfer (including as a result of
condemnation proceedings or any similar taking) or other disposition thereof,
excluding (i) any renegotiation, cancellation or termination (which does not
substantially consist of a sale, including to the lessor) of store leases in the
ordinary course of business, including in such cases the retention by the
landlord of Equipment related to the premises, (ii) the issuance by Penn Traffic
of its Capital Stock and (iii) a Disposition of Vehicles; the terms "Dispose"
and "Disposed of" shall have correlative meanings.
"Distribution" means, in respect of any corporation, partnership,
limited liability company or similar business entity: (a) the payment or making
of any dividend or other distribution of Property in respect of its Capital
Stock or equity interests; or (b) the redemption, repurchase or other
acquisition of (i) any of its Capital Stock or equity interests, (ii) any of its
securities or debt instruments convertible into such Capital Stock or equity
interests, or (iii) any option, warrant, or other right to acquire such Capital
Stock, convertible security or debt instrument or equity interests; provided,
however, that "Distribution" does not mean a transaction in which, in lieu of
the exercise of an option, such entity issues a reduced number of shares of its
Capital Stock or equity interests solely in consideration of the cancellation of
such option.
"Dollars" and "$" mean the lawful currency of the United States of
America.
"Effective Date" has the meaning specified in the Plan of
Reorganization.
"Eligible Accounts" of a Borrower means the trade Accounts of such
Borrower upon which the Agent has a first priority perfected Security Interest,
excluding any Account:
(a) which is more than 30 days past due;
(b) with respect to which any of the representations, warranties,
covenants, and agreements contained in Article 6, 7 or 8 or in the Security
Agreement are not or have ceased to be complete and correct or have been
breached;
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(c) with respect to which, in whole or in part, a check or other
instrument for the payment of money has been received, presented for payment and
returned uncollected for any reason;
(d) which represents a progress billing or as to which a Borrower
has extended the time for payment without the written consent of the Agent; for
the purposes hereof, "progress billing" means any invoice for goods sold or
leased or services rendered under a contract or agreement pursuant to which the
Account Debtor's obligation to pay such invoice is conditioned upon a Borrower's
completion of any further performance under the contract or agreement;
(e) as to which any one or more of the following events has occurred
with respect to the Account Debtor on such Account: death or judicial
declaration of incompetency of an Account Debtor who is an individual; the
filing by or against the Account Debtor of a request or petition for
liquidation, reorganization, arrangement, adjustment of debts, adjudication as a
bankrupt, winding-up, or other relief under the bankruptcy, insolvency, or
similar laws of the United States, any state or territory thereof, or any
foreign jurisdiction, now or hereafter in effect; the making of any general
assignment by the Account Debtor for the benefit of creditors; the appointment
of a receiver or trustee for the Account Debtor or for any of the assets of the
Account Debtor; the institution by or against the Account Debtor of any other
type of insolvency proceeding (under the bankruptcy laws of the United States or
otherwise) or of any formal or informal proceeding for the dissolution or
liquidation of, settlement of claims against, or winding up of affairs of, the
Account Debtor; the sale, assignment, or transfer of all or any material part of
the assets of the Account Debtor; the nonpayment generally by the Account Debtor
of its debts as they become due; or the cessation of the business of the Account
Debtor as a going concern;
(f) representing a refund, credit, allowance, or similar item due to
a Borrower for Inventory returned to a vendor;
(g) owed by an Account Debtor which: (i) does not maintain its chief
executive office in the United States; or (ii) is not organized under the laws
of the United States or any state thereof; or (iii) is the government of any
foreign country or sovereign state, or of any state, province, municipality, or
other political subdivision thereof, or any department, agency, public
corporation, or other instrumentality of any such government; except to the
extent that such Account is secured or payable by a letter of credit or banker's
acceptance, on terms and from a bank acceptable to the Agent;
(h) owed by an Account Debtor which is a Borrower or an Affiliate of
a Borrower;
(i) except as provided in subsection (k) below, as to which either
the perfection, enforceability, or validity of the Security Interest in such
Account, or the Agent's right or ability to obtain direct payment of the
Proceeds of such Account, is governed by any federal, state, or local statutory
requirements other than those of the UCC;
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(j) which is owed by an Account Debtor to which a Borrower is
indebted in any way (including, without limitation, in connection with loans to
Penn Traffic from its franchisees) or which is subject to any right of setoff by
the Account Debtor, unless the Account Debtor has entered into a written
agreement acceptable to the Agent to waive setoff rights; or if the Account
Debtor thereon has disputed liability or made any claim with respect to such or
any other Account due from such Account Debtor; but in each such case only to
the extent of such indebtedness, setoff, dispute, or claim;
(k) which is owed by the government of the United States of America,
or any department, agency, public corporation, or other instrumentality thereof,
unless the Federal Assignment of Claims Act of 1940, as amended, and any other
steps necessary to perfect the Agent's Security Interest therein, have been
complied with to the Agent's satisfaction with respect to such Account;
(l) which is owed by any state, municipality, or other political
subdivision of the United States of America, or any department, agency, public
corporation, or other instrumentality thereof and as to which the Agent
determines that (i) its Security Interest therein is not or cannot be perfected
or (ii) any state or municipal law, regulation, or ordinance substantially
comparable to the Federal Assignment of Claims Act of 1940, as amended, and
applicable to such Account, has not been complied with to the Agent's
satisfaction;
(m) which arises out of a sale to an Account Debtor on a
bill-and-hold, guaranteed sale, sale and return, sale on approval, consignment,
or other repurchase or return basis;
(n) which is evidenced by a promissory note or other instrument or
by chattel paper;
(o) if the goods giving rise to such Account have not been shipped
and delivered to and accepted by the Account Debtor or the services giving rise
to such Accounts have not been performed by the applicable Borrower and accepted
by the Account Debtor;
(p) if the Agent believes in its reasonable credit judgment that the
prospect of collection of such Account is impaired or that the Account may not
be paid by reason of the Account Debtor's financial inability to pay;
(q) which is owed by an Account Debtor which the Agent, in its
reasonable credit judgment, otherwise deems to be uncreditworthy;
(r) with respect to which the Account Debtor is located in (i) New
Jersey, unless the applicable Borrower has qualified to do business in New
Jersey or has filed a Notice of Business Activities Report with the New Jersey
Division of Taxation for the then-current year or (ii) any other
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state that has a business reporting act or similar statute unless the applicable
Borrower is in compliance with the requirements of such statute;
(s) any amount accounted for by a Borrower or a Subsidiary as an
account receivable which is in fact entered on such Person's books for the
purpose of allocating expenses among divisions or for any similar purpose;
(t) which represents rent or similar charges payable for, or which
otherwise arises from, the rental, lease, or use of real Property;
(u) which is a claim for payment from Medicaid, Medicare, or another
medical reimbursement or medical or health insurance program whether public or
private; provided, however, that Accounts for the sale of pharmaceuticals
payable by private medical or health insurers shall not be so excluded except to
the extent that the outstanding amount of all such accounts to the extent
otherwise constituting Eligible Accounts pursuant to the other provisions hereof
exceeds $10,000,000;
(v) which represent sales to educational, welfare, charitable, and
non-profit institutions and organizations;
(w) which is of the type currently reflected on the Borrowers' books
and records as "Gift Certificate Receivable";
(x) if 50% or more of the aggregate dollar amount of Accounts owed
to such Borrower at such time by the Account Debtor thereon is classified as
ineligible under the other criteria set forth herein;
(y) if the aggregate dollar amount of all Accounts owed to such
Borrower by the Account Debtor thereon exceeds 10% of the aggregate amount of
all Accounts owed to such Borrower at such time, but only to the extent of such
excess; or
(z) which arises in connection with a manufacturer's coupon.
"Eligible Inventory" of a Borrower means Inventory of such Borrower
that constitutes readily saleable, first quality goods and wares, upon which the
Agent has a first priority perfected security interest and which is stored at
locations acceptable to the Agent, except any Inventory which is: (a) packaging
and shipping material; (b) supplies; (c) bill-and- hold Inventory; (d) returned
or defective Inventory; (e) Inventory delivered to a Borrower on consignment;
(f) raw materials and work-in-process; and (g) Excess Perishables Inventory.
"Entry Date" means the date the Confirmation Order is entered.
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"Environmental Claim" means a claim, however asserted, by any Public
Authority or other Person alleging potential liability on the part of a Borrower
or any of its Subsidiaries for violation of any Environmental Law or for release
or injury to the environment or threat to public health, personal injury
(including sickness, disease or death), property damage, natural resources
damage, or otherwise alleging liability for damages, punitive damages, cleanup
costs, removal costs, remedial costs, response costs, restitution, civil or
criminal penalties, injunctive relief, or other type of relief, resulting from
or based upon (a) the presence, placement, discharge, emission or release
(including intentional or unintentional, negligent or non-negligent, sudden or
non-sudden, accidental or non-accidental placement, spill, leak, discharge,
emission or release) of any Hazardous Material at, in or from property, whether
or not owned by a Borrower or any of its Subsidiaries, or (b) any other
circumstances forming the basis of any violation, or alleged violation, of any
Environmental Law.
"Environmental Laws" means all federal, state and local laws, rules,
regulations, ordinances, and consent decrees relating to health, safety,
hazardous substances, and environmental matters applicable to the business and
facilities of a Borrower or a Subsidiary (whether or not owned by it). Such laws
and regulations include but are not limited to the Resource Conservation and
Recovery Act, 42 U.S.C. ss. 6901 et seq., as amended; the Comprehensive
Environmental Response, Compensation and Liability Act, 42 U.S.C. ss. 9601 et
seq., as amended; the Toxic Substances Control Act, 15 U.S.C. ss. 2601 et seq.,
as amended; the Clean Water Act, 33 U.S.C. ss. 466 et seq., as amended; the
Clean Air Act, 42 U.S.C. ss. 7401 et seq., as amended; the Hazardous Material
Transportation Act, 49 U.S.C. ss. 1801 et seq.; the Federal Water Pollution
Control Act, 22 U.S.C. ss. 1251 et seq.; and the Occupational Safety and Health
Act, 29 U.S.C. ss. 651 et seq.
"Equipment" means, with respect to a Borrower, all of such Person's
now owned and hereafter acquired machinery, equipment, furniture, furnishings,
fixtures, and other tangible personal property (except Inventory), including,
without limitation, data processing hardware and software, motor vehicles,
trailers, aircraft, tools, office equipment, store fixtures, and leasehold
improvements, as well as all of such types of property leased by such Borrower
and all of such Person's rights and interests with respect thereto under such
leases (including, without limitation, options to purchase); together with all
component and auxiliary parts and supplies used or to be used in connection
therewith, and all substitutes for any of the foregoing, all manuals, drawings,
instructions, warranties and rights with respect thereto, and all proceeds and
general intangibles relating to all of the foregoing, including without
limitation any claims against third parties for loss or damage.
"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended.
"ERISA Event" means: (a) a reportable event with respect to a Plan
(other than a Multiemployer Plan described in Section 4043 of ERISA and the
regulations issued thereunder (other than any such event not subject to the
provision for 30-day notice to the PBGC under such regulations)); or (b) the
occurrence with respect to a Borrower or any Related Company of a withdrawal
from a Plan described in Section 4063 of ERISA, or a cessation of operations
described in Section 4062 of ERISA, or a determination of liability under
Section 4064 or 4069 of ERISA; or
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(c) a request by a Borrower or a Related Company for a variance from the minimum
funding standards under Section 412 of the Code; or (d) the filing by a Borrower
or a Related Company of a notice of intent to terminate a Plan or the treatment
of a Plan amendment as a termination under Section 4041 of ERISA; or (e) the
institution of proceedings by the PBGC to terminate or have a trustee appointed
to administer a Plan; or (f) any other event or condition which might constitute
grounds under Section 4042 of ERISA for the termination of, or the appointment
of a trustee to administer, any Plan; or (g) the partial or complete withdrawal
of a Borrower or any Related Company from a Multiemployer Plan.
"Eurocurrency Reserve Requirement" means, for the Interest Period
for a Eurodollar Revolving Loan, the aggregate of rates (expressed as a decimal)
of reserve requirements, if any, current on the date two Eurodollar Business
Days prior to the first day of such Interest Period (including, without
limitation, basic, supplemental, marginal, and emergency reserves under any
regulations of the Federal Reserve Board or other Public Authority having
jurisdiction with respect thereto), which are required to be maintained against
a category of liabilities which includes Eurodollar deposits, or a category of
assets which includes Eurodollar loans, and applicable to the Bank (such as of
the type from time to time prescribed by Regulation D of the Federal Reserve
Board).
"Eurodollar Business Day" means any Business Day on which dealings
in Dollar deposits in the interbank Eurodollar market may be carried on in
London, England and New York, New York.
"Eurodollar Lending Office" means the office or branch of a Lender
or one of its Affiliates in New York where the Lender customarily conducts its
dealings in United States Dollar deposits in the interbank Eurodollar market.
"Eurodollar Loans" means Loans the rate of interest applicable to
which is based upon the Eurodollar Rate.
"Eurodollar Rate" means, for the Interest Period for a Eurodollar
Loan, a rate per annum equal to the sum of: (a) the Applicable Margin; and (b)
the rate determined pursuant to the following formula:
LIBOR
------------------------------------
1 - Eurocurrency Reserve Requirement
"Eurodollar Revolving Loan" means a Revolving Loan bearing interest
at the Eurodollar Rate.
"Event" means any event or condition which, with notice, the passage
of time, the happening of any other condition or event, or any combination
thereof, would constitute an Event of Default.
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"Event of Default" has the meaning given to such term in Section
9.1.
"Excess Perishables Inventory" means, at any time, Inventory of a
Borrower consisting of the categories of perishables listed on Exhibit W in an
amount equal to the amount by which (a) the Value (as hereinafter defined) of
all such categories of Inventory of such Borrower at such time exceeds (b)
one-hundred fifty percent (150%) of the product of the total Value of all
Inventory of such Borrower at such time multiplied by the Determination Date
Perishables Percentage (as hereinafter defined). When used in this definition,
"Value" means the lower of cost (on a first-in, first-out basis) or market
value, and "Determination Date Perishables Percentage" means the quotient,
expressed as a decimal percentage, obtained by dividing the Value of the
specified categories of perishables of such Borrower listed on Exhibit W on July
2, 1999 by the Value of all Inventory of such Borrower on such date.
"Exchange Act" means the Securities and Exchange Act of 1934, as
amended, including all rules and regulations issued thereunder.
"Excluded Cash Capital Expenditures" means, for any Fiscal Year, the
lesser of (x) $25,000,000 and (y) the sum of (i) Carryover Cash Capex for such
period and (ii) the Unutilized Cash Capex Reserve at the end of such period.
"Exit Commitment Letter" means the Commitment Letter dated May 13,
1999 from Fleet Capital and agreed to and accepted by Penn Traffic and certain
Borrowers, and approved by the Bankruptcy Court.
"Exit Expense Letter" means the letter agreement dated May 13, 1999
of Penn Traffic in favor of Fleet Capital and approved by the Bankruptcy Court.
"Exit Fee Letter" means the Fee Letter dated May 13, 1999 from Fleet
Capital and agreed to and accepted by Penn Traffic, and approved by the
Bankruptcy Court.
"Facility" means (a) the Term Loan Commitments and the Term Loans
made thereunder (the "Term Loan Facility") and (b) the Revolving Credit
Commitments and the extensions of credit made thereunder (the "Revolving Credit
Facility").
"Fair Market Value" means the price at which a willing buyer under
no compulsion to buy would purchase Property from a willing seller under no
compulsion to sell in a transaction under customary terms and conditions for the
time and location, as determined in good faith by the Agent.
"Federal Reserve Board" means the Board of Governors of the Federal
Reserve System, or any successor.
"Filing Date" means March 1, 1999.
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"Final Order" means an order of the Bankruptcy Court (a) as to which
the time to appeal, petition for certiorari or move for reargument or rehearing
has expired and as to which no appeal, petition for certiorari or other
proceedings for reargument or rehearing shall then be pending, or (b) if an
appeal, writ of certiorari, reargument or rehearing thereof has been filed or
sought, such order of the Bankruptcy Court shall have been affirmed by the
highest court to which such order was appealed, or certiorari shall have been
denied or reargument or rehearing shall have been denied or resulted in no
modification of such order, and the time to take any further appeal, petition
for certiorari or move or reargument or rehearing shall have expired; provided,
however, that the possibility that a motion under Rule 59 or Rule 60 of the
Federal Rules of Civil Procedure, or any analogous rule under the Federal Rules
of Bankruptcy Procedure, may be filed with respect to such order shall not cause
such order not to be a Final Order.
"Financed Capital Expenditures" means any Capital Expenditure or
portion thereof simultaneously financed with the proceeds of Debt (other than
the Revolving Loans or Swing Line Loans, but including Capital Leases), or Debt
incurred at the time of the acquisition of capital assets as part of a Permitted
Asset Acquisition (but excluding Sale and Leaseback Transactions).
"Financial Statements" means, according to the context in which it
is used, the audited financial statements of the Borrowers and their
consolidated Subsidiaries for the Fiscal Year ended on January 31, 1999, or any
financial statements required to be given to the Agent under this Agreement.
"Financing Proceeds" means, for any Fiscal Year, the Net Cash
Proceeds from Sale and Leaseback Transactions or from the incurrence of Debt, in
each case otherwise permitted under this Agreement and used to finance any Cash
Capital Expenditures previously made, provided that such financing is
consummated within 365 days after the later of (x) the date the subject Property
or Qualified Real Property was acquired and (y) the date of the completion of
the store, warehouse or distribution project for which such Property or
Qualified Real Property was acquired; provided, further, that such Net Cash
Proceeds shall not include amounts that are (i) applied to the repayment of Debt
previously incurred in connection with the financing of the Qualified Real
Property or Property which was the subject of the Sale and Leaseback Transaction
or the incurrence of Debt, as the case may be or (ii) required to be paid to the
Agent under Section 4.4(a)(ii).
"Fiscal Quarter" means a 13-week or 14-week accounting period of a
Fiscal Year.
"Fiscal Year" means Penn Traffic's fiscal year for financial
accounting purposes, which ends on the Saturday closest to January 31 of each
year. The current Fiscal Year will end on January 29, 2000. Any reference in
this Agreement to "Fiscal Year" immediately followed by a specific year (e.g.,
Fiscal Year 2000) means the Fiscal Year ending on the Saturday closest to
January 31 of such year.
"Foreign Taxes" has the meaning given to such term in Section 3.10.
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"Franchise Agreements" means, collectively, all now existing or
hereafter arising agreements and instruments between any Borrower and any Person
which participates in either of the Riverside Markets, Bi-Lo Markets, or Big M
franchise programs (or any additional programs put in effect by any Borrower),
or an Affiliate of any such Person, including, without limitation, franchise
agreements, license agreements, agreements for loans and advances, financing fee
agreements, promissory notes, security agreements, guaranties, and agreements
for accounting and financial services or for maintenance and repair services,
and any and all amendments, supplements, extensions, and renewals thereof,
together with all Property at any time serving as security for any obligation
owing to any Borrower under or in connection with any such agreement or
instrument, and all of the rights and remedies of each Borrower under, and all
moneys and claims for money due or to become due to each Borrower under or in
connection with, any such agreement or instrument, including, without
limitation, all now or hereafter existing rights and claims of a Borrower: (a)
under any insurance, indemnities, warranties, or guaranties provided for or
arising out of or in connection with any such agreement or instrument; (b) for
any damages arising out of any default under or in connection with any such
agreement instrument; and (c) to all other amounts from time to time paid or
payable under or in connection with any such agreement or instrument.
"Funded Debt" means, as to any Person, all Debt described in the
definition of "Debt" (other than clauses (d), (e) and (f) of such definition) of
such Person that matures more than one year from the date of its creation or
matures within one year from such date but is renewable or extendible, at the
option of such Person, to a date more than one year from such date or arises
under a revolving credit or similar agreement that obligates the lender or
lenders to extend credit during a period of more than one year from such date,
including, without limitation, all current maturities and current sinking fund
payments in respect of such Debt whether or not required to be paid within one
year from the date of its creation and, in the case of the Borrowers, such Debt
in respect of the Loans.
"Funding Office" means the office specified from time to time by the
Agent as its funding office by notice to the Borrowers and the Lenders.
"GAAP" means generally accepted accounting principles in the United
States of America as in effect from time to time, except that for purposes of
Section 7.1, GAAP shall be determined on the basis of such principles in effect
on the date hereof and consistent with those used in the preparation of the most
recent audited financial statements delivered pursuant to Section 7.2(a) and
(b). In the event that any "Accounting Change" (as defined below) shall occur
and such change results in a change in the method of calculation of financial
covenants, standards or terms in this Agreement, then the Borrowers and the
Agent agree to enter into negotiations in order to amend such provisions of this
Agreement so as to equitably reflect such Accounting Changes with the desired
result that the criteria for evaluating the Borrowers' financial condition shall
be the same after such Accounting Changes as if such Accounting Changes had not
been made. Until such time as such an amendment shall have been executed and
delivered by the Borrower, the Agent and the Required Lenders, all financial
covenants, standards and terms in this Agreement shall continue to be calculated
or construed as if such Accounting Changes had not occurred. "Accounting
Changes"
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refers to changes in accounting principles required by the promulgation of rule,
regulation, pronouncement or opinion by the Financial Accounting Standards Board
of the American Institute of Certified Public Accountants or, if applicable, the
Securities and Exchange Commission (or successors thereto or agencies with
similar functions).
"Guaranty" by any Person means all obligations of such Person which
in any manner directly or indirectly guarantee the payment or performance of any
indebtedness, dividend or other obligation of any other Person (the "guaranteed
obligations"), or assure or in effect assure the holder of the guaranteed
obligations against loss in respect thereof, including, without limitation, any
such obligations incurred through an agreement: (a) to purchase the guaranteed
obligations or any Property constituting security therefor; or (b) to advance or
supply funds for the purchase or payment of the guaranteed obligations or to
maintain a working capital or other balance sheet condition.
"Guaranty Agreement" means the Guaranty Agreement in the form
annexed hereto as Exhibit A to be executed and delivered to the Agent by each
Subsidiary Guarantor.
"Hazardous Material" means any of those substances which are
regulated by, or which may form the basis of liability under, any Environmental
Law, including, without limitation, all substances identified under any
Environmental Law as a pollutant, contaminant, waste, solid waste, hazardous
waste, hazardous constituent, special waste, hazardous substance, hazardous
material, or toxic substance, or petroleum or petroleum-derived substance or
waste.
"Hedge Obligations" means all indebtedness and obligations of the
Borrowers or any of them in connection with interest rate swaps, caps or collar
agreements or similar agreements entered into by any of the Borrowers with the
Bank or any Lender (or an Affiliate of any Lender) in connection with this
Agreement, providing for protection against fluctuations in interest rates or
currency exchange rates or the exchange of nominal interest obligations, either
generally or under specific contingencies.
"Hedging Agreements" means any and all agreements or documents
evidencing any Hedge Obligations.
"Indemnitee" has the meaning specified in Section 11.8 hereto.
"Insolvency" means, with respect to any Multiemployer Plan, the
condition that such Plan is insolvent within the meaning of Section 4245 of
ERISA.
"Insolvent" means pertaining to a condition of Insolvency.
"Interest Payment Date" means, as to any Eurodollar Loan (a) having
an Interest Period of three months or less, the last day of such Interest
Period, (b) having an Interest Period longer than three months, each day which
is three months, or a whole multiple thereof, after the first
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day of such Interest Period and the last day of such Interest Period and (c) the
date of any repayment or prepayment made in respect thereof.
"Interest Period" means, with respect to each Eurodollar Loan:
(i) initially, the period commencing on the date such Eurodollar
Loan is made or another Loan of another type is converted into such Eurodollar
Loan, as the case may be, and ending on the numerically corresponding date one,
two, three or six months thereafter, as the applicable Borrower may elect; and
(ii) thereafter for each renewal of such Loan, the period commencing
on the last day of the next preceding Interest Period for such Loan and ending
one, two, three or six months thereafter, as the applicable Borrower may elect;
provided that: (A) any such Interest Period which would otherwise end on a day
which is not a Eurodollar Business Day shall be extended to the next succeeding
Eurodollar Business Day (and interest shall accrue and be payable for the period
of such extension) unless such next succeeding Eurodollar Business Day falls in
another calendar month, in which case such Interest Period shall end on the next
preceding Eurodollar Business Day; and (B) any such Interest Period which begins
on the last Eurodollar Business Day of any calendar month (or on a day for which
there is no numerically corresponding day in the calendar month at the end of
such Interest Period) shall end on the last Eurodollar Business Day of a
calendar month.
"Inventory" means, with respect to a Borrower, all of such
Borrower's now owned and hereafter acquired goods, merchandise, and other
personal property, wherever located, to be furnished under any contract of
service or held for sale or lease, all raw materials, work-in-process, finished
goods, returned goods, and materials and supplies of any kind, nature or
description which are or might be used or consumed in such Borrower's business
or used in connection with the manufacture, packing, shipping, advertising,
selling or finishing of such inventory, goods, merchandise, and other personal
property, and all documents of title or other documents representing the
foregoing.
"IRS" means the Internal Revenue Service or any successor.
"Issuing Bank" means the Bank or any other bank that issues a Letter
of Credit at the Agent's request and with the applicable Borrower's consent, not
to be unreasonably withheld.
"Latest Projections" means: (a) at the date hereof and thereafter
until the Agent receives new Projections pursuant to Section 7.2(f), the
projections of the financial condition, results of operations and cash flow of
the Borrowers and their consolidated Subsidiaries for Fiscal Year 2000, as set
forth in the Business Plan; and (b) thereafter, the Projections most recently
received by the Agent pursuant to Section 7.2(f).
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"L/C Commitment" means $70,000,000.
"L/C Participants" means the collective reference to all the
Revolving Credit Lenders other than the Issuing Bank.
"L/C Payment Date" means the last day of each calendar month and the
last day of the Revolving Credit Commitment Period.
"Lender" means (a) a financial institution or other Person listed as
a Lender (either or both a Revolving Credit Lender or a Term Loan Lender) on the
signature pages of this Agreement, or which hereafter becomes a party to this
Agreement as a Lender, and (b) the Swing Line Lender, and in each case its
successors and assigns.
"Lending Office" means, with respect to a Lender, the office of such
Lender in the United States designated as its "Lending Office" opposite its name
on the signature pages of this Agreement, or such other office in the United
States as such Lender may from time to time specify to the Borrowers and the
Agent.
"Letter of Credit Obligations" means, with respect to a Letter of
Credit, the sum of: (a) the Undrawn Amount of such Letter of Credit; and (b) all
Reimbursement Obligations related to such Letter of Credit.
"Letters of Credit" has the meaning specified in Section 2.16(a).
"LIBOR" means, with respect to each day during each Interest Period
pertaining to a Eurodollar Loan, the rate per annum determined on the basis of
the rate for deposits in Dollars for a period equal to such Interest Period
commencing on the first day of such Interest Period appearing on Page 3750 of
the Dow Jones Markets screen as of 11:00 A.M., London time, two Eurodollar
Business Days prior to the beginning of such Interest Period. In the event that
such rate does not appear on Page 3750 of the Dow Jones Markets screen (or
otherwise on such screen), LIBOR for purposes of this definition shall be
determined by reference to such other comparable publicly available service for
displaying Eurodollar rates as may be selected by the Agent or, in the absence
of such availability, by reference to the rate at which the Agent is offered
Dollar deposits at or about 11:00 A.M., New York City time, two Eurodollar
Business Days prior to the beginning of such Interest Period in the interbank
Eurodollar market where its Eurodollar and foreign currency and exchange
operations are then being conducted for delivery on the first day of such
Interest Period for the number of days comprised therein.
"Lien" means any interest in Property securing an obligation owed
to, or a claim by, a Person other than the owner of the Property, whether such
interest is based on the common law, statute, or contract, and including,
without limitation, (a) a security interest, charge, claim, or lien arising from
a mortgage, deed of trust, encumbrance, pledge, hypothecation, assignment,
deposit arrangement, agreement, or conditional sale or a lease, consignment or
bailment for security
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purposes, or (b) any reservation, exception, encroachment, easement,
right-of-way, condition, restriction or other title exception or encumbrance
affecting Property.
"LIFO Provision" means, with respect to any fiscal period, the
positive or negative change in the LIFO Reserve between the beginning and the
end of such fiscal period.
"LIFO Reserve" means, as at any date, the positive or negative
difference, if any, between the cost of the inventory of the Borrowers and their
consolidated Subsidiaries as at such date, determined in accordance with GAAP on
a first-in, first-out basis, and the cost of such inventory as at such date,
determined in accordance with GAAP on a last-in, first-out basis.
"Loan" means any loan made by any Lender pursuant to this Agreement.
"Loan Documents" means this Agreement, the Revolving Loan Notes, the
Term Loan Notes, the Security Documents and all other agreements, instruments,
and documents heretofore, now or hereafter evidencing, securing, guaranteeing or
otherwise relating to the Obligations, the Collateral, the Security Interest, or
any other aspect of the transactions contemplated by this Agreement, including,
without limitation, the Exit Fee Letter and the Exit Expense Letter.
"Loan Parties" means the Borrowers and each of their respective
Subsidiaries which is a party to a Loan Document.
"Majority Facility Lenders" means, with respect to any Facility, the
holders of more than 50% of the aggregate unpaid principal amount of the Term
Loans or the Total Revolving Extensions of Credit, as the case may be,
outstanding under such Facility (or, in the case of the Revolving Credit
Facility, prior to any termination of the Revolving Credit Commitments, the
holders of more than 50% of the Total Revolving Credit Commitments).
"Majority Revolving Credit Lenders" means the Majority Facility
Lenders in respect of the Revolving Credit Facility.
"Material Adverse Effect"means a material adverse effect on (a) the
business, assets, liabilities, property, condition (financial or otherwise) or
prospects of Penn Traffic and its Subsidiaries taken as a whole or (b) the
validity or enforceability of this Agreement, the Notes, the Security Agreement,
the Mortgages, the other Loan Documents or the rights or remedies of the Agent
or the Lenders hereunder or thereunder.
"Material Subsidiary" means (i) Sunrise Properties, Inc. and (ii)
any other Subsidiary directly or indirectly (through one or more Subsidiaries)
having assets with a Fair Market Value of not less than $5,000,000.
"Mortgaged Properties" means the collective reference to each of the
Real Estate Interests subject to the Mortgages.
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"Mortgages" means the collective reference to each of the mortgages,
deeds of trust and deeds to secure debt encumbering each of the Mortgaged
Properties to be executed and delivered by the respective Loan Parties in favor
of, or for the benefit of, the Agent for the benefit of the Secured Parties,
substantially in the forms referred to in the Security Agreement (with such
changes thereto as shall be advisable under the law of the jurisdiction in which
such mortgage, deed to secure debt or deed of trust is to be recorded), as the
same may be amended, supplemented or otherwise modified from time to time.
"Multiemployer Plan" means a "multiemployer plan" as defined in
Section 4001(a)(3) of ERISA to which a Borrower or any Related Company
contributes or is required to contribute.
"Net Amount of Eligible Accounts" means, with respect to a Borrower,
the gross amount of Eligible Accounts of such Borrower less the following
(without duplication to the extent already deducted under the definition of
Eligible Accounts): (a) sales, excise or similar taxes, (b) returns, discounts,
claims, credits and allowances of any nature at any time issued, owing, granted,
outstanding, available or claimed, (c) any finance charges included as a
component thereof, and (d) any adjustments or reserves reflected on such
Borrower's books and records in recording the amount of Accounts.
"Net Cash Proceeds" means the cash portion of Net Proceeds, when
received.
"Net Proceeds" means, with respect to an Asset Transfer or Casualty
Event: (a) the gross amount of all cash and the Fair Market Value of all other
Property, received directly or indirectly by a Borrower or a Subsidiary, or for
its account, in connection with the Asset Transfer or Casualty Event, whether at
the time of such Asset Transfer or Casualty Event or thereafter, including,
without limitation, upon receipt all payments of principal of or interest on any
note or other debt instrument issued as part of the consideration for such Asset
Transfer or Casualty Event; minus (b) the sum of: (i) all reasonable
commissions, legal fees, and other costs and expenses incurred by such Borrower
or Subsidiary in connection with such Asset Transfer or Casualty Event; (ii)
payments on account of Debt (other than the Obligations) secured by the Property
disposed of in such Asset Transfer or Casualty Event, the payment of which Debt
was required in order to consummate such Asset Transfer or necessary as a result
of such Casualty Event; (iii) all taxes payable by such Borrower or Subsidiary
and attributable to such Asset Transfer or Casualty Event; (iv) the amount of
cash and the Fair Market Value of all other Property attributable to the bulk
sale of inventory; and (v) appropriate amounts to be set aside by such Borrower
or Subsidiary as a reserve, in accordance with GAAP, against liabilities
associated with the assets that are the subject of the Asset Transfer or
Casualty Event and which liabilities are retained by such Borrower or Subsidiary
after the Asset Transfer or Casualty Event (including, without limitation,
liabilities arising from indemnifications provided in connection with such Asset
Transfer or Casualty Event).
"Notes" means the collective reference to any promissory note
evidencing Loans.
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"Obligations" means any and all present and future loans, advances,
liabilities, obligations, covenants, duties, and Debts owing by any or all of
the Borrowers to the Agent, the Bank, the Issuing Bank, or any Lender, arising
under or pursuant to this Agreement or any other Loan Document, whether arising
from an extension of credit, opening of a letter of credit, acceptance, loan,
guaranty, indemnification or otherwise, whether direct or indirect, absolute or
contingent, due or to become due, primary or secondary, as principal or
guarantor, and including, without limitation, all interest, charges, expenses,
fees, attorneys fees, filing fees and any other sums chargeable to a Borrower
hereunder or under another Loan Document (including, without limitation,
interest accruing after the maturity of the Loans and Reimbursement Obligations
and interest accruing after the filing of any petition in bankruptcy, or the
commencement of any insolvency, reorganization or like proceeding, relating to a
Borrower, whether or not a claim for post-filing or post-petition interest is
allowed in such proceeding). "Obligations" includes, without limitation: all
debts, liabilities, and obligations now or hereafter owing from any or all of
the Borrowers (i) to the Agent, the Issuing Bank, or any Lender under or in
connection with the Letters of Credit (including, without limitation, the DIP
Letters of Credit), and (ii) in connection with Hedge Obligations.
"Original Property Value" means in connection with a Redevelopment
Project and a Redevelopment Sale and Leaseback Transaction, the value, as
determined by the relevant Property Valuation, of the Original Redevelopment
Property; provided, that the Property Valuation of Equipment constituting
Original Redevelopment Property shall be included only if such value is greater
than 20% of the Property Valuation of the entire Redevelopment Project as of the
date of the relevant transaction.
"Original Redevelopment Property" means the Property owned by a
Borrower or a Subsidiary on the Closing Date which is employed in a
Redevelopment Project.
"Other Taxes" means any and all present or future stamp or
documentary taxes or any other excise or property taxes, charges or similar
levies arising from any payment made hereunder or from the execution, delivery
or enforcement of, or otherwise with respect to, this Agreement or any other
Loan Document.
"Outstanding Revolving Obligations" means as to any Borrower the sum
of (a) the Revolving Loans and Swing Line Loans to such Borrower and (b) the
Letter of Credit Obligations of such Borrower.
"PACA Reserve" means any reserve which the Agent establishes in its
reasonable discretion for potential trust fund liability under the Perishable
Agricultural Commodities Act, 1930, 7 U.S.C. ss. 499 et seq., as amended.
"Participating Lender" means any Person who shall have been granted
the right by any Lender to participate in the Revolving Loans made by such
Lender and who shall have entered into a participation agreement in form and
substance satisfactory to such Lender.
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"Payment Account" means each collection account, blocked bank
account or bank account associated with a lock box, established or maintained
pursuant to Section 7.8, to which the funds of a Borrower (including, without
limitation, Proceeds of Accounts and other Collateral) are deposited or
credited, and which is maintained on terms acceptable to the Agent, including,
without limitation, the Concentration Account.
"PBGC" means the Pension Benefit Guaranty Corporation or any
successor.
"Permitted Asset Acquisitions" means acquisitions of the assets
(excluding Capital Stock) of ongoing retail and wholesale grocery businesses at
locations in or adjacent to the geographic market in which the Borrowers and
their Subsidiaries operate on the Closing Date.
"Permitted Claim Settlement" means and includes discounts, credits
and allowances made or given to a customer or franchisee in the good faith
business judgment of a Borrower in connection with the settlement or adjustment
of a claim by or against such franchisee or customer.
"Permitted Inducement" means inducements extended (a) to new
customers or (b) to existing customers in connection with (i) the opening of a
new facility or (ii) a substantial addition to or remodeling of an existing
facility, in each event in a manner consistent with (x) the past practice of the
Borrowers or (y) the current general practice in the Borrowers' industry.
"Permitted Investments" means (a) direct obligations issued by, or
guaranteed by, the United States Government or issued by any agency thereof, in
each case maturing within one year from the date of acquisition; (b)
certificates of deposit, time deposits, Eurodollar time deposits or overnight
bank deposits having maturities of one year or less from the date of acquisition
issued by any Lender or by any bank or trust company organized under the laws of
the United States of America or any state thereof having combined capital and
surplus of not less than $100,000,000; (c) commercial paper of an issuer rated
at least A-2 by Standard & Poor's Ratings Services ("S&P") or P-2 by Moody's
Investors Service, Inc. ("Moody's"), or carrying an equivalent rating by a
nationally recognized rating agency, and maturing within 270 days from the date
of acquisition; (d) repurchase obligations of any Lender or of any commercial
bank satisfying the requirements of clause (b) of this definition, having a term
of not more than 30 days with respect to securities issued or fully guaranteed
or insured by the United States government; (e) securities with maturities of
one year or less from the date of acquisition issued or fully guaranteed by any
state, commonwealth or territory of the United States, by any political
subdivision or taxing authority of any such state, commonwealth or territory or
by any foreign government, the securities of which state, commonwealth,
territory, political subdivision, taxing authority or foreign government (as the
case may be) are rated at least A by S&P or A by Moody's, or carry an equivalent
rating by a nationally recognized rating agency; (f) securities with maturities
of six months or less from the date of acquisition backed by standby letters of
credit issued by any Lender or any commercial bank satisfying the requirements
of clause (b) of this definition; or (g) shares of money market mutual or
similar funds which invest exclusively in assets satisfying the requirements of
clauses (a) through (f) of this definition.
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"Permitted Liens" means: (a) Liens for taxes (i) not yet payable or
(ii) being contested in good faith and by proper proceedings diligently pursued,
provided that a reserve or other appropriate provision, if any, as shall be
required by GAAP shall have been made therefor on the applicable Financial
Statements; (b) Liens in favor of the Agent; (c) purchase money Liens upon
Equipment granted in connection with the acquisition of such Equipment by a
Borrower or any Subsidiary after the date hereof, including, but not limited to,
pursuant to Capital Leases and including any renewals or refinancings thereof,
provided that (i) the cost of each such acquisition constitutes a Capital
Expenditure permitted by Section 8.13, (ii) the Debt incurred to finance each
such acquisition is permitted by Section 8.4, and (iii) each such Lien attaches
only to the Equipment acquired with the Debt secured thereby; (d) Liens other
than on Inventory, or Receivables to secure Debt permitted by, and on the terms
and conditions set forth in, clauses (b), (h), (i), (j), (k) (m), and (n) of
Section 8.4; (e) deposits or pledges under workmen's compensation, unemployment
insurance, social security and other similar laws (other than ERISA); (f)
carriers', warehousemen's, mechanics', materialmen's, repairmen's, or other like
Liens arising in the ordinary course of business securing sums which are not
overdue or which are being contested in good faith through appropriate
proceedings; (g) deposits or pledges to secure performance in connection with
bids, tenders, contracts (other than contracts for the payment of money) or
leases made in the ordinary course of business by a Borrower or any Subsidiary;
(h) deposits to secure public or statutory obligations of a Borrower or any
Subsidiary; (i) deposits to secure surety, appeal or customs bonds in
proceedings to which a Borrower or any Subsidiary is a party; (j) Liens arising
out of judgments or awards in respect of which a Borrower or any Subsidiary
shall in good faith be prosecuting an appeal or proceedings for review and in
respect of which such Borrower or any Subsidiary shall have secured a subsisting
stay of execution pending such appeal or proceedings for review, provided that
adequate reserves as shall be required by GAAP shall have been made therefor on
the applicable Financial Statements; (k) Liens granted or arising in the
ordinary course in favor of landlords or owners on fixtures in connection with
store leases, and Liens granted in the ordinary course in respect of consignment
arrangements to the extent consistent with prior practice of the Borrowers, (l)
a Lien under a lease of personal Property entered into in the ordinary course of
business, so long as the Lien attaches only to such personal Property; (m) Liens
specified on Exhibit B hereto, including any renewals or refinancings thereof,
so long as the Liens do not cover any additional Property, but only to the
extent such Liens continue to secure Debt permitted by Section 8.4; (n)
easements, rights of way, restrictions, covenants and other similar charges or
encumbrances on any Real Estate Interest or any other interest in real property
of any Borrower or any of its Subsidiaries; (o) Liens arising under licensing
agreements entered into by any Borrower or any Subsidiary of a Borrower in the
ordinary course of business for the use of Proprietary Rights or other
intangible assets, including any settlements, permissions, consents to use and
other similar agreements concerning Proprietary Rights; (p) Liens specified in
the title reports delivered to the Agent on or before the Closing Date in
respect of the Real Estate Interests; (q) a Lien arising from a judgment,
attachment or execution so long as an Event of Default has not occurred under
Section 9.1(j); and (r) Liens which do not have priority over the Security
Interest except as required by applicable law, and which secure indebtedness not
exceeding $5,000,000 in the aggregate at any time.
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"Person" means any individual, sole proprietorship, partnership,
joint venture, trust, unincorporated organization, association, corporation,
Public Authority, or any other entity.
"Plan" means, at a particular time, any employee benefit plan which
is covered by ERISA and in respect of which a Borrower or a Commonly Controlled
Entity is (or, if such plan were terminated at such time, would under Section
4069 of ERISA be deemed to be) an "employer" as defined in Section 3(5) of
ERISA.
"Plan of Reorganization" means the Borrowers' Amended Joint Plan of
Reorganization, dated April 2, 1999, under Chapter 11 of the Bankruptcy Code, as
the same may be amended, modified or otherwise supplemented from time to time
with the express written consent of the Agent, which consent shall not be
unreasonably withheld.
"Pricing Grid" means the pricing grid (and subjoined text) attached
hereto as Annex A.
"Prime-Based Loan" means a Revolving Loan, a Swing Line Loan or the
amount of a Term Loan, bearing interest at the Prime-Based Rate or which is made
as such by reason of the operation of any other provision of this Agreement.
"Prime-Based Rate" means the Prime Lending Rate, plus the Applicable
Margin.
"Prime-Based Revolving Loan" means a Revolving Loan bearing interest
at the Prime-Based Rate.
"Prime Lending Rate" means the rate which the Bank announces from
time to time as its prime lending rate, as in effect from time to time. The
Prime Lending Rate is a reference rate and does not necessarily represent the
lowest or best rate actually charged by the Bank or any Lender to any customer.
The Lenders may make commercial loans or other loans at rates of interest at,
above or below the Prime Lending Rate.
"Prior Plan" means a pension or other employee benefit plan which is
subject to ERISA (including, without limitation, a Multiemployer Plan) and (a)
which is maintained currently or was maintained within the five (5) calendar
years preceding the date of determination by a Person which was, at any time
while it maintained such plan, but is no longer, a Related Company of a
Borrower, and (b) to which none of the Borrowers or any Related Company
currently makes any contributions and to which none of the Borrowers or any
Related Company is currently required to contribute.
"Proceeds" means all "proceeds" as such term is defined in Section
9-306(1) of the UCC and all proceeds and products of any Collateral, and all
proceeds of such proceeds and products, including, without limitation, all cash
and credit balances, all payments under any indemnity, warranty, or guaranty
payable with respect to any Collateral, all awards for taking by
26
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eminent domain, all proceeds of fire or other insurance, and all money and other
Property obtained as a result of any claims against third parties or any legal
action or proceeding with respect to Collateral and all dividends or other
income from the Pledged Securities, collections thereon or distributions or
payments with respect thereto.
"Projections" has the meaning as defined in Section 7.2(f).
"Property" means any right or interest in or to property of any kind
whatsoever, whether real, personal or mixed and whether tangible or intangible,
including, without limitation, Capital Stock.
"Property Valuation" means either (a) with respect to Real Estate
Interests, the valuations set forth in the written report dated January 26, 1999
of Cushman & Wakefield (N.J.) Inc. addressed to Penn Traffic and heretofore
delivered to the Agent (and any subsequent modification or supplement thereto,
including separate property by property appraisals), setting forth appraisals of
certain Real Estate Interests of the Borrowers owned or held as of the Closing
Date; or (b) with respect to Equipment constituting Original Redevelopment
Property, the Fair Market Value thereof as determined in good faith by the
relevant Borrower after consultation with the Agent with respect to the basis of
such valuations.
"Proprietary Rights" means, with respect to a Borrower, all of such
Borrower's now owned and hereafter arising or acquired: licenses, franchises,
permits, patents, patent rights, copyrights, works which are the subject matter
of registered copyrights, registered trademarks, trade names, patent and
trademark applications, and licenses and rights thereunder, including, without
limitation, those patents, trademarks and copyrights set forth on Exhibit L
hereto, and all other rights under any of the foregoing, all extensions,
renewals, reissues, divisions, continuations, and continuations-in-part of any
of the foregoing, and all rights to sue for past, present, and future
infringement of any of the foregoing; inventions, trade secrets, formulae,
processes, compounds, drawings, designs, blueprints, surveys, reports, manuals,
and operating standards; goodwill; customer and other lists in whatever form
maintained; and trade secret rights, copyright rights, rights in works of
authorship, and contract rights relating to computer software programs, in
whatever form created or maintained.
"Pro-Rata Share" means with respect to any Lender at any time, the
ratio (expressed as a percentage) of such Lender's Aggregate Exposure at such
time to the Aggregate Exposure of all Lenders at such time.
"Public Authority" means the government of any country or sovereign
state, or of any state, province, municipality, or other political subdivision
thereof, or any department, agency, public corporation or other instrumentality
of any of the foregoing.
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"Qualified Real Property" means any real property or improvements
thereon (a) from which a Borrower operates a retail store or warehouse or
distribution facility and (b) which is acquired, refurbished, or constructed by
a Borrower after the Closing Date.
"Real Estate Interests" has the meaning set forth in the Security
Agreement.
"Receivables" has the meaning set forth in the Security Agreement.
"Redevelopment Project" means a redevelopment, expansion or
rebuilding by a Borrower or a Subsidiary of a retail store, or a warehouse or
distribution facility or Vehicles employed in the distribution operations of
such Borrower or Subsidiary, in each case utilizing Original Redevelopment
Property.
"Redevelopment Sale and Leaseback Transaction" means a Sale and
Leaseback Transaction with respect to a Redevelopment Project, including a Sale
and Leaseback of Equipment, which is consummated within one year from the
completion of the Redevelopment Project.
"Refunded Swing Line Loans" has the meaning as defined in Section
2.13.
"Refunding Date" has the meaning as defined in Section 2.13.
"Regulation U" means Regulation U of the Board as in effect from
time to time.
"Regulatory Replacement" has the meaning given to such term in
Section 4.11.
"Reimbursement Obligations" means, with respect to a Letter of
Credit, the amount of all drawings presented thereunder that have been honored
by the Issuing Bank, and all other payments made and expenses incurred by the
Issuing Bank in connection with such drawings, which have not yet been
reimbursed by the applicable Borrower to the Issuing Bank.
"Reinvestment Amount" has the meaning specified in Section 4.4(b).
"Reinvestment Assets" means any capital assets to be employed in the
business of a Borrower or any of its Subsidiaries, which, in the case of a
Casualty Event, shall include the replacement, refurbishing, or reconstruction
of the assets subject to such Casualty Event.
"Reinvestment Election" has the meaning provided in Section 4.4(b).
"Reinvestment Notice" means a written notice signed by an Approved
Officer of a Borrower stating that (i) no Event or Event of Default has occurred
and is continuing and (ii) such Borrower or any of its Subsidiaries in good
faith, intends and expects to use all or a specified portion of the Net Cash
Proceeds of an Asset Transfer or Casualty Event to purchase, construct or
otherwise acquire Reinvestment Assets within 12 months of the end of month to
which the notice relates.
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"Reinvestment Prepayment Amount" means with respect to any
Reinvestment Election, the amount, if any, on the Reinvestment Prepayment Date
relating thereto by which (i) the Notified Reinvestment Amount in respect of
such Reinvestment Election exceeds (ii) the aggregate amount thereof expended to
acquire Reinvestment Assets.
"Reinvestment Prepayment Date" shall mean, with respect to any
Reinvestment Election, the earliest of (i) the date, if any, upon which the
Agent, on behalf of the Required Prepayment Lenders, shall have delivered a
written termination notice to the Borrower with respect to the Reinvestment
Election, provided that such notice may only be given while an Event of Default
exists, and shall only be effective for so long as such Event of Default
continues, (ii) the date occurring one year after such Reinvestment Election and
(iii) the date on which the Borrower (for itself or on behalf of its Subsidiary)
shall have determined not to, or shall have otherwise ceased to, proceed with
the purchase, construction or other acquisition of Reinvestment Assets with the
related Reinvestment Amount.
"Related Company" means any member of: any controlled group of
corporations (as defined in Section 414(b) of the Code) of which any Borrower is
a part; any trade or business (whether or not incorporated) under common control
(within the meaning of Section 414(c) of the Code) with any Borrower; or any
affiliated service group (within the meaning of Section 414(m) of the Code) with
any Borrower.
"Reorganization" means, with respect to any Multiemployer Plan, the
condition that such plan is in reorganization within the meaning of Section 4241
of ERISA.
"Reportable Event" means any of the events set forth in Section
4043(b) of ERISA, other than those events as to which the thirty day notice
period is waived under subsection .27, .28, .29, .30, .31, .32, .34 or .35 of
PBGC Reg. ss. 4043.
"Required Lenders" means, at any time, the holders of more than 50%
of (a) until the Closing Date, the Commitments and (b) thereafter, the sum of
(i) the aggregate unpaid principal amount of the Term Loans then outstanding and
(ii) the Total Revolving Credit Commitments then in effect or, if the Revolving
Credit Commitments have been terminated, the Total Revolving Extensions of
Credit then outstanding.
"Required Prepayment Lenders" means the Majority Facility Lenders in
respect of each Facility which is affected by a prepayment under Section 4.4(a)
or 4.4(b).
"Restricted Investment" means any investment by a Borrower or a
Subsidiary in any other Person for cash or other Property, including, without
limitation, in the form of an acquisition of capital stock, indebtedness or
other obligation, or by loan, advance or capital contribution, except the
following: (a) Property acquired in the ordinary course of the business of a
Borrower or a Subsidiary to be used in the ordinary course of such business; (b)
current assets arising from the sale or lease of goods or rendition of services
in the ordinary course of business of a Borrower or a
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Subsidiary; (c) investments existing on the date hereof including in the capital
stock of Subsidiaries and Affiliates; (d) Permitted Investments, so long as such
are subject to a valid, first priority, exclusive Security Interest in favor of
the Agent for the benefit of the Secured Parties; (e) loans by any Borrower to,
and investments by any Borrower in, any other Borrower to provide working
capital or other funding requirements to such Borrower, provided, however, that
the aggregate amount of such loans to and investments in all such other
Borrowers made after the date hereof shall not exceed at any time outstanding
the sum of $3,000,000 plus the aggregate amount of net cash Distributions of
such Subsidiaries to Penn Traffic after the date hereof; (f) loans by any
Borrower to, and investments by any Borrower in, any Subsidiary of such Borrower
for periods after the Closing Date to provide working capital or other funding
requirements consistent with past practices, in an aggregate amount not to
exceed at any time outstanding $3,000,000 in the aggregate, for all such
Subsidiaries of all Borrowers, plus the aggregate amount of net cash
Distributions of such Subsidiaries to such Borrower after the date hereof; (g)
investments after the date hereof in any Person, other than a Borrower or a
Subsidiary, not to exceed $5,000,000 in the aggregate existing at any time; (h)
Permitted Asset Acquisitions; (i) promissory notes of franchisees of the
Borrowers and of customers of the wholesale and manufacturing business of the
Borrowers, to the extent acquired as a part of or in connection with a Permitted
Inducement or Permitted Claim Settlement or otherwise in the ordinary course of
business, in each case consistent with past practices of the Borrowers; provided
that the maximum aggregate amount of such promissory notes outstanding at any
one time shall not exceed $10,000,000; (j) with the prior written consent of the
Required Lenders, which shall not be unreasonably withheld, acquisitions which
would constitute Permitted Asset Acquisitions but for the fact that they include
the acquisition of capital stock, or that at the time they would be made, the
aggregate amount of Debt incurred or assumed in connection with Permitted Asset
Acquisitions exceeds, or would exceed as a result of such additional
acquisition, the amount provided for in clause (n) of Section 8.4 in the
then-current Fiscal Year; and (k) loans by Penn Traffic to its employees in an
aggregate outstanding amount not to exceed $3,000,000 at any time.
"Restricted Subsidiary" means each of St. Mary's Foods, Inc., Seneca
Falls Foods, Inc., Chili Paul Foods, Inc., 12th & Powell Foods, Inc., Corry
Foods, Inc., Jamestown Foods, Inc., Fredonia Foods, Inc., Lakewood Foods, Inc.,
East 5th Street Foods, Inc., Grandview Foods, Inc., 26th & Legion Foods, Inc.,
Dunkirk Foods, Inc. and Eastway Foods, Inc., each of which is a Delaware
corporation.
"Restructuring" means (i) the recapitalization and financial
restructuring of the Borrowers and their respective Subsidiaries as contemplated
by the Chapter 11 Cases, and (ii) Penn Traffic's store rationalization process.
"Restructuring Charges" means all of the following, to the extent
deducted in determining net income, and arising or incurred prior to the end of
Fiscal Year 2000: fees, charges, expenses, write-offs and write-downs relating
to the Restructuring, including, without limitation, (i) fees and expenses,
including attorneys' and accountants' fees, appraisals and other related fees
and expenses, incurred in connection with the Restructuring by any Borrower or
any other interested
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person which is payable by any Borrower, including any fees or expenses incurred
prior to the Filing Date, (ii) fees paid to The Blackstone Group or any other
consultants or investment advisors hired or engaged by or for the benefit of any
Borrower or any interested person which is payable by any Borrower and (iii)
costs and expenses relating to closed stores, including, without limitation,
continuing occupancy costs and other related expenses, any payments made to
landlords of closed stores or rejected leases in cancellation of lease
obligations, severance payments to employees and other miscellaneous expenses
related to closed stores, in each case, including any reserves therefor.
"Reversions" means, with respect to a Borrower, any funds which may
become due to such Borrower in connection with the termination of any Plan or
other employee benefit plan.
"Revolving Borrowing" means an extension of credit hereunder
consisting of Revolving Loans made on the same day by the Revolving Credit
Lenders (or by Fleet Capital for itself and for the account of the other
Revolving Credit Lenders, as the case may be).
"Revolving Borrowing Capacity" of a Borrower means, with respect to
such Borrower:
(a) the lesser at any point in time of:
(i) the Total Revolving Credit Commitment minus the aggregate
outstanding principal balance of Revolving Loans and Swing Line Loans made
to the other Borrowers and the aggregate outstanding amount of Letter of
Credit Obligations of the other Borrowers; or
(ii) the sum of:
(A) eighty-five percent (85%) of the Net Amount of
Eligible Accounts of such Borrower; and
(B) sixty-five percent (65%) of the Value of Eligible
Inventory of such Borrower;
less
(b) the sum of:
(i) all Letter of Credit Obligations of such Borrower; and
(ii) the following, as relevant to a Borrower or pro-rated
among the Borrowers based upon the Outstanding Revolving Obligations of
such Borrower and all Borrowers:
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(A) reserves for Liens, other than Permitted Liens, that
the Agent determines should be discharged in order to protect
the Security Interest and preserve the Agent's or the Lenders'
rights in the Collateral;
(B) reserves for costs and expenses that the Borrowers
are required to pay in accordance with Section 11.10; and
(C) the PACA Reserve; and
(D) all other reserves which the Agent in its reasonable
discretion deems necessary or desirable to maintain, in an
aggregate amount not to exceed $10,000,000 at any time for all
Borrowers.
"Revolving Commitment Expiration Date" means June 30, 2005.
"Revolving Commitment Fee" has the meaning given to such term in
Section 3.7.
"Revolving Commitment Termination Date" means the earliest to occur
of (i) the Revolving Commitment Expiration Date, or (ii) acceleration of any
Obligations following the occurrence of an Event of Default, or (iii) any other
termination of the Revolving Credit Commitments of all Revolving Credit Lenders.
"Revolving Credit Commitment" means, as to any Revolving Credit
Lender, the obligation of such Revolving Credit Lender, if any, to make
Revolving Loans and participate in Swing Line Loans and Letters of Credit, in an
aggregate principal and/or face amount not to exceed the amount set forth under
the heading "Revolving Credit Commitment" opposite such Lender's name on Annex A
hereto, or, as the case may be, in the Assignment and Acceptance pursuant to
which such Revolving Credit Lender became a party hereto, as the same may be
changed from time to time pursuant to the terms hereof.
"Revolving Credit Commitment Period" means the period from and
including the Closing Date to the Revolving Commitment Termination Date.
"Revolving Credit Lender" means each Lender which has a Revolving
Credit Commitment or which is the holder of Revolving Loans.
"Revolving Credit Percentage" means as to any Revolving Credit
Lender at any time, the percentage which such Lender's Revolving Credit
Commitment then constitutes of the Total Revolving Credit Commitments (or, at
any time after the Revolving Credit Commitments shall have expired or
terminated, the percentage which the aggregate principal amount of such Lender's
Revolving Loans then outstanding constitutes of the aggregate principal amount
of the Revolving Loans then outstanding).
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"Revolving Extensions of Credit" means as to any Revolving Credit
Lender at any time, an amount equal to the sum of (a) the aggregate principal
amount of all Revolving Loans made by such Lender then outstanding, (b) such
Lender's Revolving Credit Percentage of the Letter of Credit Obligations then
outstanding and (c) such Lender's Revolving Credit Percentage of the aggregate
principal amount of Swing Line Loans then outstanding.
"Revolving Loan Notes" has the meaning given to such term in Section
2.3.
"Revolving Loans" has the meaning given to such term in Section 2.2.
"Sale and Leaseback Transaction" means any transaction or series of
transactions in which a Borrower or any Subsidiary leases Property from any
Person, which Property has been or is to be sold or otherwise transferred by a
Borrower or any Subsidiary to such Person, whether such Property is now owned by
a Borrower or any Subsidiary or hereafter is acquired by it.
"Secured Parties" means the Lenders, the Agent and all other
obligees with respect to the Obligations.
"Security Agreement" means the Security and Collateral Agreement to
be executed and delivered by the Borrowers and each Subsidiary Guarantor,
substantially in the form of Exhibit V, as the same may be amended, supplemented
or otherwise modified from time to time.
"Security Documents" means the collective reference to the Security
Agreement, the Mortgages and all other security documents hereafter delivered to
the Agent granting a Lien on any Property of any Person to secure the
obligations and liabilities of any Loan Party under any Loan Document.
"Security Interest" means collectively the Liens in the Collateral
granted to the Agent or the Agent for the benefit of the Secured Parties
pursuant to this Agreement, the other Loan Documents, or any other agreement or
instrument, or by applicable law, in each case in respect of the Obligations.
"Senior Notes" means the $100,000,000, 11% Senior Notes of Penn
Traffic due 2009, as the same may be amended, modified, and in effect from time
to time in a manner not prohibited hereunder.
"Senior Notes Indenture" means the Indenture dated as of the
Effective Date, evidencing the Senior Notes and any Additional Senior Notes, as
the same may be amended, modified, and in effect from time to time in a manner
not prohibited hereunder.
"Single Employer Plan" means any Plan which is covered by Title IV
of ERISA, but which is not a Multiemployer Plan.
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"Solvent" means, when used with respect to any Person, that, as of
any date of determination, (a) the amount of the "present fair saleable value"
of the assets of such Person will, as of such date, exceed the amount of all
"liabilities of such Person, contingent or otherwise", as of such date, as such
quoted terms are determined in accordance with applicable federal and state laws
governing determinations of the insolvency of debtors, (b) the present fair
saleable value of the assets of such Person will, as of such date, be greater
than the amount that will be required to pay the liability of such Person on its
debts as such debts become absolute and matured, (c) such Person will not have,
as of such date, an unreasonably small amount of capital with which to conduct
its business, and (d) such Person will be able to pay its debts as they mature.
For purposes of this definition, (i) "debt" means liability on a "claim", and
(ii) "claim" means any (x) right to payment, whether or not such a right is
reduced to judgment, liquidated, unliquidated, fixed, contingent, matured,
unmatured, disputed, undisputed, legal, equitable, secured or unsecured or (y)
right to an equitable remedy for breach of performance if such breach gives rise
to a right to payment, whether or not such right to an equitable remedy is
reduced to judgment, fixed, contingent, matured or unmatured, disputed,
undisputed, secured or unsecured.
"Subsidiary" means, as to any Person, a corporation, partnership,
limited liability company or other entity of which shares of stock or other
ownership interests having ordinary voting power (other than stock or such other
ownership interests having such power only by reason of the happening of a
contingency) to elect a majority of the board of directors or other managers of
such corporation, partnership or other entity are at the time owned, or the
management of which is otherwise controlled, directly or indirectly through one
or more intermediaries, or both, by such Person. Unless otherwise qualified, all
references to a "Subsidiary" or to "Subsidiaries" in this Agreement shall refer
to a Subsidiary or Subsidiaries of a Borrower.
"Subsidiary Guarantor" means each Material Subsidiary of a Borrower.
"Suspension Period" has the meaning given to such term in Section
4.11.
"Swing Line Availability" means the excess, if any, of the Swing
Line Commitment over the outstanding principal balance of the Swingline Loans.
"Swing Line Commitment" means the obligation of the Swing Line
Lender to make Swing Line Loans pursuant to Section 2.12 in an aggregate
principal amount at any one time outstanding not to exceed $10,000,000.
"Swing Line Lender" means Fleet Capital Corporation, in its capacity
as the lender of Swing Line Loans.
"Swing Line Loans" has the meaning given to such term in Section
2.12.
"Swing Line Participation Amount" has the meaning given to such term
in Section 2.13(c).
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"Term Loan A" has the meaning set forth in Section 2.5.
"Term Loan A Commitment" means as to any Term Loan A Lender, the
obligation of such Lender to make a Term Loan A to Penn Traffic hereunder in a
principal amount not to exceed the amount set forth opposite such Lender's name
on the signature pages hereof.
"Term Loan A Lender" means each Lender designated as a Term Loan A
Lender on the signature pages hereof, or is the holder of a Term Loan A.
"Term Loan B" has the meaning set forth in Section 2.6.
"Term Loan B Commitment" means as to any Term Loan B Lender, the
obligation of such Lender to make a Term Loan B to Penn Traffic hereunder in a
principal amount not to exceed the amount set forth opposite such Lender's name
on Annex A hereto.
"Term Loan B Lender" means each Lender designated as a Term Loan B
Lender on the signature pages hereof, or is the holder of a Term Loan B.
"Term Loan Lender" means a Lender which is a Term Loan A Lender
and/or a Term Loan B Lender.
"Term Loan Notes" has the meaning given to such term in Section 2.7.
"Term Loan A Percentage" means as to any Term Loan A Lender at any
time, the percentage which such Lenders Term Loan A Commitment then constitutes
of the aggregate Term Loan A Commitments (or, at any time after the Closing
Date, the percentage which the aggregate principal amount of such Lenders Term
Loans A then outstanding constitutes of the aggregate principal amount of the
Term Loans A then outstanding).
"Term Loan Percentage" means, as to any Lender at any time, the
percentage which such Lender's Term Loan Commitment then constitutes of the
aggregate Term Loan Commitments (or, at any time after the Closing Date, the
percentage which the aggregate principal amount of such Lender's Term Loans then
outstanding constitutes of the aggregate principal amount of the Term Loans then
outstanding).
"Term Loan B Percentage" means as to any Term Loan B Lender at any
time, the percentage which such Lenders Term Loan B Commitment then constitutes
of the aggregate Term Loan B Commitments (or, at any time after the Closing
Date, the percentage which the aggregate principal amount of such Lenders Term
Loans B then outstanding constitutes of the aggregate principal amount of the
Term Loans B then outstanding).
"Term Loans" means Term Loans A as defined in Section 2.5 and Term
Loans B as defined in Section 2.6.
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"Termination Date" means the later of (a) the Revolving Commitment
Expiration Date, or (b) the earlier of: (x) June 30, 2006, or (y) the date as of
which all Term Loans and all Obligations in respect thereof have been paid in
full.
"Total Revolving Credit Commitments" means, at any time, the
aggregate amount of the Revolving Credit Commitments then in effect.
"Total Revolving Extensions of Credit" means, at any time, the
aggregate amount of the Revolving Extensions of Credit of the Revolving Credit
Lenders outstanding at such time.
"Type" means, as to any Loan, its nature as a Prime-Based Loan or a
Eurodollar Loan.
"UCC" means the Uniform Commercial Code (or any successor statute)
of the State of New York or of any other state the laws of which are required to
be applied by Sections 1-105 and 9-103 thereof.
"Undrawn Amount" means, with respect to a Letter of Credit at a
particular time, the maximum amount available to be drawn under such Letter of
Credit at such time under all circumstances and contingencies.
"Unutilized Cash Capex Reserve" means for any Fiscal Year an amount
designated by an Approved Officer of Penn Traffic for inclusion in determining
Excluded Cash Capital Expenditures for such Fiscal Year; provided, however, that
the total amount of Unutilized Cash Capex Reserve shall not exceed $15,000,000
for any Fiscal Year and $25,000,000 in the aggregate for all Fiscal Years
commencing with Fiscal Year 2001.
"Value of Eligible Inventory" means the aggregate value of the
Eligible Inventory computed at the lower of cost (on a first-in, first-out
basis) or current market value, less (a) reserves to reflect variances between
current cost and book value, (b) reserves to reflect variances between Inventory
carried on a Borrower's books and records and Inventory actually on hand, (c)
reserves for rebates and discounts, (d) amounts included in cost on a Borrower's
books and records to allocate shipping, handling, or other costs and expenses
among the Borrowers, their Subsidiaries, and their divisions and retail stores,
and (e) any other adjustments or reserves (other than the LIFO Reserve)
reflected on a Borrower's books and records in recording the value of Inventory;
and determined without giving effect to any write-up in inventory value
attributable to any event occurring prior to, on, or after the date hereof,
whether or not required or permitted by GAAP (including, without limitation,
pursuant to Accounting Principles Board Opinion No. 16).
"Vehicles" has the meaning set forth in the Security Agreement.
"Voting Stock" means any class of capital stock of any Person then
outstanding which is normally entitled to vote in elections of directors.
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1.2 Other Definitional Provisions. (a) Unless otherwise specified
therein, all terms defined in this Agreement shall have the defined meanings
when used in the other Loan Documents or any certificate or other document made
or delivered pursuant hereto or thereto.
(b) As used herein and in the other Loan Documents, and any
certificate or other document made or delivered pursuant hereto or thereto,
accounting terms relating to a Borrower and its Subsidiaries not defined in
Section 1.1 and accounting terms partly defined in Section 1.1, to the extent
not defined, shall have the respective meanings given to them under GAAP.
(c) The words "hereof", "herein" and "hereunder" and words of
similar import when used in this Agreement shall refer to this Agreement as a
whole and not to any particular provision of this Agreement, and Section,
Schedule and Exhibit references are to this Agreement unless otherwise
specified.
(d) The meanings given to terms defined herein shall be equally
applicable to both the singular and plural forms of such terms.
1.3 Other Terms. All other undefined terms contained in this
Agreement shall, unless the context indicates otherwise, have the meanings
provided for by the UCC to the extent the same are used or defined therein.
Wherever appropriate in the context, terms used herein in the singular also
include the plural, and vice versa and each masculine, feminine, or neuter
pronoun shall also include the other genders.
ARTICLE 2. LOANS AND LETTERS OF CREDIT
2.1 Total Facility. Subject to the terms and conditions of this
Agreement, the Lenders and the Swing Line Lender shall make available to the
Borrowers a total credit facility of up to $320,000,000 to be comprised of Total
Revolving Extensions of Credit not to exceed $205,000,000, and Term Loans not to
exceed $115,000,000 in aggregate principal amount, in each case as provided in
this Article 2.
2.2 Revolving Loans. (a) Each Revolving Credit Lender severally (and
not jointly) agrees, upon the terms and conditions of this Agreement, to make
Revolving Extensions of Credit, including revolving loans ("Revolving Loans") to
the Borrowers from time to time during the period from the date hereof through
and including the Revolving Commitment Termination Date in the amount of its
Revolving Credit Percentage of each requested Revolving Borrowing, in an
aggregate amount not to exceed at any one time such Lender's Revolving Credit
Commitment. The Revolving Credit Commitments are subject to early termination
under Sections 9.2, 10.2 and 10.3. Each Borrower may borrow up to its Revolving
Borrowing Capacity net of the outstanding Revolving Loans and Swing Line Loans
to such Borrower. Each Borrower may repay, and reborrow Revolving Loans on any
Business Day as hereinafter provided. Each Borrowing of Prime-Based Rate
Revolving Loans shall be in the principal amount of not less than $500,000 (or
the unused balance of such Borrower's Revolving Borrowing Capacity, if less) and
each Revolving Borrowing of
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Revolving Loans constituting Eurodollar Loans shall be in the principal amount
of not less than $5,000,000. The Revolving Borrowing Capacity of each Borrower
shall be determined solely and conclusively by the Agent based upon the
Borrowing Base Certificate and all other certificates, appraisals and reports of
Eligible Accounts and Eligible Inventory delivered by such Borrower to the Agent
pursuant to Section 2.10 of the Security Agreement and upon such other
information as is available to the Agent.
(b) The Borrowers may permanently reduce the Total Revolving Credit
Commitments on one or more occasions prior to the Revolving Commitment
Termination Date by the amount of $5,000,000 or more (in $1,000,000 increments)
on each occasion, by giving the Agent irrevocable written notice thereof at
least five Business Days prior to the date elected for such reduction; provided,
however, that, except in connection with a termination of this Agreement
pursuant to Article 10, the Borrowers may not effect more than one such
reduction in any three-month period and the Borrowers may not reduce the Total
Revolving Credit Commitment below $150,000,000 during the three-year period
commencing on the Closing Date. Any such reduction shall also reduce each
Revolving Credit Lender's Revolving Credit Commitment by an amount equal to such
Revolving Credit Lender's Revolving Credit Percentage of the reduction in the
Total Revolving Credit Commitments. Any such reduction of the Revolving Credit
Commit ments shall be accompanied by a prepayment first, of the Swing Line
Loans, and second, of the Revolving Loans, to the extent, if any, that the Total
Outstanding Revolving Obligations exceed the amount of the Total Revolving
Credit Commitments as so reduced, provided that if the aggregate principal
amount of Revolving Loans and Swing Line Loans then outstanding is less than the
amount of such excess (because Letter of Credit Obligations constitute a portion
of the Total Outstanding Revolving Obligations), the Borrowers shall, to the
extent of the balance of such excess, cause to be canceled outstanding Letters
of Credit and/or deposit in a cash collateral account established with the Agent
for the benefit of the Lenders, an amount in cash equal to 110% of the related
Letter of Credit Obligations and otherwise on terms and conditions reasonably
satisfactory to the Agent. The application of any prepayment pursuant to this
provision shall be made first to Prime-Based Loans and second to Eurodollar
Loans. Each prepayment of the Revolving Eurodollar Loans under this provision
shall be accompanied by accrued interest to the date of such prepayment on the
amount prepaid, and shall be subject to Section 3.14(c).
2.3 Revolving Loan Notes. In addition to this Agreement, the
Borrowers' obligations to repay the Revolving Loans made to it by a Lender
pursuant hereto shall be evidenced by the Borrowers' promissory note payable to
the order of such Lender, in the form attached as Exhibit D-1 hereto (as
amended, modified, replaced or reissued from time to time, collectively, the
"Revolving Loan Notes"). In the event that a Lender shall assign all or a part
of its rights and obligations under, and in accordance with the terms of this
Agreement, the Borrowers shall execute and deliver one or more replacement
Revolving Loan Notes to carry out such assignment.
2.4 Borrowing Revolving Loans. Subject to the terms and conditions
of this Agreement, Revolving Loans may be Prime-Based Revolving Loans or
Eurodollar Revolving Loans, or a combination thereof, as elected by the Borrower
requesting the Loan. To the extent that the amount
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of any requested Revolving Loan exceeds the Swing Line Availability, a Borrower
may borrow a Prime-Based Revolving Loan on any Business Day by giving the Agent
notice in accordance with Section 2.10 prior to 1:00 p.m. on the day of such
borrowing. Commencing 3 Business Days after the Closing Date, a Borrower may
borrow a Eurodollar Revolving Loan on any Eurodollar Business Day by giving the
Agent notice in accordance with Section 2.10 at least three Eurodollar Business
Days prior to the day of such borrowing.
2.5 Term Loans A. Subject to the terms and conditions hereof, each
Term Loan A Lender severally agrees to make a term loan (a "Term Loan A") to
Penn Traffic on the Closing Date in an amount not to exceed the amount of the
Term Loan A Commitment of such Lender; provided, that the aggregate principal
amount of the Term Loans A shall not be less than $25,000,000 and shall not
exceed $40,000,000. The Term Loans A may from time to time be Eurodollar Loans
(subject to the second sentence of Section 2.8) or Prime-Based Loans, as
determined by Penn Traffic and notified to the Agent in accordance with Section
2.10.
2.6 Term Loans B. Subject to the terms and conditions hereof, each
Term Loan B Lender severally agrees to make a term loan (a "Term Loan B") to
Penn Traffic on the Closing Date in an amount not to exceed the amount of the
Term Loan B Commitment of such Lender; provided, that the aggregate principal
amount of the Term Loans B shall be $75,000,000. The Term Loans B may from time
to time be Eurodollar Loans (subject to the second sentence of Section 2.8) or
Prime- Based Loans, as determined by Penn Traffic and notified to the Agent in
accordance with Section 2.10.
2.7 Notes Evidencing Term Loans. In addition to this Agreement, Penn
Traffic's obligations to repay the Term Loans shall be evidenced by Penn
Traffic's promissory notes payable to the order of the Term Loan A Lenders and
the Term Loan B Lenders, respectively, in the forms attached as Exhibit D-2 and
D-3 hereto as amended, modified, replaced or reissued from time to time
(collectively, the "Term Loan Notes"). In the event that a Term Loan Lender
shall assign all or a part of its rights and obligations under, and in
accordance with the terms of this Agreement, Penn Traffic shall execute and
deliver one or more replacement Term Loan Notes to carry out such assignment.
2.8 Borrowing of Term Loans. Penn Traffic shall give the Agent
irrevocable notice (which notice must be received by the Agent prior to 12
o'clock (or such later time as agreed by the Agent) New York City time, one
Business Day prior to the anticipated Closing Date) requesting that the Term
Loan Lenders make the Term Loans on the Closing Date and specifying the amount
to be borrowed. The Term Loans made on the Closing Date shall initially be
Prime-Based Loans, and no Term Loan may be converted into a Eurodollar Loan
prior to the date which is 30 days after the Closing Date, or, if earlier, the
date on which the Agent completes the syndication of the Facilities and the
entities selected in such syndication process become parties to this Agreement,
and thereafter in accordance with Section 2.9.
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2.9 Conversions; Renewals, etc. of Loans. (a) Commencing 3 Business
Days after the Closing Date, a Borrower may convert (subject to the second
sentence of Section 2.8) any of its Prime-Based Loans into one or more
Eurodollar Loans on any Eurodollar Business Day. A Borrower may convert any
Eurodollar Loan into a Prime-Based Loan, in each case only at the end of the
Interest Period for such Eurodollar Loan. Any reference in this Agreement to the
date a Revolving Loan is made shall, in the case of a Revolving Loan arising
from a conversion of another Revolving Loan, be deemed to refer to the date of
such conversion.
(b) All conversions of Revolving Loans of either Type shall be
effected by giving the Agent the same notice as would be required by Section 2.4
and Section 2.10 for a new Loan of the Type into which such Borrower desires to
convert. All conversions of Term Loans which are Prime-Based Loans into
Eurodollar Loans and all renewals of Eurodollar Loans, shall be effected by
giving the Agent notice in accordance with Section 2.10 at least three
Eurodollar Business Days prior to the day of such conversion or renewal.
(c) If a Borrower gives notice in accordance with Section 2.4 and
Section 2.10 to borrow or convert a Revolving Loan, or in accordance with
Section 2.9(b) to renew a Revolving Loan which is a Eurodollar Loan, without
electing the Type thereof, such Revolving Loan shall be or become a Prime-Based
Revolving Loan. In the case of any Eurodollar Loan, if the applicable Borrower
does not (i) convert or renew such Loan in the manner and within the time limits
prescribed by this Section 2.9 and Section 2.10, or (ii) repay such Loan if a
Revolving Loan in full on the last day of the Interest Period for such Revolving
Loan, then such Borrower shall be deemed to have converted all of such Loan (or
the unpaid portion thereof) into a Prime-Based Loan effective on the last day of
such Interest Period.
(d) Notwithstanding any provision of this Agreement to the contrary,
unless the Revolving Credit Lenders otherwise agree with respect to a Revolving
Loan and the Term Loan A Lenders and the Term Loan B Lenders, respectively,
otherwise agree with respect to a Term Loan A or a Term Loan B, as the case may
be: (i) a Borrower may not elect an Interest Period for a Eurodollar Revolving
Loan which ends after the Revolving Commitment Expiration Date; (ii) a Borrower
may not convert a Prime-Based Loan into a Eurodollar Loan or renew a Eurodollar
Loan at any time when an Event or Event of Default has occurred and is
continuing or if such conversion or renewal is otherwise prohibited hereunder;
and (iii) a Borrower may not borrow a Eurodollar Revolving Loan, convert to, or
renew a Eurodollar Term Loan, if, after such Loan is made, converted or renewed,
there would be more than six Interest Periods in effect, respectively, for all
Eurodollar Revolving Loans and Eurodollar Term Loans.
2.10 Notices of Borrowings, Conversions and Renewals. All notices to
convert or renew a Loan (or borrow a Revolving Loan) shall be given by telephone
or in writing by a person designated by the applicable Borrower to a person
designated by the Agent. If a Borrower gives notice by telephone, such Borrower
shall promptly confirm such notice in writing, but such confirmation shall not
be a condition to the making of such Loan and the Agent may conclusively rely on
the telephonic notice. Each such notice shall specify: (a) the date of such
borrowing,
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conversion or renewal, subject to the provisions of this Agreement regarding the
date when such borrowing, conversion or renewal, can be made; (b) the aggregate
amount of such borrowing, conversion or renewal; (c) whether the Loans
comprising such borrowing, conversion or renewal are to be Prime-Based Loans,
Eurodollar Loans or a combination thereof; and (d) in the case of a Eurodollar
Loan, the Interest Period elected by a Borrower for such Loan, subject to the
provisions of this Agreement. Such notice shall be irrevocable by the Borrower
and shall be substantially in the form of Exhibit Y. The Agent shall determine
the interest rate for the Loan in accordance with the terms of a Borrower's
notice and this Agreement, and each such determination shall be conclusive and
binding on such Borrower absent manifest error.
2.11 Funding of Revolving Loans. (a) On the date for a Revolving
Loan specified in a Borrower's notice delivered pursuant to Section 2.4 and
Section 2.10, other than a Revolving Borrowing comprised of Eurodollar Revolving
Loans, Fleet Capital, in its capacity as a Lender, will make the aggregate
amount of such Revolving Borrowing available to such Borrower for its account
and for the account of the other Lenders, except for the Revolving Credit
Percentage thereof of any Lender that has notified Fleet Capital pursuant to
Section 2.11(d) that it does not intend to fund its Revolving Loan included in
such Revolving Borrowing.
(b) Upon receipt of a Borrower's notice pursuant to Section 2.10 of
a Revolving Borrowing to be comprised of Eurodollar Loans, the Agent will
promptly notify each Lender thereof and of the amount and terms thereof. Each
Lender will make the amount of its Revolving Credit Percentage of such Revolving
Borrowing available to the Agent for the account of the applicable Borrower at
the office specified by the Agent in Section 11.11 by 11:00 a.m. (New York time)
on the date of the Revolving Borrowing specified in the Borrower's notice, in
funds immediately available to the Agent.
(c) Except as provided in Section 2.16(d), if the applicable
conditions set forth in Article 5 have been satisfied, the Agent shall make each
Revolving Borrowing available by crediting or transferring the amount thereof in
immediately available funds to a bank account designated by the Borrower that
requested such Borrowing. If any of the Obligations are due and payable by a
Borrower on the date of a Revolving Borrowing requested by such Borrower, then
the Agent may apply the amount of such Borrowing to the payment of such
Obligations and make available to the Borrower funds in the amount of the
balance of the Borrowing, if any, remaining after such payment.
(d) Unless the Agent shall have been notified by any Lender prior to
10:00 a.m. on the date of a Revolving Borrowing that such Lender does not intend
to make available such Lender's Revolving Credit Percentage of any Borrowing on
or after such date, the Agent may assume that such Lender will make such amount
available to the Agent when due in accordance with Section 2.11(b) or Section
4.7, and the Agent may make available to the Borrower a corresponding amount for
the account of such Lender. If any Revolving Loan is not in fact made available
to the Agent in full by such Lender when due in accordance with Section 2.11(b)
or Section 4.7, and if the Agent has made the full amount of the Revolving Loan
available to the Borrower as provided above,
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then the Agent shall be entitled to recover such corresponding deficiency on
demand from such Lender together with interest at the customary rate set by the
Agent for the correction of errors among banks. If such Lender does not pay such
deficiency forthwith upon such demand therefor, the Agent shall promptly notify
the applicable Borrower, and such Borrower shall immediately repay such amount
to the Agent together with interest at the rate or rates then in effect with
respect to the Revolving Loans. Nothing in this subsection shall be deemed to
relieve any Lender of its obligation to make available the amount of its
Revolving Credit Commitment or to prejudice any rights which a Borrower may have
against any Lender as a result of any default by such Lender hereunder. No
Lender shall be responsible for any default by another Lender in its obligation
to make its Revolving Loans hereunder, and each Lender shall be obligated to
make the Revolving Loan provided to be made by it hereunder, regardless of the
failure of any other Lender to make its Revolving Loan.
2.12 Swing Line Commitment. (a) Subject to the terms and conditions
hereof, the Swing Line Lender agrees to make a portion of the credit otherwise
available to the Borrowers under the Revolving Credit Commitments from time to
time during the Revolving Credit Commitment Period by making swing line loans
("Swing Line Loans") to one or more Borrowers; provided that (i) the aggregate
principal amount of Swing Line Loans outstanding at any time shall not exceed
the Swing Line Commitment then in effect (notwithstanding that the Swing Line
Loans outstanding at any time, when aggregated with the Swing Line Lender's
other outstanding Revolving Loans hereunder, may exceed the Swing Line
Commitment then in effect) and (ii) a Borrower shall not request, and the Swing
Line Lender shall not make, any Swing Line Loan if, after giving effect to the
making of such Swing Line Loan, the Availability would be less than zero. During
the Revolving Credit Commitment Period, the Borrowers may use the Swing Line
Commitment by borrowing, repaying and reborrowing, all in accordance with the
terms and conditions hereof. Swing Line Loans shall be Prime-Based Loans only.
(b) A Borrower shall request Swing Line Loans and not Revolving
Loans to the extent of the Swing Line Availability. The Borrowers shall repay
all outstanding Swing Line Loans on the Revolving Commitment Termination Date.
(c) Each Borrower's obligation to repay the Swing Line Loans made to
it by the Swing Line Lender pursuant hereto shall be evidenced by, in addition
to this Agreement, such Borrower's promissory note payable to the order of the
Swing Line Lender, in the form attached as Exhibit D-4 hereto (as amended,
modified, replaced or re-issued from time to time, collectively, the "Swing Line
Loan Note"). In the event that the Swing Line Lender shall assign all or a part
of its rights and obligations under, and in accordance with the terms of this
Agreement, the Borrowers shall execute and deliver one or more replacement Swing
Line Loan Notes to carry out such assignment.
2.13 Procedure for Swing Line Borrowing; Refunding of Swing Line
Loans. (a) Whenever a Borrower desires that the Swing Line Lender make Swing
Line Loans it shall give the Swing Line Lender irrevocable telephonic notice
confirmed promptly in writing (which telephonic notice must be received by the
Swing Line Lender not later than 1:00 P.M., New York
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City time, on the proposed Borrowing Date), specifying (i) the amount to be
borrowed and (ii) the requested Borrowing Date (which shall be a Business Day
during the Revolving Credit Commitment Period). Each borrowing under the Swing
Line Commitment shall be in an amount equal to $500,000 or a whole multiple of
$100,000 in excess thereof. Not later than 3:00 P.M., New York City time, on the
Borrowing Date specified in a notice in respect of Swing Line Loans, the Swing
Line Lender shall make available to the Agent at the Funding Office an amount in
immediately available funds equal to the amount of the Swing Line Loan to be
made by the Swing Line Lender. The Agent shall make the proceeds of such Swing
Line Loan available to the Borrower on such Borrowing Date by depositing such
proceeds in the account of such Borrower with the Agent on such Borrowing Date
in immediately available funds.
(b) The Swing Line Lender, at any time and from time to time in its
sole and absolute discretion may, on behalf of any Borrower (which hereby
irrevocably directs the Swing Line Lender to act on its behalf), on one Business
Day's notice given by the Swing Line Lender no later than 12:00 Noon, New York
City time, request each Revolving Credit Lender to make, and each Revolving
Credit Lender hereby agrees to make, a Revolving Loan, in an amount equal to
such Revolving Credit Lender's Revolving Credit Percentage of the aggregate
amount of the Swing Line Loans (the "Refunded Swing Line Loans") outstanding on
the date of such notice, to repay the Swing Line Lender. Each Revolving Credit
Lender shall make the amount of such Revolving Loan available to the Agent at
the Funding Office in immediately available funds, not later than 10:00 A.M.,
New York City time, one Business Day after the date of such notice. The proceeds
of such Revolving Loans shall be immediately made available by the Agent to the
Swing Line Lender for application by the Swing Line Lender to the repayment of
the Refunded Swing Line Loans. The Borrowers irrevocably authorize the Swing
Line Lender to charge the Borrowers' accounts with the Agent (up to the amount
available in each such account) in order to immediately pay the amount of such
Refunded Swing Line Loans to the extent amounts received from the Revolving
Credit Lenders are not sufficient to repay in full such Refunded Swing Line
Loans.
(c) If prior to the time a Revolving Loan would have otherwise been
made pursuant to Section 2.13(b), one of the events described in Sections 9.1(f)
shall have occurred and be continuing with respect to the Borrowers or if for
any other reason, as determined by the Swing Line Lender in its sole discretion,
Revolving Loans may not be made as contemplated by Section 2.13(b), each
Revolving Credit Lender shall, on the date such Revolving Loan was to have been
made pursuant to the notice referred to in Section 2.13(b) (the "Refunding
Date"), purchase for cash an undivided participating interest in the then
outstanding Swing Line Loans by paying to the Swing Line Lender an amount (the
"Swing Line Participation Amount") equal to (i) such Revolving Credit Lender's
Revolving Credit Percentage times (ii) the sum of the aggregate principal amount
of Swing Line Loans then outstanding which were to have been repaid with such
Revolving Loans.
(d) Whenever, at any time after the Swing Line Lender has received
from any Revolving Credit Lender such Lender's Swing Line Participation Amount,
the Swing Line Lender receives any payment on account of the Swing Line Loans in
which such Revolving Credit Lender participates, the Swing Line Lender will
distribute to such Lender its Swing Line Participation
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Amount (appropriately adjusted, in the case of interest payments, to reflect the
period of time during which such Lender's participating interest was outstanding
and funded and, in the case of principal and interest payments, to reflect such
Lender's pro rata portion of such payment if such payment is not sufficient to
pay the principal of and interest on all Swing Line Loans then due); provided,
however, that in the event that such payment received by the Swing Line Lender
is required to be returned, such Revolving Credit Lender will return to the
Swing Line Lender any portion thereof previously distributed to it by the Swing
Line Lender.
(e) Each Revolving Credit Lender's obligation to make the Loans
referred to in Section 2.13(b) and to purchase participating interests pursuant
to Section 2.13(c) shall be absolute and unconditional and shall not be affected
by any circumstance, including, without limitation, (i) any setoff,
counterclaim, recoupment, defense or other right which such Revolving Credit
Lender or a Borrower may have against the Swing Line Lender, a Borrower or any
other Person for any reason whatsoever; (ii) the occurrence or continuance of,
an Event of Default or the failure to satisfy any of the other conditions
specified in Article 5 or this Article 2; (iii) any event or condition which has
any Material Adverse Effect; (iv) any breach of this Agreement or any other Loan
Document by the any of Borrowers, any other Loan Party or any other Revolving
Credit Lender; or (v) any other circumstance, happening or event whatsoever,
whether or not similar to any of the foregoing.
2.14 Revolving Loan Account; Charges. The Agent will establish a
loan account for each Borrower with each Revolving Credit Lender. Unless the
Agent otherwise elects, the principal amount of each Revolving Loan, the amount
of each required principal repayment, all accrued interest, all fees, all
payments due to the Agent or a Lender from a Borrower under Sections 3.11, 3.12
and 3.14 (to the extent referable to the Revolving Loans), and all costs and
expenses described in Section 11.10 (to the extent referable to the Revolving
Loans) will be charged to the applicable Borrower's loan account with the
appropriate Revolving Credit Lender as of the date such Revolving Loan is made,
or the date such other amount is due from such Borrower or is paid or incurred
by the Agent or a Lender, or the date such amount becomes chargeable to such
Borrower's loan account pursuant to Section 11.10, as the case may be. Except
for the principal amount of Eurodollar Revolving Loans, all such amounts shall
be charged as Prime-Based Revolving Loans.
2.15 Funding of Term Loans; Term Loans Account; Charges. (a) Upon
receipt of the notice from Penn Traffic under Section 2.8, the Agent shall
promptly notify each Term Loan Lender thereof. Not later than 12:00 Noon, New
York City time, on the Closing Date, each Term Loan Lender shall make available
to the Agent an amount in immediately available funds equal to the Term Loan to
be made by such Lender. The Agent shall credit to the account of Penn Traffic on
the Agent's books the aggregate of the amounts made available to the Agent by
the Term Loan Lenders in immediately available funds.
(b) The Agent will establish a loan account for Penn Traffic with
each Term Loan Lender. Unless the Agent otherwise elects, the principal amount
of each Term Loan A and each Term Loan B, the amount of each required principal
repayment, all accrued interest, all fees, all payments due to the Agent or a
Term Loan Lender from Penn Traffic under Sections 3.11, 3.12 and
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3.14 (to the extent referable to the Term Loans), and all costs and expenses
described in Section 11.10 (to the extent referable to the Term Loans) will be
charged to Penn Traffic's Term Loan account with the appropriate Term Loan
Lender as of the date made, or the date such other amount is due from Penn
Traffic or is paid or incurred by the Agent or a Term Loan Lender, or the date
such amount becomes chargeable to Penn Traffic's loan account pursuant to
Section 11.10, as the case may be. Except for the principal amount of Term Loans
constituting Eurodollar Loans, all such amounts shall be charged as Prime-Based
Revolving Loans.
2.16 Letters of Credit. (a) Subject to the terms and conditions of
this Agreement, the Agent will, upon a Borrower's request from time to time,
cause standby or merchandise letters of credit to be issued by the Issuing Bank
for such Borrower's account (together with the DIP Letters of Credit outstanding
on the Closing Date, the "Letters of Credit"). Upon the Closing Date, all DIP
Letters of Credit shall constitute Letters of Credit hereunder with the same
effect and status as if such DIP Letters of Credit were originally issued
pursuant to this Agreement. All fees payable with respect to such DIP Letters of
Credit accrued and unpaid through the Closing Date shall be paid on the Closing
Date. Until the Closing Date, the letter of credit fees with respect to all DIP
Letters of Credit shall accrue and be payable at the rates set forth in the DIP
Loan Agreement and on and after the Closing Date such fees shall accrue and be
payable at the rates set forth herein. The Agent will not be obligated to cause
any Letter of Credit to be opened if: (i) the Undrawn Amount of the requested
Letter of Credit, plus the aggregate Undrawn Amount of all outstanding Letters
of Credit of all Borrowers, would exceed $70,000,000; (ii) the Undrawn Amount of
the requested Letter of Credit, if it is to be a merchandise Letter of Credit,
plus the aggregate Undrawn Amount of all outstanding merchandise Letters of
Credit of all Borrowers, would exceed $5,000,000; (iii) the Letter of Credit
Obligations related to the requested Letter of Credit, plus the aggregate
principal amount of any Revolving Loans and Swing Line Loans to such Borrower
outstanding at such time, exceed the Revolving Borrowing Capacity of such
Borrower at such time, or such Letter of Credit Obligations plus the aggregate
principal amount of all Revolving Loans and all Swing Line Loans to all
Borrowers outstanding at such time, exceed the Combined Revolving Borrowing
Capacity at such time, or if a Lender's Revolving Credit Percentage of such
Letter of Credit Obligations and all Letter of Credit Obligations related to
other Letters of Credit then outstanding, plus the aggregate unpaid principal
amount of such Lender's Revolving Loans and its Revolving Credit Percentage of
Swing Line Loans, which case then outstanding, would exceed such Lender's
Revolving Credit Commitment; or (iv) an Event or an Event of Default has
occurred and is continuing or would occur after giving effect to the opening of
such Letter of Credit. Each Letter of Credit shall have an expiry date on or
before the Revolving Credit Commitment Expiration Date and otherwise shall be
satisfactory in form, scope, and substance to the Agent and the Issuing Bank
(provided, however, that no merchandise Letter of Credit shall have an expiry
date later than 180 days after the date of issuance; provided, further, that the
limitation in the preceding proviso does not comply that standby Letters of
Credit may not provide for automatic renewal at the end of each one-year term
subject to cancellation by the Issuing Bank). As a condition to the issuance of
a Letter of Credit, the Borrower that requested the Letter of Credit shall
execute and deliver an application prescribed by the Issuing Bank and such other
documents, instruments, and agreements as may be required by the Agent and the
Issuing Bank.
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(b) Each Revolving Credit Lender hereby severally agrees,
irrevocably and unconditionally, to purchase from the Issuing Bank, effective
upon the issuance of each Letter of Credit, an undivided interest and
participation in each Letter of Credit and the Letter of Credit Obligations
arising in connection therewith, in each case in an amount equal to the Lender's
Revolving Credit Percentage of such Letter of Credit Obligations.
(c) The Agent shall cause the Issuing Bank to notify the applicable
Borrower and each Revolving Credit Lender of any drawing under a Letter of
Credit and whether the Issuing Bank will pay such draft and the date on which
such payment will be made.
(d) Each Borrower hereby irrevocably and unconditionally agrees to
pay to the Issuing Bank, and reimburse the Issuing Bank for, all Reimbursement
Obligations arising from Letters of Credit issued for the account of such
Borrower, when due in accordance with this Agreement. Each Borrower shall
reimburse the Issuing Bank for the amount of any Reimbursement Obligation under
a Letter of Credit issued (or deemed issued) for the account of such Borrower
not later than the date the Issuing Bank pays the draft in connection with which
such Reimbursement Obligation arises, as indicated in its notice pursuant to
subsection (c) of this Section. For that purpose, each Borrower hereby agrees
that it shall be deemed to have given a notice of a Revolving Borrowing in the
amount of such Reimbursement Obligation each time the Issuing Bank gives notice
of a drawing under a Letter Credit issued for such Borrower's account, and it
hereby authorizes the Agent to make such Revolving Borrowing available by paying
the proceeds thereof directly to the Issuing Bank for application to the
Reimbursement Obligations. Unless a Lender has notified Fleet Capital that it
does not intend to make available its Revolving Credit Percentage of such
Revolving Borrowing, Fleet Capital shall make the proceeds of such Revolving
Borrowing available to the Issuing Bank as provided above. A Borrower shall not
be relieved of any Reimbursement Obligation hereunder in the event that such
Revolving Borrowing is not made or is not made in full for any reason. In the
event that such Borrower could not have made such Revolving Borrowing at such
time under the other terms and conditions of this Agreement, the Revolving Loans
comprising such Revolving Borrowing shall be immediately due and payable.
(e) Each Borrower agrees to pay to the Agent and the Issuing Bank
all fees, expenses or other amounts paid or incurred by or on behalf of the
Agent or the Issuing Bank in connection with or as a result of the issuance,
negotiation, processing or administration of the Letters of Credit issued for
the account of such Borrower.
(f) Whenever the Issuing Bank receives a payment on account of a
Reimbursement Obligation, including any interest thereon, as to which the
Issuing Bank has previously received payments from the proceeds of a Revolving
Borrowing, it shall promptly pay to the Agent the amount of such payment, and
the Agent shall promptly pay to each Revolving Credit Lender which has funded
its Revolving Credit Percentage of such Revolving Borrowing an amount equal to
such Revolving Credit Lender's Revolving Credit Percentage of such payment.
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(g) In the event any payment received by the Issuing Bank with
respect to a Letter of Credit and distributed by the Agent to the Revolving
Credit Lenders on account of their participations is thereafter set aside,
avoided or recovered from the Issuing Bank in connection with any receivership,
liquidation or bankruptcy proceeding or otherwise, each Revolving Credit Lender
having received such distribution shall, upon demand by the Issuing Bank,
contribute such Revolving Credit Lender's Revolving Credit Percentage of the
amount set aside, avoided or recovered together with interest at the rate
required to be paid by the Issuing Bank upon the amount so required to be
repaid.
2.17 Indemnification by Revolving Credit Lenders. Each Revolving
Credit Lender severally agrees to indemnify the Agent, the Issuing Bank and each
officer, director, employee, agent and Affiliate of the Agent and the Issuing
Bank, ratably according to their respective Revolving Credit Percentages, to the
extent not reimbursed by the Borrowers, from and against any and all actions,
causes of action, suits, losses, liabilities, damages, and expenses which may at
any time (including, without limitation, at any time following the payment of
any of the Letter of Credit Obligations) be imposed on, incurred by or asserted
against such Person in any way relating to or arising out of the issuance of,
transfer of, or payment or failure to pay under a Letter of Credit or the use of
proceeds of any payment made under any Letter of Credit issued in accordance
with the terms of this Agreement; provided, however, that no Revolving Credit
Lender shall be liable for the payment of any portion of such actions, causes of
action, suits, losses, liabilities, damages and expenses which a court of
competent jurisdiction shall have determined in a final proceeding to have
arisen solely by reason of the gross negligence, willful misconduct or bad faith
of the Person otherwise entitled to indemnification hereunder.
2.18 Responsibilities of Issuing Bank. Each Revolving Credit Lender
agrees that, in paying any drawing under a Letter of Credit, the Issuing Bank
shall not have any responsibility to obtain any document (other than the draft,
certificates, and documents required by such Letter of Credit) or to ascertain
or inquire as to the validity or accuracy of any such document or the authority
of the Person delivering any such document. Neither the Issuing Bank nor any of
its representatives, officers, employees or agents shall be liable to any
Revolving Credit Lender for: (i) any action taken or omitted in connection
herewith at the request or with the approval of the Majority Revolving Credit
Lenders; (ii) any action taken or omitted in the absence of gross negligence,
willful misconduct or bad faith; or (iii) the execution, effectiveness,
genuineness, validity or enforceability of a Letter of Credit or any draft,
certificate, or other document contemplated hereby or thereby.
2.19 No Limitation on Obligation to Reimburse or Participate. So
long as the Issuing Bank acted in good faith, without gross negligence or
willful misconduct, each Borrowers' obligation to reimburse the Issuing Bank for
payments and disbursements made by the Issuing Bank under a Letter of Credit,
and each Lender's obligation to participate in such payments and disbursements
in accordance with this Agreement, shall be irrevocable, absolute and
unconditional under any and all circumstances, including the following
circumstances:
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(a) any lack of validity or enforceability of this Agreement, any
other Loan Document, the Letter of Credit, or any other agreement or instrument;
(b) 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 amendment or waiver of or
any consent to a departure from all or any of the terms of the Letter of Credit;
(c) the existence of any claim, set-off, defense or other right that
a Borrower may have at any time against any beneficiary or any transferee of the
Letter of Credit (or any Person for whom any such beneficiary or any such
transferee may be acting), the Issuing Bank or any other Person, whether in
connection with this Agreement, the transactions contemplated by the Letter of
Credit, or any unrelated transaction;
(d) any draft, certificate, statement or other document presented
under the 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;
(e) payment by the Issuing Bank under the Letter of Credit against
presentation of a draft, certificate or document that does not strictly comply
with the terms of the Letter of Credit;
(f) any exchange, release or non-perfection of any Collateral, or
any release, amendment, or waiver of or consent to departure from any guaranty,
for all or any of the Obligations;
(g) any other circumstance or happening whatsoever whether or not
similar to any of the foregoing, including any other circumstance that might
otherwise constitute a defense available to, or a discharge of, a Borrower; or
(h) the occurrence of an Event or Event of Default.
2.20 Issuing Bank's Agreements Control. The provisions of this
Agreement applicable to the Letters of Credit are in addition to and not in lieu
of any agreements, documents, and instruments that the Issuing Bank requires a
Borrower to execute in connection with such Letters of Credit. In the event of
any conflict, the terms of this Agreement shall control.
2.21 Use of Proceeds of Initial Loans. On the Closing Date, (a) the
Term Loans shall be made in an amount (the "Term Loan Amount") not less than
$100,000,000, and (b) each Borrower shall be deemed to have requested Revolving
Loans in an amount not less than the excess, if any, of the outstanding
liquidated DIP Credit Obligations on the Closing Date, over the Term Loan
Amount. The proceeds of the Term Loan Amount and of such Revolving Loans shall
be disbursed directly to the DIP Agent for application to the DIP Credit
Obligations in accordance with the terms thereof.
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ARTICLE 3. INTEREST AND OTHER CHARGES
3.1 Prime-Based Rate Interest. (a) Each Prime-Based Loan shall bear
interest on the outstanding principal amount thereof from the date made until
converted or fully paid at a fluctuating rate per annum equal to the Prime-Based
Rate or as otherwise provided in Section 3.3. Accrued interest at the
Prime-Based Rate shall be payable in arrears (i) on the first day of each
calendar month of each year, commencing on June 30, 1999; (ii) on the date a
Loan is due and payable; or (iii) when such Loan (or portion thereof) shall be
converted to a Eurodollar Loan, but only to the extent then accrued on the
principal amount so converted. Any changes in the Prime Lending Rate shall be
reflected in the interest rate for each Prime-Based Loan as of the opening of
business on the day such change becomes effective.
(b) Each Borrower shall pay interest on the Reimbursement
Obligations owed by it, and which are not paid when due with the proceeds of
Revolving Loans pursuant to Section 2.16(d), from the date such Reimbursement
Obligations are incurred until paid in full, at a rate per annum equal to the
Default Rate that would apply if such Reimbursement Obligations were Prime-Based
Revolving Loans.
3.2 Eurodollar Rate-Based Interest. Each Eurodollar Loan shall bear
interest on the outstanding principal amount thereof from the date such Loan is
made until converted or renewed or until fully paid at a rate per annum equal to
the Eurodollar Rate determined for such Loan. Accrued interest shall be payable
in arrears on the applicable Interest Payment Date.
3.3 Default Rate. (a) If any Event of Default occurs, then, from the
date such Event of Default occurs until it is cured or until all Obligations are
paid and performed in full, all outstanding Loans and Reimbursement Obligations
(whether or not overdue) shall bear interest (as well after as before judgment)
at a rate (the "Default Rate") per annum which is equal to (x) in the case of
the Loans, the rate that would otherwise be applicable thereto pursuant to the
provisions of Section 3.1 and Section 3.2 plus 2%, or (y) in the case of
Reimbursement Obligations, the rate applicable to Prime-Based Loans under the
Revolving Credit Facility plus 2%, and (b) if all or a portion of any interest
payable on any Loan or Reimbursement Obligation or any commitment fee or other
amount payable hereunder shall not be paid when due (whether at the stated
maturity, by acceleration or otherwise), such overdue amount shall bear interest
at a rate per annum equal to the rate then applicable to Prime-Based Loans under
the relevant Facility plus 2% (or, in the case of any such other amounts that do
not relate to a particular Facility, the rate then applicable to Prime-Based
Loans under the Revolving Credit Facility plus 2%), in each case from the date
of such non-payment until such amount is paid in full (as well after as before
judgment). Interest accruing pursuant to this Section 3.3 shall be payable from
time to time on demand.
3.4 Maximum Interest Rate. In no event shall any interest or other
charge hereunder exceed the highest rate permissible under any law which a court
of competent jurisdiction shall, in a final determination, deem applicable
hereto. In the event that a court so determines that any Lender has received
interest and other charges hereunder in excess of the highest rate applicable
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thereto, such excess shall be deemed received on account of, and shall
automatically be applied to reduce, the Obligations owed to such Lender other
than interest in the inverse order of maturity, and the provisions hereof shall
be deemed amended to provide for the highest permissible rate. If there are no
Obligations outstanding, then such Lender shall refund such excess to the
appropriate Borrower.
3.5 Computation of Interest. All computations of interest hereunder
shall be made on a daily basis on the actual number of days elapsed over a year
of 360 days.
3.6 Agency and Collateral Monitoring Fee. The Borrowers jointly and
severally agree to pay the Agent for its own account an agency and collateral
monitoring fee (the "Agency and Collateral Monitoring Fee") in the amount of
$250,000 per annum, payable in advance on the Closing Date (as reduced by any
unamortized administration fee paid and retained by Fleet Capital under the DIP
Credit Agreements) and on each anniversary of the Closing Date until the
Commitments have expired or been terminated and all Obligations have been paid
in full.
3.7 Commitment Fee. The Borrowers jointly and severally agree to pay
to the Agent for the account of the Revolving Lenders, in accordance with their
respective Revolving Credit Percentages, a commitment fee (the "Revolving
Commitment Fee") at a rate of one-half of one percent (1/2%) per annum
(calculated on a daily basis for the actual number of days elapsed over a year
of 360 days), as the same may be adjusted in accordance with the Pricing Grid,
on the amount, if any, by which the Total Revolving Credit Commitments exceeds
the sum of the average daily closing balance of all Revolving Loans and the
average daily aggregate Undrawn Amount of all outstanding Letters of Credit.
Such Commitment Fee shall be payable on the last Business Day of each March,
June, September, and December with respect to the calendar quarter (or shorter
period) then ending, commencing June 30, 1999, and on the expiration or
termination of the Revolving Credit Commitments.
3.8 Financing Fee. The Borrowers jointly and severally agree to pay
to the Agent, for the benefit of each Lender, in such shares as shall be
determined by the Agent, a financing fee (the "Financing Fee") as set forth in
the Exit Fee Letter (less the amount previously paid to the Agent under the Exit
Fee Letter) on the Closing Date.
3.9 Letter of Credit Fees. (a) Each Borrower shall pay with respect
to each standby Letter of Credit opened for its account a standby Letter of
Credit Fee equal to one and three-quarters percent (1 3/4%) per annum, applied
(on the basis of actual days elapsed over a year of 360 days) to the Undrawn
Amount of such standby Letter of Credit from the date of issuance until the
expiration date thereof and payable in arrears on the L/C Payment Date. This fee
shall be paid to the Agent for the account of the Revolving Credit Lenders in
proportion to their respective Revolving Credit Percentages and shall be
distributed to the Revolving Credit Lenders in proportion to their respective
Revolving Credit Percentages monthly in arrears.
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(b) Each Borrower shall pay with respect to each merchandise Letter
of Credit opened for its account a merchandise Letter of Credit Fee equal to (i)
one-half of one percent (1/2%) multiplied by the face amount of the draft
presented, if such draft is presented on or before 90 days after the date of
issuance of such Letter of Credit, or (ii) one percent (1%) multiplied by the
face amount of the draft presented, if such draft is presented thereafter, and
(iii) one-half of one percent (1/2%) of the Undrawn Amount at cancellation, if
such Letter of Credit is canceled within 90 days after the date of issuance, or
(iv) one percent (1%) of the Undrawn Amount at cancellation, if such Letter of
Credit is canceled thereafter. Fees relating to (i) and (ii) above shall become
due and payable at the time each draft is presented under a merchandise Letter
of Credit. Fees relating to (iii) and (iv) above shall become due and payable at
cancellation of such Letter of Credit. Notwithstanding anything herein to the
contrary, all fees pertaining to this Section 3.9(b) received by the Agent shall
be distributed to the Revolving Credit Lenders in proportion to their respective
Revolving Credit Percentages quarterly in arrears, and on the Revolving
Commitment Termination Date.
(c) The Borrowers shall pay to the Issuing Bank, solely for its own
account, the standard charges or fees assessed by the Issuing Bank in connection
with the issuance, administra tion, amendment, drawing, transmission, transfer
or cancellation of Letters of Credit.
3.10 Taxes. All payments made by each Borrower in respect of the
Obligations shall be made free and clear of, and without reduction for or on
account of, any present or future income, stamp or other taxes, levies, imposts,
duties, charges, fees, deductions, or withholding, now or hereafter imposed,
levied, collected, withheld or assessed by any Public Authority; provided,
however, that the Borrowers shall not be required by this Section to pay or
reimburse the Agent, the Issuing Bank, or any Lender for income and franchise
taxes imposed on or in respect of any such Person's overall net income or gross
receipts from all operations (or taxes imposed in lieu of such income or
franchise taxes on overall net income or gross receipts) by the jurisdiction in
which is located the Lending Office or other office for payments of such Person,
or any political subdivision or taxing authority thereof or therein (all of the
foregoing, except for those taxes excluded by the proviso to this sentence,
being referred to hereinafter as the "Foreign Taxes"). If any Foreign Taxes are
required to be withheld from any amounts payable to the Agent, the Issuing Bank,
or a Lender hereunder or under the applicable Note, the amounts so payable to
such Person shall be increased to the extent necessary to yield to such Person
(after withholding or payment of all Foreign Taxes) interest or any such other
amounts payable hereunder or thereunder at the rates or in the amounts specified
herein and in the applicable Note as if no such deduction had been made, and the
applicable Borrower shall make such deduction and pay the full amount deducted
to the appropriate Public Authority in accordance with applicable law. Whenever
any Foreign Tax is payable by a Borrower, as promptly as possible thereafter,
such Borrower shall send to the Agent a certified copy of an original official
receipt showing payment thereof. If a Borrower fails to pay any Foreign Taxes
when due to the appropriate taxing authority or fails to remit to the Agent the
required receipts or other required documentary evidence, such Borrower shall
indemnify the Agent, the Issuing Bank, or the Lender, as the case may be, for
any incremental Foreign Taxes, interest or penalties that may become payable by
such Person as a result of any such failure. On the date hereof (or the later
date
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on which a Lender becomes a party hereto), each Lender and the Issuing Bank
which is not incorporated under the laws of the United States or any State
thereof shall deliver to the Borrowers a complete signed original of Internal
Revenue Service Form 4224 or Form 1001, as applicable, indicating that such
Lender or Issuing Bank is entitled to receive payments free from withholding of
United States federal income tax. If such Form 4224 or Form 1001 ceases to be
effective for any reason, other than that such Lender or Issuing Bank is no
longer so entitled to receive payments free from such withholding, then it will
promptly provide the Borrowers with a complete signed original of a replacement
Form 4224 or Form 1001.
3.11 Requirements of Law. In the event that any change in law,
regulation, treaty, or directive or any change therein or in the interpretation
or application thereof, or compliance by any Lender with any request or
directive (whether or not having the force of law) of any central bank or other
Public Authority: (a) does or shall subject any Lender or the Issuing Bank (or
any corporation controlling a Lender or an Issuing Bank) to any tax of any kind
whatsoever with respect to any Loan or Letter of Credit, or change the basis of
taxation of payments to such Lender or the Issuing Bank of principal, interest,
or any other amount payable in respect of any Loan or Letter of Credit (other
than Foreign Taxes and except for changes in the rate of tax on or in respect of
such Person's overall net income or gross receipts); (b) does or shall impose,
modify, deem applicable, or result in the application of any reserve, special
deposit, compulsory loan or similar requirement against loans or loan
commitments made by a Lender or the Issuing Bank or against any other extensions
of credit or commitments to extend credit or other assets of or any deposits or
other liabilities taken or entered into by a Lender or the Issuing Bank and
which was not otherwise included in determining the rate of interest on the
Loans of such Lender or the fees applicable to the Letters of Credit; or (c)
imposes on a Lender or the Issuing Bank (or any corporation controlling a Lender
or an Issuing Bank) any other condition regarding this Agreement; and the result
of any such event shall be to increase the cost to a Lender or the Issuing Bank
(or any corporation controlling a Lender or an Issuing Bank) of making or
maintaining the Loans, the Letters of Credit, or the other Obligations of the
Borrowers hereunder or to reduce the amounts receivable by such Person hereunder
then, upon demand by such Lender or the Issuing Bank, the Borrowers shall,
subject to the provisions of Section 4.11, either (a) immediately pay to the
appropriate Lender or the Issuing Bank, from time to time as specified by such
Person, additional fees which shall be sufficient to compensate such Person (or
any corporation controlling such Person) for such increased cost or reduction in
amounts receivable, or (b) pay all outstanding Obligations and terminate this
Agreement, paying the foregoing fees to the date of termination. Upon the
occurrence of any event referred to above, the affected Person shall send the
Agent and the Borrowers a certificate setting forth in reasonable detail the
increased cost or reduction in amounts receivable, which certificate shall be
conclusive, absent manifest error or bad faith, as to the amount thereof.
3.12 Capital Adequacy Costs. If the introduction of or any change in
(a) the judicial, administrative, or other governmental interpretation of any
law or regulation or (b) compliance by a Lender or the Issuing Bank (or any
corporation controlling a Lender or the Issuing Bank) with any guideline or
request from any central bank or other Public Authority (whether or not having
the force of law) has the effect of requiring an increase in the amount of
capital required or expected to be
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maintained by such Lender or the Issuing Bank or any corporation controlling
such Lender or the Issuing Bank, and such Lender or the Issuing Bank determines
that such increase is based upon its transactions with any Borrower hereunder,
then, subject to the provisions of Section 4.11, the applicable Borrower shall
either: (x) pay to such Lender or the Issuing Bank such additional amount as
such Lender or the Issuing Bank shall certify to be the amount allocable to its
transactions with such Borrower hereunder; or (y) pay to the Lenders all
outstanding Obligations and terminate this Agreement. Such Lender or the Issuing
Bank will notify the Borrowers and the Agent of any event occurring after the
date of this Agreement that will entitle such Lender or the Issuing Bank to
compensation pursuant to this Section as promptly as practicable after such
Lender or the Issuing Bank obtains knowledge thereof and determines to request
such compensation. Such Lender's or the Issuing Bank's determination for
purposes of this Section of the effect of any increase in the amount of capital
required to be maintained by it and of the amount allocable to its transactions
with a Borrower hereunder shall be conclusive, provided that such determination
is made on a reasonable basis. For purposes of this Section, in calculating the
amount necessary to compensate a Lender or the Issuing Bank for any increase in
or imposition of capital requirements, such Lender or the Issuing Bank shall be
deemed to be entitled to a rate of return on capital per annum (after federal,
state and local taxes) equivalent to that which it would have received had such
increase in or imposition of capital requirements not occurred.
3.13 Inability to Determine Interest Rate. In the event that the
Agent or a Lender, as the case may be, shall have determined (which
determination shall be conclusive and binding upon the applicable Borrower) that
by reason of circumstances affecting the interbank Eurodollar market, adequate
and reasonable means do not exist for ascertaining LIBOR for any Interest Period
with respect to any proposed Eurodollar Loans, or that LIBOR as so ascertained
will not accurately reflect such Lender's cost of creating or maintaining such
Loan, then any Lender making such determination shall so notify the Agent, and
the Agent in either case shall forthwith give prompt telephone notice of such
determination, confirmed in writing, to the applicable Borrower. If such notice
is given, any requested Eurodollar Loan shall be made as a Prime-Based Loan.
Until such notice has been withdrawn by such Lender or the Agent, as the case
may be, no further Eurodollar Loans shall be made, nor shall any Borrower have
the right to convert a Prime-Based Loan to a Eurodollar Loan or renew a
Eurodollar Loan.
3.14 Indemnity. The Borrowers shall be jointly and severally liable
for, and they agree to indemnify each Lender against, to hold each Lender
harmless from and to pay to the Agent on such Lender's behalf on demand, any
cost, loss or expenses which such Lender may sustain or incur as a consequence
of (a) default by a Borrower in payment of the principal amount of or interest
on any Eurodollar Loan, including, but not limited to, any such loss or expense
arising from interest or fees payable by a Lender to lenders of funds obtained
by it in order to maintain such Eurodollar Loan, (b) failure by a Borrower to
make a borrowing, or a conversion or renewal of a Loan after such Borrower has
given a notice in accordance with the terms hereof, unless such failure is as a
result of the provisions of Section 3.15, or (c) repayment of a Eurodollar Loan
on a day which is not the end of the Interest Period with respect thereto,
including, but not limited to, any such loss or expense arising from interest or
fees payable by any Lender to lenders of funds obtained by it in order to
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maintain such Eurodollar Loan. Notice of a claim thereunder shall be given to
the Borrowers by the Agent within 6 months of the payment of any Eurodollar
Loan.
3.15 Illegality. If, after the date of this Agreement, the adoption
of any applicable law, rule or regulation, or any change therein, or any change
in the interpretation or administration thereof by any Public Authority, or
compliance by a Lender (or a Eurodollar Lending Office) with any request or
directive (whether or not having the force of law) of any such Public Authority
shall make it unlawful or impossible for such Lender to make, maintain or fund
Eurodollar Loans, then such Lender shall forthwith so notify the Borrowers and
the Agent. Upon giving of such notice by such Lender, such Lender's obligation
to make Eurodollar Loans shall be suspended, and each Borrower shall convert the
then-outstanding principal amount of each Eurodollar Loan (on either (a) the
last day of the then-current Interest Period applicable to such Eurodollar Loan
if such Lender may lawfully continue to maintain and fund such Eurodollar Loan
to such day or (b) immediately, if such Lender may not lawfully continue to fund
and maintain such Eurodollar Loan to such day) into a Prime-Based Loan in an
equal principal amount.
ARTICLE 4. PAYMENTS AND PREPAYMENTS
4.1 Revolving Loans; Application of Payments to Loans. (a) Each
Prime-Based Rate Revolving Loan, unless sooner converted or prepaid, shall be
due and payable in full on the Revolving Commitment Termination Date. A Borrower
may prepay any Prime-Based Rate Revolving Loan in whole or in part, at any time
and from time to time, without premium or penalty in an amount of not less than
$100,000, or the outstanding principal balance thereof if less than $100,000.
(b) Each Eurodollar Revolving Loan, unless converted, renewed or
prepaid, shall be due and payable in full at the end of the Interest Period for
such Eurodollar Revolving Loan. A Borrower may prepay any Eurodollar Revolving
Loan in whole or in part, at any time and from time to time, without premium or
penalty in an amount not less than $100,000, or the outstanding principal
balance thereof if less than $100,000. Any such prepayment shall be accompanied
by the payment of accrued interest on such Revolving Loan to the date of
prepayment, and, in addition, such Borrower shall be liable to the Lender
pursuant to Section 3.14 for any cost, loss, or expense sustained or incurred by
any Lender as a consequence of such prepayment.
(c) Each Borrower, jointly and severally, shall pay to the Agent for
the account of the Swing Line Lender and the Revolving Credit Lenders, on
demand, any amount by which the Outstanding Revolving Obligations of that
Borrower exceeds its Revolving Borrowing Capacity to be applied first, to the
principal balance of the Swingline Loans; second, to the principal balance of
the Prime-Based Revolving Loans; and third, to the principal balance of the
Eurodollar Revolving Loans, in each case to each Revolving Credit Lender in
accordance with its Revolving Credit Percentage; provided, however, that in the
case of Revolving Loans made by Fleet Capital pursuant to Section 2.11(a), the
other Lenders' Revolving Credit Percentage of such Revolving Loans shall not be
considered Fleet Capital's Revolving Loans for purposes of this Section 4.1(c).
Each
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payment under this subsection (c) shall be accompanied by the payment of accrued
interest on the amount of such payment to the date of payment. If any payment by
a Borrower under this subsection (c) is applied to Eurodollar Revolving Loans as
set forth in Section 4.1(d), such Borrower shall also be liable to the
applicable Lender pursuant to Section 3.14 for any cost, loss or expense
sustained or incurred by such Lender as a consequence of such application.
(d) Except as specifically provided in Sections 4.3 and 4.4(c), or
pursuant to instruction of a Borrower not inconsistent with the terms and
conditions of this Agreement (which instructions may not be given during the
continuance of an Event of Default), all payments made by such Borrower or
received by the Agent in respect of Loans of such Borrower shall be applied on
such Borrowers' loan accounts: (i) first, to all accrued but unpaid interest on
Swing Line Loans that is then due and payable; (ii) second, to all accrued but
unpaid interest on Revolving Loans and Term Loans that is then due and payable;
(iii) third, to the payment of any fees described in Section 3.6, 3.7, 3.8 or
3.9; (iv) fourth, to the outstanding principal balances of the Prime-Based
Revolving Loans of such Borrower; (v) fifth, to the outstanding principal
balances of the Eurodollar Revolving Loans of such Borrower as to which the last
day of the current Interest Period coincides with the day such payment is to be
applied; (vi) sixth, to the outstanding principal balances of the Eurodollar
Revolving Loans of such Borrower as to which the last day of the current
Interest Period does not coincide; (vii) seventh, to the outstanding balance of
Prime-Based Term Loans; (viii) eighth to the outstanding balance of Eurodollar
Term Loans as to which the last day of the current Interest Period coincides
with the day such payment is to be applied; (ix) ninth, to the outstanding
balance of Eurodollar Term Loans as to which the last day of the current
Interest Period does not so coincide; and tenth, to all other Obligations due
and payable; provided, however, that nothing in this subsection (d) shall be
construed to restrict the manner in which any Lender accounts for any payment
for internal purposes on its own books and records.
4.2 Scheduled Installments of Term Loans. Unless sooner payable as
provided in Sections 9.2, 10.2 and 10.3, the Term Loans shall be prepaid by Penn
Traffic in the following installments:
(a) Term Loan A
(i) $1,000,000 on each of September 30, 2000, December 31, 2000,
March 31, 2001, June 30, 2001, September 30, 2001, December 31, 2001, March 31,
2002 and June 30, 2002;
(ii) $2,000,000 on each of September 30, 2002, December 31, 2002,
March 31, 2003 and June 30, 2003;
(iii) $2,500,000 on each of September 30, 2003, December 31, 2003,
March 31, 2004 and June 30, 2004;
(iv) $3,500,000 on each of September 30, 2004, December 31, 2004,
March 31, 2005 and June 30, 2005.
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(b) Term Loan B:
(i) $750,000 on June 30 in the years 2001, 2002, 2003, 2004 and
2005; and
(ii) $71,250,000 on June 30, 2006.
4.3 Optional Prepayments of Term Loans. Optional prepayments of each
of the Term Loans A and Term Loans B may be made by Penn Traffic on one or more
occasions in a minimum amount of $5,000,000 or more (in $1,000,000 increments),
upon five (5) Business Days' prior written notice to the Agent to be applied in
the manner as specified in such notice to the Agent; provided that no more than
three such prepayments may be made in any Fiscal Year.
4.4 Mandatory Prepayments and Commitment Reductions. (a) Unless the
Required Prepayment Lenders shall otherwise agree in writing, if any Borrower
shall receive (i) Net Cash Proceeds from an Asset Transfer permitted under
Section 8.1(e) but only to the extent that such Net Cash Proceeds are from one
or more Asset Transfers of Mortgaged Properties existing as of the Closing Date
and exceed $10,000,000 in any Fiscal Year (the "Excess"), (ii) Net Cash Proceeds
from a Redevelopment Sale and Leaseback Transaction permitted under Section
8.1(f)(ii), (iii) Net Cash Proceeds from a Sale and Leaseback Transaction
permitted under Section 8.1(f)(iii), or (iv) proceeds of Debt permitted under
Section 8.4(m), such Net Cash Proceeds (equal to the Original Property Value, in
the case of clause (a)(ii) above and the Excess in the case of clause (a)(i)
above) or proceeds of Debt in the case of clause (iv) above, shall immediately
following receipt by a Borrower, be paid to the Agent to be applied to the
prepayment of the Term Loans and the reduction of the Revolving Credit
Commitments as set forth in Section 4.4(c).
(b) Unless the Required Prepayment Lenders shall otherwise agree in
writing, if any Borrower or any of its Subsidiaries shall receive Net Cash
Proceeds from any Asset Transfers or Casualty Events (other than Net Cash
Proceeds required to be paid to the Agent to the extent provided in Section
4.4(a)(i) above, or from Sale and Leaseback Transactions described in clauses
(a)(ii) and (iii) above or a transaction described in clause (b), (c) or (d) of
Section 8.1), then, within ten (10) days of providing the notice required under
Section 7.3(f), such Borrower (for itself and on behalf of any Subsidiary
effecting the Asset Transfer) shall apply such Net Cash Proceeds toward the
prepayment of the Term Loans and the reduction of the Revolving Credit
Commitments as set forth in Section 4.4(c); provided, that, notwithstanding the
foregoing, (i) the Borrowers may elect (a "Reinvestment Election") to exclude
from the foregoing requirement amounts with respect to the relevant Asset
Transfers or Casualty Events to the extent that such are to be reinvested in
Reinvestment Assets (the "Reinvestment Amount") by delivering to the Agent a
written Reinvestment Notice delivered with the information required under
Section 7.3(d) setting forth the anticipated Reinvestment Amount, whereupon the
Borrowers and their Subsidiaries shall have 365 days from the date of such
notice in which to reinvest such Reinvestment Amount in Reinvestment Assets;
provided, that the Reinvestment Amounts so specified in any Fiscal Year
(excluding insurance proceeds or condemnation awards for Casualty Events) shall
not exceed $20,000,000 in
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the aggregate, provided, further, that after four (4) months following the end
of the month to which the Reinvestment Notice relates, the Agent may in its sole
but reasonable discretion establish reserves in respect of the Reinvestment
Amount not yet reinvested and provided further, that on the Reinvestment
Prepayment Date with respect to a Reinvestment Election, the Borrower shall pay
to the Agent an amount equal to the Reinvestment Prepayment Amount, if any, for
application as provided in Section 4.4(c).
(c) Amounts to be applied in connection with prepayments and
Commitment reductions made pursuant to this Section 4.4 shall be applied, first,
to the prepayment of the Term Loans pro rata to the then unpaid amounts of the
Term Loans, and second, to reduce permanently the Revolving Credit Commitments.
Any such reduction of the Revolving Credit Commitments shall be accompanied by
prepayment first, of the Swing Line Loans, and second, of the Revolving Loans,
to the extent, if any, that the Total Outstanding Revolving Obligations exceed
the amount of the Total Revolving Credit Commitments as so reduced, provided
that if the aggregate principal amount of Revolving Loans and Swing Line Loans
then outstanding is less than the amount of such excess (because Letter of
Credit Obligations constitute a portion of the Total Outstanding Revolving
Obligations), the Borrowers shall, to the extent of the balance of such excess,
cause to be canceled outstanding Letters of Credit and/or deposit in a cash
collateral account established with the Agent for the benefit of the Lenders, an
amount in cash equal to 110% of the related Letter of Credit Obligations and
otherwise on terms and conditions reasonably satisfactory to the Agent. The
application of any prepayment pursuant to this Section 4.4 shall be made first
to Prime-Based Loans of the relevant Facility and second to Eurodollar Loans of
the relevant Facility. Each prepayment of the Loans under this Section 4.4
(except in the case of Revolving Loans that are Prime-Based Loans and Swing Line
Loans) shall be accompanied by accrued interest to the date of such prepayment
on the amount prepaid.
4.5 Pro Rata Treatment and Payments. (a) Each (i) borrowing by a
Borrower from the Lenders hereunder (other than the Swing Line Lender), and (ii)
payment by a Borrower on account of any commitment fee and any reduction of the
Commitments of the Lenders, shall be made pro rata according to the respective
Term Loan Percentages or Revolving Credit Percentages, as the case may be, of
the relevant Lenders.
(b) Each payment (including each prepayment) by Penn Traffic on
account of (i) principal of and interest on the Term Loans A and any other
amounts payable to the Term Loan A Lenders, shall be made pro rata according to
the respective Term Loan A Percentages of the Term Loan A Lenders, and (ii)
principal and interest on the Term Loans B and any other amounts payable to the
Term Loan B Lenders shall be made pro rata according to the respective Term Loan
B Percentages of the Term Loan B Lenders. Amounts prepaid on account of the Term
Loans may not be reborrowed.
(c) Each payment (including each prepayment) by the Borrowers on
account of principal of and interest on the Revolving Loans, and in respect of
Reimbursement Obligations, shall
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be made pro rata according to the respective Revolving Credit Percentages of the
Revolving Credit Lenders.
4.6 Place and Form of Payments; Extension of Time. All payments of
principal, interest, and other sums due to the Agent, the Issuing Bank, or any
Lender shall be made without offset, defense, or counterclaim at the Agent's
address set forth in Section 11.11 or, to the extent provided in Section 2.14,
charged by the Agent to the appropriate Borrower's loan account with each Lender
(in accordance with each Lender's Revolving Credit Percentage) as a Revolving
Loan. Except for Proceeds received directly by the Agent, all such payments
shall be made in United States Dollars and in immediately available funds. If
any payment of principal, interest, or other sum to be made hereunder becomes
due and payable on a day other than a Business Day, then, except as otherwise
provided herein, the due date of such payment shall be extended to the next
succeeding Business Day and interest thereon shall be payable at the applicable
interest rate during such extension.
4.7 Settlements between the Agent and the Lenders. On the 10th and
25th days of each month or on any other day as the Agent shall determine (or if
any such day shall not be a Business Day, on the immediately succeeding Business
Day, provided that in no event shall there be less than two such days per
month), the Agent shall notify each Revolving Credit Lender of changes in the
aggregate outstanding principal amount of the Revolving Loans during the period
commencing on the Business Day after the last day covered by the immediately
preceding notification, if any, by the Agent under this Section (or if no such
notification shall have been given, during the period commencing on the Closing
Date) and ending on the Business Day immediately preceding the date of such
current notification by the Agent. Upon the giving of such notice, the Agent and
the Revolving Credit Lenders agree promptly to adjust among themselves the
respective amounts of their Revolving Credit Percentages of the Revolving Loans
by transferring among themselves appropriate amounts in immediately available
and freely transferable funds such that each Lender shall have funded its
Revolving Credit Percentage of the outstanding Revolving Loans. Each Revolving
Credit Lender shall make available to the Agent such Lender's portion of such
adjustments by 12:00 noon on the Business Day immediately succeeding the date on
which such Lender receives any such notification from the Agent. Each Revolving
Credit Lender's Revolving Credit Percentage of Revolving Loans will be debited,
and each payment or prepayment on account thereof will be credited, and shall be
recorded, in the appropriate loan account for such Lender. Notwithstanding
anything contained herein to the contrary, each Revolving Credit Lender shall be
entitled to receive interest on its Revolving Loans and its share of the
Commitment Fee only to the extent and based upon such Revolving Credit Lender's
actual funds employed, which shall not include any part of a Revolving Borrowing
funded by Fleet Capital with respect to which such Revolving Credit Lender has
not provided its Revolving Credit Percentage. The Agent shall render to each of
the Revolving Credit Lenders, on or before the seventh Business Day of each
month, a statement of such Revolving Credit Lender's loan account as of the last
day of the prior month; provided, however, that the failure of the Agent to
render any such statement in a timely fashion shall not impair the validity or
binding nature of any loan account or any Revolving Credit Lender's right to
contest the correctness of its loan account. Each Revolving Credit Lender shall
use its best
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efforts to notify the Agent promptly of any error discovered in any such
statement of its loan account.
4.8 Sharing of Payments. If any Lender shall obtain any payment or
reduction (including, without limitation, any amounts received as adequate
protection of a deposit treated as cash collateral under the United States
Bankruptcy Code) of any Obligations of a Borrower hereunder (whether voluntary,
involuntary, through the exercise of any right of set-off, or otherwise) which
exceeds its ratable share of payments or reductions on account of such
Obligations obtained by all the Lenders under the relevant Facility (other than
payments under Section 3.10, 3.11, 3.12 or 3.14) such Lender shall promptly (i)
notify the Agent of such receipt, and (ii) purchase from the other Lenders under
the relevant Facility such participations in the affected Obligations as shall
be necessary to cause such purchasing Lender to share the excess payment or
reduction, net of costs incurred in connection therewith, ratably with each of
them; provided that if all or any portion of such excess payment or reduction is
thereafter recovered from such purchasing Lender or additional costs are
incurred, the purchase shall be rescinded and the purchase price restored to the
extent of such recovery or such additional costs, but without interest. The
Borrowers agree that any Lender so purchasing a participation from another
Lender pursuant to this Section may, to the fullest extent permitted by law,
exercise all its rights of payment (including the right of set-off) with respect
to such participation as fully as if such Lender were the direct creditor of
each Borrower in the amount of such participation. For the purposes of this
Section, a Lender shall be deemed to have received a payment of the Obligations
when it exercises a right of set-off against Property of a Borrower or a
Subsidiary unless such Property was being held expressly and solely for or in
connection with a transaction unrelated to the transactions contemplated by the
Loan Documents.
4.9 [Intentionally left blank.]
4.10 Indemnity for Returned Payments. If after receipt of any
payment of, or Proceeds applied to the payment of, all or any part of the
Obligations, the Issuing Bank or any Lender is for any reason required to
surrender such payment or Proceeds to any Person, because such payment or
Proceeds is invalidated, declared fraudulent, set aside, determined to be void
or voidable as a preference, or a diversion of trust funds, or for any other
reason, then: the Obligations or the part thereof intended to be satisfied shall
be revived and continue and this Agreement shall continue in full force as if
such payment or Proceeds had not been received by such Lender or the Issuing
Bank, and each Borrower shall be liable to pay to such Lender or the Issuing
Bank, as appropriate, and hereby jointly and severally does indemnify such
Person and hold such Person harmless, from and against the amount of such
payment or Proceeds surrendered. The Agent shall reflect the surrender of such
payment or Proceeds, and any subsequent payment by the Borrowers to such Lender
or the Issuing Bank pursuant to this Section, in the applicable loan account.
The provisions of this Section 4.10 shall be and remain effective
notwithstanding any contrary action which may have been taken by such Lender or
the Issuing Bank in reliance upon such payment or Proceeds, and any such
contrary action so taken shall be without prejudice to such Lender's or the
Issuing Bank's rights under the Loan Documents and shall be deemed to have been
conditioned upon such payment or
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Proceeds having become final and irrevocable. The provisions of this Section
4.10 shall survive the termination of this Agreement and the final and full
payment and performance of the Obligations.
4.11 Regulatory Replacement of Lender. If the Borrowers receive a
certificate from a Lender or the Issuing Bank pursuant to Section 3.11 or 3.12
setting forth increased fees and other costs to be charged to the Borrowers as a
result of any event set forth in either such section, then, solely as a result
of receiving such certificate, the Borrowers may replace such Lender or the
Issuing Bank with another lender or issuing bank approved by the Agent, which
approval shall not be unreasonably withheld (any such replacement being referred
to herein as a "Regulatory Replacement"). During the 90-day period commencing on
the date the Borrowers receive such certificate under Section 3.11 or 3.12 (the
"Suspension Period"), the Borrowers shall not be required to pay the increased
fees and other costs specified in such certificate for such 90-day period (but
such fees and costs shall accrue during such period). In order to make a
Regulatory Replacement, the Borrowers must (a) give the Agent a written notice
of their intention to do so, which notice must be received by the Agent during
the Suspension Period and no later than ten Business Days prior to the proposed
date for the Regulatory Replacement and (b) consummate the Regulatory
Replacement within 90 days after the Agent receives such notice. If the
Borrowers make a timely Regulatory Replacement, they shall be required to pay
the increased fees and other costs which have accrued under Section 3.11 or 3.12
during the Suspension Period in respect of the event described in the Lender's
or Issuing Bank's certificate, after the end of the Suspension Period and on or
prior to the date of the Regulatory Replacement. If the Borrowers do not make a
timely Regulatory Replacement (whether or not they gave notice to do so), then,
at the end of the Suspension Period, the Borrowers shall immediately pay all
fees and other charges under Section 3.11 or 3.12 that were set forth in the
Lender's or Issuing Bank's certificate and that accrued during the Suspension
Period, and shall pay all such fees and other charges accruing thereafter when
due in accordance with Section 3.11 or 3.12. Upon the Regulatory Replacement of
a Lender, such Lender shall assign its Revolving Loans and Commitment and its
Term Loans to the new lender without recourse pursuant to a written agreement
meeting the requirements of Section 11.13(b) and otherwise mutually acceptable
to such Lender and the new lender, and the new lender shall thereafter
constitute a Lender hereunder for all purposes to the same extent as if the
assignment had been made pursuant to Section 11.13. Upon the Regulatory
Replacement of the Issuing Bank: the new issuing bank shall, to the extent
practicable, issue replacement letters of credit for all outstanding Letters of
Credit and, to the extent not practicable, shall provide such indemnity to the
Issuing Bank for the outstanding Letters of Credit that cannot be replaced as
the Issuing Bank shall reasonably request; and the new issuing bank shall
thereafter constitute the Issuing Bank for all purposes.
4.12 Agent's and Lenders' Books and Records; Monthly Statements.
Each Borrower agrees that the Agent's and each Lender's books and records
showing the Obligations and the transactions pursuant to this Agreement and the
other Loan Documents shall be admissible in any action or proceeding arising
therefrom, and shall constitute prima facie proof thereof, irrespective of
whether any Obligation is also evidenced by a promissory note or other
instrument. The Agent will provide to each Borrower a monthly statement of
Revolving Loans, payments, and other transactions pursuant to this Agreement.
Such statement shall be deemed correct, accurate, and
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binding on each Borrower and as an account stated (except for reversals and
reapplications of payments made as provided in Section 4.9 and corrections of
errors discovered by the Agent or a Lender), unless the appropriate Borrower
notifies the Agent in writing to the contrary within forty-five (45) days after
such statement is rendered. In the event a timely written notice of objections
is given by a Borrower, only the items to which exception is expressly made will
be considered to be disputed by such Borrower.
ARTICLE 5. CONDITIONS PRECEDENT
5.1 Conditions Precedent to Initial Loans. The Lenders will not be
obligated to make the initial Revolving Loans or the Term Loans, or the Swing
Line Lender to make the initial Swing Line Loan, and the Issuing Bank will not
be obligated to issue (or be deemed to have issued) any Letters of Credit on the
Closing Date, unless the following conditions precedent have been satisfied on
or before the Closing Date as determined by the Agent, and, if applicable, the
Issuing Bank:
(a) Delivery of Documents. The Borrowers shall have delivered, or
cause to be delivered, to the Agent on behalf of the Lenders the documents
listed on Exhibit U hereto, (including, without limitation, an opinion of
counsel to the Borrowers in the form of Exhibit Z hereto), and such other
documents, instruments and agreements as the Agent shall reasonably request in
connection herewith, duly executed by all parties thereto other than the Lenders
or the Agent, and in form and substance satisfactory to the Agent and the
Lenders and their respective counsel.
(b) Confirmation of Plan of Reorganization; Effective Date. (a) The
Confirmation Order shall have been entered by the Bankruptcy Court and the Agent
shall have received a certified copy of same, and such order shall have become a
Final Order, shall be in full force and effect and shall not have been reversed,
stayed, modified or amended absent the prior written consent of the Agent, the
Lenders and the Borrowers. The Agent shall have received evidence satisfactory
to it that the Effective Date shall occur contemporaneously with the Closing
Date hereunder.
(c) DIP Credit Obligations. The DIP Credit Obligations shall have
been paid in full with the proceeds of the initial Term Loans and Revolving
Loans, and the commitments of the Lenders under the DIP Credit Agreements shall
have been terminated.
(d) Fees. The Borrowers shall have paid in full the Agency and
Collateral Monitoring Fee due on the Closing Date, the Financing Fee and any
other fees then owing by the Borrowers under this Agreement.
(e) Financial Statements. The Agent shall have received the
Financial Statements described in Section 7.2(a) for Fiscal Year 1999.
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(f) Cash Management Arrangements. The Agent shall be satisfied as to
the continued implementation by the Borrowers of a cash management system
satisfactory to the Agent, including, without limitation, as provided in Section
7.8.
(g) Required Approvals. The Agent shall have received evidence
reasonable satisfactory to the Agent of all consent or approvals of any Public
Authority or other Person which the Agent reasonable determines is required in
connection with the transactions contemplated by this Agreement.
(h) Representations and Warranties, etc. As of the Closing Date: (i)
the representations and warranties of the Borrowers and the other Loan Parties
contained herein and in the other Loan Documents shall be true and correct; (ii)
the Borrowers shall be in compliance with all conditions to Loans as set forth
in Article 2 in all material respects; and (iii) no Event or Event of Default
shall have occurred and be continuing; and the Agent shall have received a
certificate to such effect from an Approved Officer of Penn Traffic.
(i) No Material Adverse Change. No event has occurred or condition
exists which has had a Material Adverse Effect (other than the filing of the
Chapter 11 Cases) since January 30, 1999, and the Agent shall have received a
certificate from an Approved Officer of each Borrower to such effect.
(j) Proceedings. All proceedings to be taken in connection with the
transactions contemplated by this Agreement, and all documents contemplated in
connection herewith, shall be reasonably satisfactory in form and substance to
the Agent and its counsel.
(k) Lien Searches. The Agent shall have received the results of a
recent lien search in each of the jurisdictions where assets of any of the Loan
Parties are located, and such search shall reveal no liens on any of the assets
of any Borrower or its Subsidiaries except for (i) Permitted Liens, (ii) liens
to be discharged or assigned to the Agent on or prior to the Closing Date
pursuant to documentation reasonably satisfactory to the Agent or (iii) liens
which in the aggregate are reasonably determined by the Agent to be immaterial.
(l) Filings, Registrations and Recordings. Each document (including,
without limitation, any Uniform Commercial Code financing statements) required
by the Security Documents or under law or reasonably requested by the Agent to
be filed, registered or recorded in order to create in favor of the Agent, for
the benefit of the Secured Parties, a perfected Lien on the Collateral described
therein, prior and superior in right to any other Person (other than the holders
of Permitted Liens), shall be in proper form for filing, registration or
recordation.
5.2 Conditions Precedent to All Subsequent Loans and Other
Extensions of Credit. The Swing Line Lender shall not be obligated to make any
Swing Line Loan, the Revolving Credit Lenders will not be obligated to make any
Revolving Loan and the Issuing Bank will not be obligated to issue any Letter of
Credit, unless the following conditions precedent have been satisfied as
determined by the Agent and, if applicable, the Issuing Bank:
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(a) Representations and Warranties. The Loan Parties'
representations and warranties contained in this Agreement and the other Loan
Documents shall be correct and complete in all material respects as of the date
such Swing Line Loan or Revolving Loan is made, such Letter of Credit is issued,
and after giving effect thereto (except for changes therein resulting from
events and transactions that are not prohibited by the Loan Documents or for
which the Agent, the Required Lenders, or the Lenders, as the case may be, have
given its or their written consent) in each case unless specified to relate to
an earlier date, then as of such earlier date.
(b) Compliance. Each Loan Party shall be in compliance with the
conditions to Loans set forth in Article 2 as of the date any Swing Line Loan or
any Revolving Loan is made, such Letter of Credit is issued, and after giving
effect thereto.
(c) Events. There shall exist no Event of Default on the date such
Loan is made or such Letter of Credit is issued, and after giving effect
thereto.
(d) Confirmation Order. The Confirmation Order shall be in full
force and effect and shall not have been reversed, stayed, modified or amended,
except for some modifications and amendments mutually agreed to by the Borrowers
and the Agent.
ARTICLE 6. GENERAL WARRANTIES AND REPRESENTATIONS
Each Borrower warrants and represents to the Agent and each Lender
that, except as hereafter disclosed to and accepted by the Agent in writing or
as otherwise provided herein:
6.1 Authorization, Validity, and Enforceability of this Agreement
and the Loan Documents. Each Borrower has the corporate power and authority to
execute, deliver, and perform this Agreement and the other Loan Documents, to
incur the Obligations, and to grant the Security Interest. Each Borrower has
taken all necessary corporate action (including, without limitation, obtaining
any required approval of its stockholders) to authorize its execution, delivery,
and performance of this Agreement and the other Loan Documents. No consent,
approval, or authorization of, or filing with, any Public Authority, and no
consent of any other Person, is required in connection with each Borrower's
execution, delivery, and performance of this Agreement and the other Loan
Documents, except for the Confirmation Order and those already duly obtained and
except where the failure to obtain such consent, approval, authorization or
filing will not have a Material Adverse Effect. Subject to the entry and
effectiveness of the Confirmation Order, this Agreement and the other Loan
Documents have been duly executed and delivered by each Borrower, and constitute
the legal, valid, and binding obligation of each Borrower to the extent party
thereto, enforceable against such Borrower in accordance with its terms without
defense, setoff, or counterclaim. Each Borrower's execution, delivery, and
performance of this Agreement and the other Loan Documents do not and will not
conflict with, or constitute a violation or breach of, or constitute a default
under, or result in the creation or imposition of any Lien upon the Property of
any Borrower or Subsidiary (except as contemplated by this Agreement and the
other Loan
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Documents) by reason of the terms of (a) any mortgage, lease, agreement, or
instrument to which any Borrower or any Subsidiary is a party or which is
binding upon it, (b) any judgment, law, statute, rule or governmental regulation
applicable to any Borrower or any Subsidiary, or (c) the Certificate or Articles
of Incorporation or By-Laws of any Borrower or any Subsidiary.
6.2 Organization and Qualification. Each Borrower: (a) is duly
incorporated and organized and validly existing in good standing under the laws
of the State of Delaware, in the case of Penn Traffic; or the State of New York,
in the case of Big M and Penny Curtiss; or the State of Pennsylvania, in the
case of Dairy Dell; and (b) has all requisite corporate power and authority to
conduct its business and to own its Property. Penn Traffic is qualified to do
business as a foreign corporation and is in good standing in New York,
Pennsylvania, Ohio and West Virginia; and Big M is qualified to do business as a
foreign corporation and is in good standing in Pennsylvania; such jurisdictions
are the only jurisdictions in which qualification is necessary in order for each
Borrower to own or lease its Property and conduct its business, except for such
jurisdictions where the failure to so qualify would not have a Material Adverse
Effect.
6.3 Subsidiaries and Affiliates. As of the Closing Date, Exhibit G
and Exhibit H are correct and complete lists of the name and relationship to the
Borrowers of each and all of each Borrower's Subsidiaries and other material
Affiliates, respectively. Each Material Subsidiary is (a) duly incorporated and
organized and validly existing in good standing under the laws of its state of
incorporation and (b) qualified to do business as a foreign corporation and in
good standing in the states where the failure to so qualify would have a
Material Adverse Effect. Each Restricted Subsidiary was originally organized to
acquire interests in certain limited partnerships, which have subsequently been
dissolved and the assets of which were, to the extent of such Restricted
Subsidiary's interest therein, distributed to such Restricted Subsidiary and in
turn distributed by it to its sole stockholder. None of the Restricted
Subsidiaries, as of the Closing Date, owns any material Property, has any Debt,
or engages in any active business.
6.4 Financial Statements and Projections. (a) Penn Traffic has
delivered to the Agent (i) the audited balance sheet and related statements of
income, retained earnings and cash flow for Penn Traffic and its Subsidiaries as
at January 30, 1999 and for the 52-week period then ended, accompanied by the
report thereon of Pricewaterhouse Coopers, LLP, Penn Traffic's independent
certified public accountants and (ii) the unaudited balance sheets of Penn
Traffic and its consolidated Subsidiaries as at the end of the first Fiscal
Quarter of Fiscal Year 2000, and statements of income and expense and cash flow
for Penn Traffic and its consolidated Subsidiaries for such Fiscal Quarter. All
such financial statements and the Financial Statements to be delivered pursuant
to Section 7.2 have been or will be prepared in accordance with GAAP, and
present or will present fairly the financial position of Penn Traffic and its
consolidated Subsidiaries, as at the dates thereof and the results of operations
of such Persons for the periods then ended.
(b) As of the Closing Date, the Business Plan represents Penn
Traffic's best estimate of the future financial performance of the Borrowers and
their consolidated Subsidiaries for the periods set forth therein, and has been
prepared on the basis of the assumptions set forth therein,
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which Penn Traffic believes are fair and reasonable in light of current and
reasonably foreseeable business conditions.
6.5 Capitalization. After giving effect to the Plan of
Reorganization and the Confirm ation Order, on the Effective Date:
(a) Penn Traffic's authorized (i) common stock shall consist of
30,000,000 shares of common stock, par value $.01 share, of which 20,106,955
shares will be validly issued and outstanding, fully paid and non-assessable and
(ii) preferred stock shall consist of 1,000 shares of preferred stock, par value
$.01 per share, of which none will be issued;
(b) Penny Curtiss's authorized capital stock consists of 1,000
shares of common stock, par value $.01 per share;
(c) Big M's authorized capital stock consists of 1,000 shares of
common stock, par value $.01 per share; and
(d) Dairy Dell's authorized capital stock consists of 1,000 shares
of common stock, par value $.01 per share.
6.6 Solvency. After giving effect to the Plan of Reorganization and
the Confirmation Order, on the Effective Date Penn Traffic is Solvent and
possesses adequate assets for the conduct of its business.
6.7 Title to Property. Except for Property which a Borrower or a
Material Subsidiary leases, each Borrower and each Material Subsidiary has good
and marketable title in fee simple to its real property and has good,
indefeasible, and merchantable title to all of its other Property, in each case
free of all Liens except Permitted Liens.
6.8 Real Property; Leases. As of the Closing Date, Exhibit K hereto
is a correct and complete list of all real property owned by the Borrowers and
their Subsidiaries, all leases and subleases of real or personal property by the
Borrowers and their Subsidiaries as lessee or sublessee, and all leases and
subleases of real or personal Property by the Borrowers and their Subsidiaries
as lessor or sublessor, other than any lease (as lessor, sublessor, lessee, or
sublessee) of personal Property having a Fair Market Value of less than
$250,000. As of the Closing Date (and after giving effect to the transactions
contemplated to occur on the Closing Date), each of such leases and subleases is
valid and enforceable in accordance with its terms and is in full force and
effect, and no material default (likely to have a Material Adverse Effect) has
occurred and is continuing. The Borrowers have made available true and complete
copies of each such lease and sublease for the Agent's inspection.
6.9 Proprietary Rights. As of the Closing Date, Exhibit L and
Exhibit J hereto, collectively contain a correct and complete list of all of the
Borrowers' patents, patent rights,
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registered copyrights, registered trademarks and trade names, and all other
Proprietary Rights, the loss of or termination of which would have a Material
Adverse Effect. As of the Closing Date, none of such Property is subject to any
licensing agreement or similar arrangement except as provided in the Franchise
Agreements or as listed in Exhibit L and Exhibit J. To the best of each
Borrower's knowledge, none of such Property infringes on or conflicts with any
other Person's Property other than infringements or conflicts not likely to have
a Material Adverse Effect. As of the Closing Date, the Property described on
Exhibit L and Exhibit J constitutes all of the Property of such type necessary
to the current and anticipated future conduct of the business of the Borrowers
and their Subsidiaries taken as a whole.
6.10 Trade Names. As of the Closing Date, all trade names under
which any Borrower will sell Inventory or create Accounts, or to which
instruments in payment of Accounts may be made payable, are listed on Exhibit J
hereto.
6.11 Litigation. Except as set forth on Exhibit M or otherwise
disclosed to the Agent in writing, there is no pending or, to the best of the
Borrowers' knowledge, threatened suit, proceeding, or counterclaim by any
Person, or investigation by any Public Authority, which is reasonably likely to
have a Material Adverse Effect.
6.12 Restrictive Agreements. None of the Borrowers or their
Subsidiaries is a party to any agreement, or subject to any corporate
restriction, which affects the ability of any of the Borrowers or any other Loan
Party to execute, deliver, and perform the Loan Documents and repay the
Obligations or which is likely to have a Material Adverse Effect.
6.13 Debt. After giving effect to the making of each Revolving Loan
and the Term Loans, the Borrowers and their Subsidiaries have no Debt, except
(a) the Obligations, and (b) other Debt permitted hereby.
6.14 Distributions. No Distribution has been declared, paid, or made
upon or in respect of any capital stock or other equity securities of any
Borrower or Subsidiary since January 30, 1999, except as expressly permitted
hereby or in connection with the Plan of Reorganization.
6.15 Labor Disputes. Except as set forth on Exhibit P, as of the
Closing Date: (a) there is no collective bargaining agreement or other labor
contract covering employees of a Borrower or any Subsidiary; (b) no such
collective bargaining agreement or other labor contract is scheduled to expire
during the term of this Agreement; (c) to the best of each Borrower's knowledge,
no union or other labor organization is seeking to organize, or to be recognized
as, a collective bargaining unit of employees of a Borrower or any Subsidiary;
and (d) there is no pending or, to the best of each Borrower's knowledge,
threatened strike, work stoppage, material unfair labor practice claim, or other
material labor dispute against or affecting a Borrower or any Subsidiary or
their respective employees, which is reasonably likely to have a Material
Adverse Effect.
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6.16 Environmental Laws. As of the Closing Date, except as set forth
in Exhibit N or except with respect to instances of non-compliance that could
not reasonably be expected, individually or in the aggregate, to have a Material
Adverse Effect, (i) to the best of the Borrowers' knowledge, except as set forth
on Exhibit N, none of the Borrowers or their Subsidiaries has released or
disposed of any Hazardous Material on its premises (whether or not owned by it)
in a manner or condition which will result in an obligation pursuant to
Environmental Laws to investigate or remediate such Hazardous Materials and has
not arranged for the disposal or release of Hazardous Materials at locations
other than those permitted to engage in such activities; (ii) each Borrower and
each Material Subsidiary has complied in all respects with all Environmental
Laws applicable to transfer, construction on, and operation of their Property
and business, except where the failure to so comply has not had and is not
reasonably likely to have a Material Adverse Effect; (iii) to the best of the
Borrowers' knowledge none of the Borrowers and their Subsidiaries has any
material contingent liability with respect to non-compliance with Environmental
Laws or the generation, handling, use, storage, or disposal of Hazardous
Materials; (iv) none of the Borrowers and their Subsidiaries has received any
summons, complaint, order, or similar notice that it is not in compliance with,
or that any Public Authority is investigating its compliance with, Environmental
Laws which has not been fully resolved; (v) the Borrowers and their Subsidiaries
have obtained all permits required for their operations under Environmental Laws
except where the failure to obtain such permit has not had and is not reasonably
likely to have a Material Adverse Effect, and such permits are in effect and the
Borrowers and their Subsidiaries are in compliance with the terms thereof in all
material respects; (vi) none of the Borrowers and their Subsidiaries, or any of
their businesses or Property, are subject to any order of or agreement with a
Public Authority or other Person regarding Environmental Laws, Environmental
Claims, or the removal or treatment of Hazardous Materials which is reasonably
likely to have a Material Adverse Effect; and (vii) there are no conditions or
circumstances associated with the businesses and Property of any Borrowers and
their Subsidiaries that could reasonably be expected to give rise to an
Environmental Claim which is reasonably likely to have a Material Adverse
Effect.
6.17 No Violation of Law. Except as otherwise disclosed to the Agent
in writing, none of the Borrowers and their Subsidiaries is in violation of any
law, statute, regulation, ordinance, judgment, order, or decree applicable to it
which violation would have a Material Adverse Effect.
6.18 No Default. Except as otherwise disclosed in writing to the
Agent, none of the Borrowers and their Subsidiaries is in default with respect
to any note, indenture, loan agreement, mortgage, lease, or other agreement to
which any Borrower or Subsidiary is a party or bound, which default would have a
Material Adverse Effect.
6.19 ERISA. The Borrowers and their Related Companies do not as of
the Closing Date maintain or contribute to any Plan except those listed on
Exhibit Q hereto. Each Borrower has given the Agent an opportunity to review (i)
a summary plan description of each Plan and (ii) a copy of the collective
bargaining agreement pursuant to which a Borrower or a Related Company is
required to contribute to a Multiemployer Plan. Each Borrower has made available
to the Agent an opportunity to review complete copies of each Plan, including
any amendments thereto. Each Plan
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(other than Multiemployer Plans) is in substantial compliance with ERISA and the
Code and has been operated substantially in accordance with its terms. Except as
previously disclosed to the Agent in writing, no Plan (other than Multiemployer
Plans) has incurred any "accumulated funding deficiency," as defined in Section
302(a)(2) of ERISA and Section 412(a) of the Code, whether or not waived. Except
as previously disclosed to the Agent in writing, no waiver of minimum funding
standards under Section 412 of the Code has been issued with respect to a Plan
(other than Multiemployer Plans). There is no liability for the tax imposed by
Section 4971 of the Code with respect to any Plan (other than Multiemployer
Plans). Each Plan (other than Multiemployer Plans) which is intended to be a
qualified plan under Section 401(a) of the Code as currently in effect has been
determined by the IRS to be qualified under Section 401(a) of the Code (except
for amendments made after the date of the most recent determination letter that
do not affect a Plan's qualification) and the trust related thereto is exempt
from federal income tax under Section 501(a) of the Code. None of the Borrowers
or any Related Company has incurred any material liability to the PBGC other
than the payment of premiums, and there are no premium payments which have
become due as of the Closing Date which are unpaid. None of the Borrowers or any
Related Company or, to the knowledge of the Borrowers, any fiduciary of or any
trustee to any (other than Multiemployer Plans) Plan has engaged in a nonexempt
"prohibited transaction" described in Section 406 of ERISA or Section 4975 of
the Code or taken any action which would constitute or result in an ERISA Event
with respect to any Plan, which could reasonably be expected to have a Material
Adverse Effect. No actions, suits or claims (other than routine claims for
benefits) are pending, or, to the knowledge of any Borrower or any Related
Company, could reasonably be expected to be asserted, against any Plan, in each
case, which could reasonably be expected to have a Material Adverse Effect. As
of the Closing Date, no Plan has been terminated by the plan administrator
thereof or by PBGC in the past 5 years, except for the termination of the U-Save
Foods Inc. Salaried Employees Retirement Plan and Riverside Division of Penn
Traffic Company Bi-Lo Part-time Bargaining Employees Retirement Plan which have
been transferred into the Riverside Division of Penn Traffic Company Bargaining
Employees Pension Plan and Riverside Division of Penn Traffic Company Pension
Plan for Non-Bargaining Employees and the termination of the Big Bear Stores
Employees' Pension Plan and the Pension Plan for Nonbargaining Employees of
Riverside/Insalaco Division of The Penn Traffic Company which have been
transferred into The Penn Traffic Company Cash Balance Plan (formerly the Penn
Traffic Corporation/P&C Foods Pension Plan). Except as set forth on Exhibit Q,
as of the Closing Date, the current value of the assets of each Plan exceeds the
present value of the accrued benefits and other liabilities of such Plan. Except
as set forth on Exhibit Q, as of the Closing Date, none of the Borrowers know of
any facts or circumstances which would materially change the value of such
assets and accrued benefits and other liabilities. Except as set forth on
Exhibit Q, as of the Closing Date, none of the Borrowers or any Related Company
has made a complete or partial withdrawal from a Multiemployer Plan in the past
5 years, or has incurred or expects to incur any withdrawal liability to a
Multiemployer Plan, which would have a Material Adverse Effect. As of the
Closing Date, the Borrowers and to the knowledge of the Borrower each Related
Company have timely made all required contributions to each Plan and
Multiemployer Plan. As of the Closing Date, each report, return, and notice
required to be filed with the IRS, the PBGC, the United States Department of
Labor, or any other Public Authority with respect to a Plan has been filed prior
to the date any penalty would be due for a failure to make such filing. Any
group health plan (as defined
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in Section 5000(b)(1) of the Code) maintained by a Borrower is and has been in
substantial compliance with the continuation coverage requirements of Section
4980B(f) of the Code and Part 6 of Subtitle B of Title I of ERISA. Except as set
forth on Exhibit Q, as of the Closing Date, none of the Borrowers or any Related
Company provides medical or life benefits or any other welfare benefits to
retirees. To the best of the Borrowers' knowledge, none of the Borrowers or any
Related Company has incurred or expects to incur any liability with respect to a
Prior Plan could reasonably be expected to have a Material Adverse Effect.
6.20 Taxes. The Borrowers and their Subsidiaries have filed all tax
returns and other reports which they were required by law to file on or prior to
the date hereof and have paid all taxes, assessments, fees, and other
governmental charges, and penalties and interest, if any, against them or their
Property, income, or franchise, that are due and payable, except those being
contested in good faith by appropriate proceedings diligently pursued or as
described on Exhibit O hereto or where the failure to do so is not reasonably
likely to have a Material Adverse Effect.
6.21 Regulations U and X. None of the Borrowers and their
Subsidiaries owns any "margin stock" as such term is defined in Regulation U, as
amended, of the Federal Reserve Board. The proceeds of the borrowings made
pursuant to Article II will be used by each Borrower only to satisfy such
Borrower's DIP Credit Obligations and for working capital or other general
business purposes. None of such proceeds will be used, directly or indirectly,
(i) for the purpose of purchasing or carrying any margin stock or (ii) for the
purpose of reducing or retiring any Debt which was originally incurred to
purchase or carry margin stock or (iii) for any other purpose which might
constitute any of the Loans under this Agreement a "purpose credit" within the
meaning of Regulation U or X of the Federal Reserve Board. None of the Borrowers
or their Subsidiaries has taken or will take any action which might cause this
Agreement or any of the Loan Documents to violate any regulation of the Federal
Reserve Board or to violate the Securities Exchange Act of 1934 or any state
securities laws.
6.22 Broker's Fees. None of the Borrowers and their Subsidiaries has
made any commitment or taken any action which will result in a valid claim for
any brokers, finders or similar fees or commitments in respect to the
transactions described in this Agreement (excepting any fees payable to the
Agent or the Lenders as contemplated hereby). Each Borrower agrees jointly and
severally to defend the Agent and each Lender and save them harmless from all
claims of any Person for any such fees, and this indemnity shall include
reasonable attorneys' fees and legal expenses.
6.23 Disclosure. Neither this Agreement nor any document or written
statement furnished to the Agent or any Lender by or on behalf of any Borrower
hereunder contains any untrue statement of a material fact or omits to state any
material fact necessary in order to make the statements contained herein or
therein not misleading.
6.24 Security Documents. (a) The Security Agreement is effective to
create in favor of the Agent, for the benefit of the Agent and the Lenders, a
legal, valid and enforceable security interest in the Collateral described
therein (other than in respect of Collateral Real Estate Interests)
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and the Proceeds thereof. In the case of the Pledged Securities described in the
Security Agreement, when stock certificates representing such Pledged Securities
are delivered to the Agent, and in the case of the other Collateral (other than
in respect of Collateral Real Estate Interests) described in the Security
Agreement, when financing statements in appropriate form are filed in the
offices specified on Exhibit C of the Security Agreement (to the extent that
perfection is accomplished by such filings), the Security Agreement will create
a fully perfected Lien on, and security interest in, all right, title and
interest of the Loan Parties in such Collateral and the Proceeds thereof, as
security for the Obligations, in each case free and clear of all Liens other
than Permitted Liens.
(b) Each of the Mortgages is effective to create in favor of the
Agent, for the benefit of the Agent and the Lenders, a legal, valid and
enforceable Lien on the Mortgaged Properties described therein and the Proceeds
thereof, and when the Mortgages and related fixture filings are filed in the
offices specified on Exhibit E (to the extent that perfection is accomplished by
such filings), each such Mortgage shall constitute a fully perfected Lien on,
and security interest in, all right, title and interest of the Loan Parties in
the Mortgaged Properties and the Proceeds thereof, as security for the
Obligations, in each case free and clear of Liens other than Permitted Liens.
6.25 Reorganization Matters. Attached hereto as Exhibit F is a
certified copy of the Confirmation Order confirming the Plan of Reorganization
and such Confirmation Order is in full force and effect and has not been
reversed, stayed, modified or amended without the prior written consent of the
Agent and the Lenders and such order has become a Final Order as of the Closing
Date. Simultaneously with the making of the initial Loans and the issuance of
Letters of Credit on the Closing Date, the Effective Date shall have occurred
and the Plan of Reorganization will have been substantially consummated.
6.26 Year 2000. The cost to the Borrowers of reprogramming and
testing of the Borrowers' and its Subsidiaries' computer systems and related
equipment to permit proper functioning on and following January 1, 2000
(including, without limitation, reprogramming errors) will not reasonably be
expected to result in a Material Adverse Effect.
ARTICLE 7. AFFIRMATIVE COVENANTS
Each Borrower covenants and agrees that so long as this Agreement is
in effect and until the Commitments have terminated and all Obligations (other
than any indemnities which are not then due and payable) are discharged in full:
7.1 Books and Records. Each Borrower will, and will cause its
Subsidiaries to: (a) maintain, at all times, correct and complete books, records
and accounts in which complete, correct and timely entries are made of its
transactions in accordance with GAAP; (b) reflect by means of appropriate
entries in such accounts and in all Financial Statements proper liabilities and
reserves for all taxes and proper provision for depreciation and amortization of
Property and bad debts, all in accordance with GAAP; and (c) maintain at all
times books and records pertaining to
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the Collateral in such detail, form, and scope as the Agent shall reasonably
require, including without limitation, records of: (i) all payments received and
all credits and extensions granted with respect to the Accounts; (ii) the
return, repossession, stoppage in transit, loss, damage, or destruction of any
Inventory; and (iii) all other dealings affecting the Collateral; (d) permit,
upon notice to the Authorized Officer of Penn Traffic, officers and designated
representatives of the Agent to visit and inspect any of the properties or
assets of any Borrower and any of its Subsidiaries and to examine the books of
account of any Borrower and any of its Subsidiaries and discuss the affairs,
finances and accounts of any Borrower and any of its Subsidiaries with, and be
advised as to the same by, the officers and independent accountants of any
Borrower or such Subsidiary, all at such reasonable times and intervals and to
such reasonable extent as the Agent may request.
7.2 Financial and Other Information. Each Borrower shall promptly
furnish to the Agent all such financial information as the Agent shall
reasonably request, and shall notify its auditors and accountants that the Agent
is authorized to obtain such information directly from them. Without limiting
the foregoing, the Borrowers will furnish to the Agent (with sufficient copies
for each Lender) the following:
(a) As soon as available, but in any event not later than ninety
(90) days after the close of each Fiscal Year, consolidated audited balance
sheets, and statements of income and expense, retained earnings, and cash flow
for Penn Traffic and its consolidated Subsidiaries for such Fiscal Year, and the
accompanying notes thereto, setting forth in each case in comparative form
figures for the previous Fiscal Year, all in reasonable detail, fairly
presenting the financial position and the results of operations of Penn Traffic
and its consolidated Subsidiaries as at the date thereof and for the Fiscal Year
then ended, and prepared in accordance with GAAP. Such statements shall be
examined in accordance with generally accepted auditing standards by, and
accompanied by a report thereon, unqualified as to scope, of,
PricewaterhouseCoopers LLC or another independent certified public accountants
selected by Penn Traffic and reasonably satisfactory to the Agent.
(b) As soon as available, but in any event not later than forty-five
(45) days after the close of each Fiscal Quarter other than the fourth Fiscal
Quarter of a Fiscal Year, consolidated unaudited balance sheets of Penn Traffic
and its consolidated Subsidiaries as at the end of such quarter, and
consolidated unaudited statements of income and expense and cash flow for Penn
Traffic and its consolidated Subsidiaries for such Fiscal Quarter and for the
period from the beginning of the Fiscal Year to the end of such quarter,
together with the accompanying notes thereto and, commencing with the first
Fiscal Quarter of Fiscal Year 2001, all in reasonable detail, fairly presenting
the financial position and results of operation of Penn Traffic and its
consolidated Subsidiaries as at the date thereof and for such periods, prepared
in accordance with GAAP consistent with the audited Financial Statements
required pursuant to Section 7.2(a). Such statements shall be certified to be
correct and prepared in accordance with GAAP, by the chief financial officer or
other senior financial officer of Penn Traffic, subject to normal year-end audit
adjustments.
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(c) With each of the audited Financial Statements delivered pursuant
to Section 7.2(a): (i) a certificate of the independent certified public
accountants that examined such statements to the effect that they have reviewed
and are familiar with the Loan Documents and that, in examining such Financial
Statements, they did not become aware of any fact or condition which then
constituted an Event or an Event of Default, except for those, if any, described
in reasonable detail in such certificate; and (ii) a copy of such accountants
report or letter to the Borrowers' management delivered in connection with their
year-end examination.
(d) With each of the annual audited and quarterly unaudited
Financial Statements delivered pursuant to Sections 7.2(a) and 7.2(b), a
certificate of the chief financial officer or other senior financial officer of
Penn Traffic: (i) setting forth in reasonable detail the calculations required
to establish that each Borrower was in compliance with its covenants set forth
in Sections 8.13 through 8.17 during the period covered in (or the last day of
such period, as appropriate) such Financial Statements; (ii) stating that,
except as explained in reasonable detail in such certificate (A) all of the
representations and warranties of each Borrower contained in this Agreement and
the other Loan Documents are correct and complete in all material respects as at
the date of such certificate (unless specified to relate to an earlier date,
then as of such earlier date) and (B) no Event or Event of Default has occurred
during the period covered by such Financial Statements; and (iii) commencing
with the first Fiscal Quarter of Fiscal Year 2001 describing and analyzing all
material variances between the results reported in such Financial Statements and
those projected or targeted for such period in the Latest Projections for such
Fiscal Year, in such detail as the Agent reasonably requests. If such
certificate discloses that a representation or warranty is not correct or
complete, or that an Event or Event of Default has occurred, such certificate
shall set forth what action the applicable Borrower has taken or proposes to
take with respect thereto.
(e) Promptly upon receipt thereof, a copy of each other report or
"management letter" submitted to the Borrowers by their independent accountants
in connection with any annual, interim or special audit made by it of the books
of the Borrowers.
(f) Within thirty (30) days after the beginning of each Fiscal Year,
the following ("Projections"): a copy of the business plan of Penn Traffic and
its Subsidiaries for such Fiscal Year, including projected balance sheets,
statements of income and expense, and statements of cash flow for Penn Traffic
and its Subsidiaries, and projections of Revolving Borrowing Capacity and
borrowing requirements for the Borrowers, in each case as at the end of and for
each month of such Fiscal Year, together with the assumptions on which all such
projections are based, all in form and substance satisfactory to the Agent.
(g) Promptly upon their becoming available: copies of each
information statement, consent solicitation, financial statement, or other
document or report which a Borrower or Subsidiary sends to any holder of any of
the Senior Notes; copies of each annual report and proxy statement that Penn
Traffic sends to its stockholders and each report on Form 10-K, 10-Q, or 8-K
that Penn Traffic files with the Securities and Exchange Commission; and copies
of each registration
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statement that a Borrower or any Subsidiary files under the Securities Act of
1933, as amended (other than with respect to employee benefit plans).
(h) At the Agent's request, a copy of each annual report or other
filing filed with respect to each Plan of each Borrower or any Related Company.
(i) Copies of all motions, applications and similar documents filed
by any other Person in the Chapter 11 Cases seeking relief which would have a
material adverse effect on the Confirmation Order.
(j) Such additional information as the Agent may from time to time
reasonably request, or which the Agent shall request upon the reasonable request
of any Lender, regarding the financial and business affairs, operations or
prospects of the Borrowers and their Subsidiaries, including, without
limitation, the statements described in Section 7.2(a) on a consolidating basis.
7.3 Notices to the Agent. In addition to any other notices required
hereunder, each Borrower shall notify the Agent in writing of the following
matters at the following times:
(a) Immediately after becoming aware of the existence of any Event
or Event of Default.
(b) Within two Business Days after becoming aware of:
(i) any material adverse change in the Property, business,
operations, or condition (financial or otherwise) of Penn Traffic and its
Subsidiaries taken as a whole;
(ii) any pending or threatened action, proceeding, or counterclaim
by any Person, or any pending or threatened investigation by a Public Authority,
which is reasonably likely to have a Material Adverse Effect;
(iii) any pending or threatened strike, work stoppage, material
unfair labor practice claim, or other material labor dispute which is reasonably
likely to have a Material Adverse Effect;
(iv) any violation of any law, statute, regulation, or ordinance of
a Public Authority applicable to a Borrower or any Subsidiary, which is
reasonably likely to have a Material Adverse Effect;
(v) the fact that a Borrower or any Material Subsidiary has
materially violated any Environmental Laws or that its compliance is being
investigated in respect of an alleged material failure to comply with any
Environmental Law; and
(vi) any ERISA Event with respect to a Plan which could reasonably
be expected to have a Material Adverse Effect; within five Business Days after a
Borrower's receipt of any notice
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concerning the imposition of any withdrawal liability under ERISA with respect
to a Multiemployer Plan or of any notice of liability under Section 4062, 4063
or 4064 of ERISA; within five Business Days after a Borrower's receipt of notice
from the IRS regarding the commencement of proceedings to disqualify a Plan
under Section 401(a) of the Code; within five Business Days of any action to
terminate a Plan; within five Business Days after the establishment of any
material Plan not existing at the date hereof or the commencement of
contributions by a Borrower or, provided that the Borrower has knowledge, any
Related Company to any Plan to which such Borrower or any Related Company was
not contributing at the date hereof; and within five Business Days after
becoming aware of any other event or condition regarding a Plan or a Borrower's
or a Related Company's compliance with ERISA and the applicable provisions of
the Code which could reasonably be expected to a Material Adverse Effect;
provided further, that in each case, the affected Borrower shall furnish to the
Agent copies of any notices, demands or other communications it receives from
the IRS, the Department of Labor, the PBGC or any other Public Authority in
connection with any matter referred to in this subsection (vi).
(c) Not less than thirty (30) days prior to a Borrower changing its
name or the location of its chief executive office.
(d) Not more than thirty (30) days after the end of each month: (i)
the execution of a definitive lease or sublease of real property by a Borrower;
(ii) the termination of a lease or sublease of real property to which a Borrower
is a party; (iii) the opening or closing of a retail store or other place of
business owned or operated by a Borrower; unless prior notice of any such event
is required by another provision of this Section 7.3, in each case effected
during the prior month; or (iv) all Development Projects or Redevelopment
Projects completed in such month involving Property with a Fair Market Value of
$250,000 or more; (v) any Casualty Event involving a loss of Property having a
Fair Market Value of $250,000 or more and the extent to which such occurrence is
covered by insurance; and (vi) the amount of any Reinvestment Amount reinvested
in such month.
(e) Not more than thirty (30) days after the end of each month:
Permitted Liens described in clause (a)(ii) of the definition thereof which are
created during such month.
(f) Within 30 days after the end of each month, any sales and other
dispositions of Property permitted by Section 8.1 other than Dispositions
described in clauses (a) and (g) of Section 8.1 (where no consideration is
received), in each case consummated during such monthly period.
(g) Within 30 days after the end of a Fiscal Quarter of:
(i) any repurchases of employees' stock permitted by Section 8.2
that were made during such Fiscal Quarter.
(ii) any guaranties permitted by Section 8.3 that were issued during
such Fiscal Quarter.
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(iii) any Debt incurred under Section 8.4(b), 8.4(h), 8.4(i), 8.4(j)
or 8.4(l) during such Fiscal Quarter.
(iv) any Sale and Leaseback Transactions permitted under Section
8.1(f) that were consummated during such Fiscal Quarter.
(h) Within 30 days after its filing, the Borrower shall provide to
the Agent a copy of each Form 5500 together with Schedule B thereto, which it
files with respect to any Plan.
(i) Three Business Days prior to entering into any merger permitted
under Section 8.1(c) or (d) or any Asset Transfer permitted under Section 8.1(e)
or (f), and having a Fair Market Value in excess of $2,000,000.
(j) Prior to incurring any Debt to issuers of standby letters of
credit (other than the Letters of Credit) permitted under Section 8.4(g).
(k) Within 10 Business Days after making any prepayments permitted
under Section 8.5.
(l) At the time (if any) that notice of the incurrence of any Debt
is required to be given, the making of any guaranties of such Debt permitted by
Section 8.3.
(m) The incurrence of any refinancing Debt permitted under Section
8.4(i), at the same time, if any, when notice would have been required for the
incurrence of new Debt of the type being refinanced.
(n) Within 30 days of the date on which all material aspects of a
Development Project are completed, notice of such fact and of the Reinvestment
Prepayment Amount, if any, with respect to such project.
Each notice given under this Section shall describe the subject matter thereof
in reasonable detail and shall set forth the action that the applicable Borrower
has taken or proposes to take with respect thereto.
7.4 Taxes and Other Obligations. Each Borrower will, and will cause
its Subsidiaries to: (a) file when due all tax returns and other reports which
it is required to file, pay when due all taxes, fees, assessments, and other
governmental charges against it or upon its Property, income, and franchises,
make all required withholding and other tax deposits, and establish adequate
reserves for the payment of all such items, and shall provide to the Agent, upon
request, satisfactory evidence of its timely compliance with the foregoing; (b)
pay when due all Debt owed by it and perform and discharge in a timely manner
all other obligations undertaken by it; and (c) comply with the terms and
provisions of each judgment, law, statute, rule, and governmental regulation
applicable to it and
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each contract, mortgage, lien, lease, indenture, order, instrument, agreement,
or document to which it is a party or by which it is bound, except in each case
where noncompliance would not have a Material Adverse Effect; provided, however
that a Borrower or Subsidiary need not pay any tax, fee, assessment,
governmental charge, or Debt, or perform or discharge any other obligation, that
it is contesting in good faith by appropriate proceedings diligently pursued,
and it has established and maintains adequate reserves (in the good faith
judgment of the management of such Person) with respect thereto in accordance
with GAAP.
7.5 Corporate Existence and Good Standing. Each Borrower will, and
will cause its Subsidiaries to, maintain its corporate existence and its
qualification and good standing in all states necessary to conduct its business
and own its Property except as permitted by Section 8.1, and shall obtain and
maintain all licenses, permits, franchises and governmental authorizations
necessary to conduct its business and own its Property, in each case except to
the extent, other than with respect to corporate existence, that the failure to
maintain the foregoing is not reasonably likely to have a Material Adverse
Effect.
7.6 Maintenance of Property and Insurance. Each Borrower will, and
will cause each of its Subsidiaries to: (a) maintain all of its Property
necessary and useful in its business in good operating condition and repair,
ordinary wear and tear excepted; and (b) in addition to the insurance required
by Section 2.6 of the Security Agreement, maintain with financially sound and
reputable insurers such other insurance with respect to its Property and
business against casualties and contingencies of such types (including, without
limitation, business interruption, extra expense, public liability, product
liability, and larceny, embezzlement or other criminal misappropriation) and in
such amounts, and with such deductibles and self-insured retentions (in the case
of liability or casualty damage not exceeding $500,000 per occurrence) as is
customary for Persons of established reputation engaged in the same or a similar
business and similarly situated, naming the Agent, at its request, as additional
insured under each such policy.
7.7 Environmental Laws. Each Borrower will, and will cause its
Subsidiaries to, except where non-compliance is not reasonably likely to have a
Material Adverse Effect: (a) conduct its business in full compliance with all
Environmental Laws applicable to it (including, without limitation, those
relating to such Person's generation, handling, use, storage, and disposal of
Hazardous Materials), (b) notify the Agent of any Environmental Claim, or event
or circumstance on the basis of which an Environmental Claim involving material
liability could reasonably be expected to be made, in each case which is
reasonably likely to have a Material Adverse Effect upon becoming aware thereof;
(iii) take prompt and appropriate action to respond to any Environmental Claim,
and regularly report to the Agent on such response with respect to any
Environmental Claim which could reasonably be expected to have a Material
Adverse Effect; and (iv) pay when due all fines and penalties assessed against
them for violations of Environmental Laws, except any such fine or penalty that
it is contesting in good faith by appropriate proceedings diligently pursued or
which is not likely to have a Material Adverse Effect. Without limiting the
generality of the foregoing, whenever there may be non-compliance by a Borrower
or a Subsidiary with any Environmental Law, which is reasonably likely to have a
Material Adverse Effect, the Borrower shall, at the Agent's
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reasonable request and at the Borrower's expense: (a) cause an independent
environmental engineer acceptable to the Agent to conduct such tests of the site
where the non-compliance or alleged non-compliance with Environmental Laws has
occurred and prepare and deliver to the Agent, with a copy for each Lender, a
report setting forth the results of such tests, a proposed plan for responding
to any environmental problems described therein, and an estimate of the costs
thereof; and (b) provide to the Agent, with a copy for each Lender, a
supplemental report of such engineer whenever the scope of the environmental
problems, or the response thereto or the estimated costs thereof, shall change.
If a Borrower or any of its Subsidiaries fails to conduct any such environmental
test or provide any such report to the Agent, the Agent is authorized to enter
upon such Borrower's or Subsidiary's premises at reasonable times and on
reasonable notice to conduct or have conducted such test and obtain such report
at such Borrower's expense. Each Borrower hereby grants to the Agent a license
for such purpose, which shall be irrevocable until all of the Obligations have
been fully and finally paid and the Commitments have terminated.
7.8 Deposits to Accounts; Payments. (a) Until the Agent notifies the
Borrowers to the contrary: (i) all cash and other payments received by each
retail store operated by any of the Borrowers shall be received by such Borrower
as the Agent's trustee and shall be deposited in a Payment Account or other bank
deposit account reasonably acceptable to the Agent, and all amounts so deposited
shall be transferred daily to one or more Payment Accounts in the Agent's name
established at banks designated by the applicable Borrower and acceptable to the
Agent; and (ii) each Borrower shall instruct all Account Debtors, except as
otherwise agreed to in writing by the Agent, to make all payments of Accounts
directly to the address of a lock box maintained under service arrangements
acceptable to the Agent, or to another address acceptable to the Agent, and each
Borrower shall cause all collections received in such lock boxes or at such
addresses to be deposited to a Payment Account and transferred periodically to
Concentration Accounts in a manner acceptable to the Agent. Each agreement with
a bank which maintains any such lock box or any Payment Account shall provide
that the foregoing arrangements with respect to the transfer of funds cannot be
changed without the Agent's written consent. Until the Agent gives written
instructions to the contrary, funds on deposit in the Payment Accounts shall be
transferred on the Agent's standing order to one or more bank accounts of the
Borrowers at the Bank (the "Concentration Accounts"). If, notwithstanding the
foregoing arrangements with respect to the lock boxes, a Borrower receives
directly any Proceeds of Accounts, it shall receive such payments as the Agent's
trustee, and shall immediately deposit them into a Payment Account. All
collections of Accounts and other Proceeds received in any lock box or Payment
Account or directly by a Borrower, the Agent, or any Lender, and all funds in
any Payment Account or other account to which such collections or other Proceeds
are deposited, shall be the sole property of the Agent for the benefit of the
Agent and the Lenders and subject to the Agent's sole control in accordance with
the Loan Documents. Notwithstanding the foregoing, so long as no Event of
Default has occurred or is continuing or in the discretion of the Agent if an
Event of Default has occurred and is continuing (unless acceleration has
occurred under Section 9.2(a)(x) or action has been taken under Section
9.2(a)(y) (other than clause (i) thereof), the Agent shall permit the amounts
held in the Concentration Accounts or sub-accounts to fund the Borrowers' and
their Subsidiaries' operations by transferring funds from time to time to any
disbursement accounts maintained by the Borrowers and their Subsidiaries from
time to time. The
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Agent may, at any time after an Event of Default has occurred and so long as it
is continuing and after notice to the Borrowers, notify Account Debtors that the
Accounts of a Borrower have been assigned to the Agent and of the Security
Interest therein, and may collect them directly and charge the collection costs
and expenses to such Borrower's loan accounts. Each Borrower, at the Agent's
request, shall execute and deliver to the Agent such documents as the Agent
shall require to grant the Agent access to any post office box in which
collections of Accounts are received. At such time as this Agreement has been
terminated and all Obligations paid in full, the Agent will execute and deliver
such notices as the Borrowers reasonably request to discontinue the collection
arrangements required by this subsection.
(b) If, in addition to retail store sales, a Borrower sells
Inventory for cash or other form of immediate payment, such Borrower shall
promptly (but not later than the next Business Day) deposit the identical
checks, cash, or other forms of payment which such Borrower receives into a
Payment Account.
(c) Whenever the Agent terminates its standing order to transfer
funds from the Concentration Accounts to other accounts designated by the
Borrowers, and whenever an Event of Default has occurred and is continuing, the
Agent may apply all or any part of the funds on deposit in any Payment Account
or any Concentration Account to the Obligations. All payments received by the
Agent on account of Accounts or as Proceeds of other Collateral will be the
Agent's sole property and will be credited to such Borrower's loan accounts at
the time the funds from such payment become available to the Agent in accordance
with the Federal Reserve Bank of New York funds availability schedule.
7.9 End of Fiscal Years; Fiscal Quarters. Each Borrower will, for
financial reporting purposes, cause (i) each of its, and of each of its
Subsidiaries' fiscal years to end on the Saturday closest to the last day of
January 31 of each year, and (ii) each of its, and each of its Subsidiaries'
fiscal quarters to end on dates determined in the same manner as that employed
in Fiscal Year 2000.
7.10 Further Assurances. Each Borrower shall execute and deliver, or
cause to be executed and delivered, to the Agent such documents and agreements,
and shall take or cause to be taken such actions, as the Agent may, from time to
time, reasonably request to carry out the terms and conditions of this Agreement
and the other Loan Documents. In addition, the Borrowers agree to take the
actions set forth in Exhibit R, in the manner stated therein.
7.11 Subsidiary Guaranty; Subsidiary Pledge Agreement and Subsidiary
Security Agreement. Each Borrower shall with reasonable promptness, but only to
the extent not prohibited by applicable law (i) cause each of its Material
Subsidiaries and any Person (including a Subsidiary which was not a Material
Subsidiary) that becomes a Material Subsidiary after the Closing Date to execute
a Guaranty Agreement and the Security Agreement and (ii) pledge its right, title
and interest in the Capital Stock of such Material Subsidiary to the Agent as
provided in the Security Agreement.
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7.12 Plan of Reorganization. Without the prior written consent of
the Agent, the Borrowers will not (a) cause or permit the Plan of Reorganization
to be amended or modified or (b) waive any of the conditions contained therein.
7.13 Year 2000. Each Borrower will take, and will cause its
Subsidiaries to take, all actions necessary to assure that its computer based
systems and Equipment are able to effectively process data including dates on
and after January 1, 2000, unless the failure to take such actions would not
reasonably be expected to have a Material Adverse Effect.
ARTICLE 8. NEGATIVE COVENANTS
Each Borrower covenants and agrees that so long as this Agreement is
in effect and until the Commitments have terminated and all Obligations (other
than any indemnities which are not then due and payable) are discharged in full,
such Borrower shall not and shall not permit any of its Subsidiaries to,
directly or indirectly:
8.1 Mergers, Consolidations or Sales. Enter into any transaction of
merger, reorganization, or consolidation, or effect any Asset Transfer, or wind
up, liquidate or dissolve, or agree to do any of the foregoing, except: (a)
sales of Inventory in the ordinary course of its business; (b) a lease or
sublease, as lessor or sublessor, of a retail store (i) to a participant in the
Riverside Markets, Bi-Lo Markets or Big M franchise program or to a wholesale
customer of a Borrower; (ii) which has been replaced by another retail store
operated by a Borrower; or (iii) if in such Borrower's or Subsidiary's
reasonable business judgment such store is no longer necessary to its continued
business operations and such lease or sublease is in its best interests; (c) a
merger of any Subsidiary into a Borrower or any Subsidiary, or a merger of a
Borrower that is a Subsidiary of another Borrower into such other Borrower, or
the dissolution, windup or liquidation of any Restricted Subsidiary or Dairy
Dell, Inc.; (d) with the consent of the Required Lenders, which may be given or
withheld in their sole discretion, a merger of Penn Traffic into any Subsidiary,
or a consolidation of Penn Traffic with any Subsidiary where Penn Traffic is not
the surviving corporation, or a merger or consolidation of any Borrower other
than Penn Traffic into or with any Guarantor Subsidiary; (e) if no Event or
Event of Default shall have occurred and be continuing or would occur after
giving effect thereto, a Disposition of Property by a Borrower, other than a
Sale and Leaseback Transaction, provided that (i) the Property is sold or
Disposed of for consideration not less than the Fair Market Value thereof, (ii)
the Net Cash Proceeds are paid to the Agent to the extent required under Section
4.4(a)(i) and (iii) the Fair Market Value of all Property so sold or Disposed of
(x) from the Closing Date to the end of Fiscal Year 2000 does not exceed
$20,000,000 or (y) in any subsequent Fiscal Year does not exceed $25,000,000;
(f) (i) a sale as part of a Development Sale and Leaseback Transaction, provided
that the Net Cash Proceeds are paid to the Agent to the extent required under
Section 4.4(b), (ii) a sale as part of a Redevelopment Sale and Leaseback
Transaction, provided that the Net Cash Proceeds are paid to the Agent to the
extent of the Original Property Value, to be applied as provided in Section
4.4(a)(ii), and (iii) any Sale and Leaseback Transaction other than a
Development Sale and Leaseback Transaction or a Redevelopment Sale and Leaseback
Transaction, provided that the Net Cash Proceeds are paid to
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the Agent as provided in Section 4.4(a)(iii); (g) a sale or Disposition with or
without consideration, of Property determined to be obsolete or surplus in the
discretion of management exercised pursuant to normal commercial standards, so
long as the Fair Market Value of all such Property so disposed of in any Fiscal
Year with consideration does not exceed $250,000 in the aggregate or (h) other
Dispositions specifically permitted by any Loan Document other than this
Agreement.
8.2 Distributions. Directly or indirectly declare or make, or incur
any liability to make, any Distribution, other than (i) Distributions to Penn
Traffic, (ii) dividends payable solely in the form of additional shares of
Capital Stock (including splits and reclassifications) of Penn Traffic and (iii)
so long as no Event or Event of Default shall have occurred and be continuing,
repurchases by Penn Traffic of any of its Capital Stock issued under management
plans or board of directors options plans.
8.3 Guaranties. Make, issue, or become liable on any Guaranty,
except (a) endorsements of instruments for deposit; (b) Guaranties existing on
the Closing Date as set forth on Exhibit I; (c) Guaranties of the obligations of
franchisees of the Borrowers and of customers of the wholesale business of the
Borrowers, to the extent issued in the ordinary course of business consistent
with past practices and under which the maximum aggregate liability of the
Borrowers at any one time does not exceed $5,000,000 during any Fiscal Year; (d)
Guaranties by a Borrower of any Debt of any other Borrower permitted under
Section 8.4; and (e) Guaranties in the ordinary course of business, not to
exceed $5,000,000 in the aggregate outstanding at any time.
8.4 Debt. Incur or maintain any Debt, other than: (a) the
Obligations; (b) Debt (including Capital Leases) incurred to acquire or finance
the purchase price of Equipment (including any renewals or refinancings
thereof), provided the original Debt is incurred within 365 days after the
acquisition of such Equipment, or the completion of the project to which it
relates, so long as the cost thereof constitutes a Capital Expenditure permitted
by Section 8.13; (c) the Senior Notes; (d) the Additional Senior Notes; (e)
other Debt listed on Exhibit S hereto and any renewals, extensions or
refinancing thereof that do not increase the aggregate outstanding principal
amount thereof, plus accrued and unpaid interest on the Debt refinanced, and
costs; (f) the Guaranties permitted by Section 8.3; (g) Debt incurred to issuers
of standby letters of credit (including, without limitation, the Letters of
Credit) and performance bonds and performance guarantees issued in the ordinary
course of business of the Borrowers opened for the account of a Borrower, so
long as no such issuer (except the Lenders) has any Lien on any Property of any
Borrower, and excluding performance bonds and performance guarantees issued in
the ordinary course of business of the Borrowers not backed by a Letter of
Credit, which Debt in the aggregate shall not at any time exceed $70,000,000;
(h) Capital Leases existing on the Closing Date, including renewals, extensions
or refinancings thereof; (i) Debt (including Capital Leases) secured only by
Qualified Real Property, including renewals, extensions or refinancings thereof,
and Capital Leases for retail stores entered into in connection with the
renegotiation or extension after the date hereof of a lease existing on the date
hereof, including renewals, extensions or refinancings thereof; (j) Debt arising
in connection with a Sale and Leaseback Transaction permitted under this
Agreement, including renewals, extensions or refinancings thereof, provided that
the Borrowers are in compliance with Section 8.1(f) with
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respect thereto; (k) Debt the proceeds of which are used to refinance any other
Debt permitted hereby, other than under clause (a) hereof, so long as the new
Debt is in a principal amount not to exceed the principal amount of the Debt
being refinanced plus any premiums paid to refinance such Debt plus any accrued
interest thereon plus any related costs, has a maturity date no earlier than the
maturity of the Debt being refinanced, is not secured by any additional
Property, and the original Lien, if any, was permitted by Section 8.9, and, in
the event the refinanced Debt was subordinated to the Obligations, is
subordinated in writing to the Obligations on terms substantially the same as
the refinanced Debt; (l) any partial withdrawal liability described in Exhibit S
hereto; (m) Debt secured by a Lien on Equipment (other than as provided in
clause (b) above) or Real Estate Interests subject to the Security Interest
prior to the incurrence of such Debt, so long as the proceeds (without deduction
for any costs of such transaction) are paid to the Agent in compliance with
Section 4.4(a); (n) Debt incurred or assumed in connection with Permitted Asset
Acquisitions (including a transaction described in clause (j) of the definition
of Restricted Investment) so long as the aggregate principal amount so incurred
and assumed in any Fiscal Year does not exceed $10,000,000 plus an amount equal
to the amount of such Debt so permitted but not used in the Fiscal Year when
originally permitted or in any subsequent Fiscal Year prior to the then current
Fiscal Year (the "Carryover Amount"), provided, however, that in no event shall
the aggregate principal amount of such Debt incurred or assumed in any Fiscal
Year, including any Carryover Amount, exceed $15,000,000; (o) other Debt so long
as the aggregate outstanding principal amount thereof either (i) does not exceed
$20,000,000 at any time, or (ii) if it is to exceed such amount, as to which the
Agent shall have been given not less than fifteen (15) days prior written
notice, which shall be accompanied by the certification of an approved Officer
that on a pro forma basis after giving effect to the incurrence of all such Debt
and the application of the proceeds thereof, the Borrowers would have been in
compliance with the provisions of Sections 8.10, 8.15, 8.16 and 8.17 as of the
end of the Fiscal Quarter (or in the case of Section 8.17, the Fiscal Year last
tested under such section) immediately preceding the effective date of the
transaction causing such Debt to exceed $20,000,000; and (p) Hedge Obligations.
8.5 Prepayment. Voluntarily prepay any Debt, except (a) the DIP
Credit Obligations, (b) the Obligations in accordance with their terms; (c) Debt
refinanced with the proceeds of Debt permitted under Section 8.4(k); (d) a
purchase or redemption of Senior Notes, other than a refinancing under Section
8.4(k), if the following conditions are met: (i) no Event or Event of Default
exists at the time of such purchase or redemption or would exist after giving
effect thereto; (ii) all Senior Notes so purchased or redeemed are promptly
surrendered for cancellation; (iii) the Consolidated Funded Debt Ratio as of the
end of the Fiscal Quarter ended most recently prior to such purchase or
redemption is not greater than 3 to 1; and (iv) following such purchase or
redemption and the payment for the Senior Notes so purchased or redeemed,
Availability shall be at least $75,000,000; (e) a purchase or redemption of
Senior Notes up to the aggregate principal amount of all Additional Senior Notes
previously issued, subject to compliance with clauses (i) and (ii) of (d) above;
(f) the Debt listed on Exhibit S; (g) other Debt so long as the aggregate
cumulative principal amount prepaid after the date hereof in reliance on this
clause does not exceed $5,000,000 in any Fiscal year; and (h) Debt incurred in
accordance with clause (h), (m), (n) or (o) of Section 8.4.
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8.6 Terms of Senior Notes. Except in respect of a transaction
permitted by Section 8.5, modify or amend any terms of the Senior Note
Indenture, which has the effect of shortening the maturity of the Senior Notes.
8.7 Transactions with Affiliates. Except as set forth below or as
otherwise permitted hereunder, sell, transfer, distribute, or pay any money or
Property to any Affiliate (other than a Subsidiary), or lend or advance money or
Property to any Affiliate (other than a Subsidiary), or invest in (by capital
contribution or otherwise) or purchase or repurchase any stock or indebtedness,
or any Property, of any Affiliate (other than a Subsidiary), or become liable on
any Guaranty of the indebtedness, dividends, or other obligations of any
Affiliate (other than a Subsidiary). Notwithstanding the preceding sentence to
the contrary: (a) the Borrowers and their Subsidiaries may pay reasonable
compensation to employees or consultants who are Affiliates; (b) the Borrowers
and their Subsidiaries may make loans to and investments in Affiliates to the
extent not prohibited by Section 8.12; (c) (A) if no Event or Event of Default
has occurred and is continuing, the Borrowers and their Subsidiaries may
repurchase Capital Stock issued under management plans or directors option
plans, or (B) the Borrowers and their Subsidiaries may engage in transactions
with Affiliates in the normal course of business, in amounts and upon terms
fully disclosed to the Agent, and which are no less favorable to the Borrowers
and their Subsidiaries than would be obtainable in a comparable arm's length
transaction with a third party who is not an Affiliate; (d) Penn Traffic may pay
reasonable fees and grant stock options to members of the Board of Directors of
Penn Traffic; and (e) the Borrowers and Subsidiaries may pay management fees not
to exceed $1,500,000 per year in the aggregate (with yearly increases based on
the Consumer Price Index) (and provide customary benefits of the types normally
given to senior management) to entities affiliated with Gary Hirsch and/or
Martin Fox in respect of management services.
8.8 Business Conducted. Engage, directly or indirectly, in any line
of business other than the businesses in which they are engaged on the date
hereof, provided, however, that the introduction of additional products or
services within or related to any such line of business shall not be construed
to be a new line of business.
8.9 Liens. Create, incur, assume, or permit to exist any Lien on any
Property now owned or hereafter acquired by any of them, except Permitted Liens.
8.10 Financed Capital Expenditures. Make any Financed Capital
Expenditure if, as a result thereof, the aggregate amount of all Financed
Capital Expenditures consummated in the Fiscal Year ending January 2000 shall
exceed $15,000,000 and $20,000,000 in any Fiscal Year thereafter.
8.11 Subsidiaries. Without the prior written consent of the Required
Lenders, (i) to cause or permit any Restricted Subsidiary to acquire any
material Property or engage in any active business after the Closing Date, or
(ii) directly or indirectly, organize or acquire any Subsidiary after the
Closing Date, unless in each case (A) such Subsidiary executes and delivers to
the Agent a Guaranty Agreement and the Security Agreement, and (B) the Borrower
or Subsidiary causes the Capital Stock
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of such newly organized or acquired Subsidiary to be pledged to the Agent as
provided in the Security Agreement.
8.12 Restricted Investments. Make any Restricted Investment.
8.13 Cash Capital Expenditures. Make any Cash Capital Expenditure if
(i) an Event of Default has occurred and is continuing or (ii) an Event or Event
of Default would occur after giving effect to such Capital Expenditure or (iii)
if, as a result of such Cash Capital Expenditure, Cash Capital Expenditures by
the Borrowers and their consolidated Subsidiaries would exceed for each
specified Fiscal Year the amount determined by the applicable provisions of
clauses (a) through (e) below:
(a) The amounts set forth in the following table for the specified
Fiscal Years:
Fiscal Year Amounts
----------- -------
2000 $48,000,000
2001 $50,000,000
2002 $50,000,000
2003 $50,000,000
2004 $52,000,000
2005 $55,000,000
2006 $60,000,000
2007 $55,000,000
(b) In addition to the amounts set forth in the above schedule, in
any Fiscal Year after Fiscal Year 2000, the Borrowers and their Subsidiaries may
make Cash Capital Expenditures in an amount equal to the lesser of (i) 50% of
the excess, if any, of the Consolidated EDITDA for such Fiscal Year over the
minimum amount of Consolidated EDITDA required for such Fiscal Year pursuant to
Section 8.14, and (ii) $15,000,000
(c) In addition to the amounts permitted above, the Borrowers and
their Subsidiaries may make Cash Capital Expenditures of up to $10,000,000 (plus
the Net Cash Proceeds of any Casualty Event) with Net Cash Proceeds of an Asset
Transfer or a Casualty Event in any Fiscal Year identified in a Reinvestment
Notice as a Reinvestment Amount in accordance with Section 4.4(b).
(d) In addition to the amounts permitted above, the Borrowers and
their Subsidiaries may make Cash Capital Expenditures in any Fiscal Year in an
aggregate amount not
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to exceed the lesser of (i) the Financing Proceeds received by the Borrowers and
Subsidiaries during such Fiscal Year and (ii) $20,000,000.
(e) In addition to the amounts permitted above, in any Fiscal Year
after Fiscal Year 2000, an amount equal to the lesser of (i) the excess, if any,
in the prior Fiscal Year of the sum of the amounts set forth in clauses (a)
through (d) above, over the aggregate amount of all Cash Capital Expenditures
made by the Borrowers and their Subsidiaries on a consolidated basis for such
prior Fiscal Year, and (ii) $20,000,000.
8.14 Consolidated EBITDA. Permit Consolidated EBITDA (a) for the
third and fourth Fiscal Quarters of Fiscal Year 2000; to be less than
$40,000,000 (on a combined basis) or $60,000,000 (on a combined basis) for such
Fiscal Quarters and the first Fiscal Quarter of Fiscal Year 2001, or (b) for any
period of four consecutive Fiscal Quarters ending on the last day of the
relevant Fiscal Quarter set forth below to be less than the following amounts:
Fiscal Year Amounts
----------- -------
Fiscal Year 2001 Q2 $82,000,000
Fiscal Year 2001 Q3 $89,000,000
Fiscal Year 2001 Q4 $95,000,000
Fiscal Year 2002 Q1 $97,000,000
Fiscal Year 2002 Q2 $100,000,000
Fiscal Year 2002 Q3 $102,000,000
Fiscal Year 2002 Q4 $105,000,000
Fiscal Year 2003 Q1 $110,000,000
Fiscal Year 2003 Q2 $115,000,000
Fiscal Year 2003 Q3 $120,000,000
Fiscal Year 2003 Q4 $125,000,000
Fiscal Year 2004 Q1 $130,000,000
Fiscal Year 2004 Q2 $135,000,000
Fiscal Year 2004 Q3 $140,000,000
Fiscal Year 2004 Q4 $145,000,000
Fiscal Year 2005 Q1 $147,000,000
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Fiscal Quarter Amounts
-------------- -------
Fiscal Year 2005 Q2 $150,000,000
Fiscal Year 2005 Q3 $152,000,000
Fiscal Year 2005 Q4 $155,000,000
Fiscal Year 2006 Q1 $157,000,000
Fiscal Year 2006 Q2 $160,000,000
Fiscal Year 2006 Q3 $163,000,000
Fiscal Year 2006 Q4 $165,000,000
Fiscal Year 2007 Q1 $170,000,000
Fiscal Year 2007 Q2 $175,000,000
8.15 Consolidated Funded Debt Ratio. Permit the Consolidated Funded
Debt Ratio as at the end of any Fiscal Quarter set forth below to exceed the
ratio set forth below opposite such Fiscal Quarter:
Fiscal
Fiscal Year Quarter Requirement
----------- ------- -----------
2000 4 N/A
2001 1 N/A
2 4.8
3 4.7
4 4.5
2002 1 4.4
2 4.3
3 4.2
4 4.1
2003 1 4.1
2 4.0
3 3.8
4 3.7
2004 1 3.7
2 3.7
3 3.7
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Fiscal
Fiscal Year Quarter Requirement
----------- ------- -----------
4 3.7
2005 1 3.7
2 3.7
3 3.7
4 3.7
2006 1 3.7
2 3.7
3 3.7
4 3.7
8.16 Consolidated Interest Coverage Ratio. Permit the Consolidated
Interest Coverage Ratio for any period of four consecutive Fiscal Quarters of
the Borrowers and their Subsidiaries (or, if less, the number of full fiscal
quarters subsequent to the Closing Date) ending with any fiscal quarter set
forth below to be less than the ratio set forth below opposite such fiscal
quarter:
Fiscal Year Quarter Requirement
----------- ------- -----------
2000 4 1.80 (two quarters)
2001 1 1.80 (three quarters)
2 1.80
3 1.90
4 2.00
2002 1 2.05
2 2.05
3 2.10
4 2.10
2003 1 2.15
2 2.20
3 2.25
4 2.30
2004 1 2.35
2 2.40
3 2.45
4 2.50
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Fiscal Year Quarter Requirement
----------- ------- -----------
2005 1 2.55
2 2.60
3 2.65
4 2.70
2006 1 2.75
2 2.80
3 2.85
4 2.90
2007 1 2.95
2 3.00
8.17 Consolidated Fixed Charge Coverage Ratio. Permit the
Consolidated Fixed Charge Coverage Ratio as of the end of the Fiscal Years of
the Borrowers specified below to be less than the ratio set forth below opposite
such Fiscal Year:
Fiscal Year Requirement
----------- -----------
2001 .85
2002 1.00
2003 1.00
2004 1.00
2005 1.10
2006 1.10
8.18 Negative Pledge Clauses. Enter into or suffer to exist or
become effective any agreement which prohibits or limits the ability of any
Borrower or any of its Subsidiaries to create, incur, assume or suffer to exist
the Liens upon the Collateral contemplated by the Loan Documents, to secure the
Obligations or, in the case of any Guarantor, its obligations under the Guaranty
Agreement and Security Agreement, other than (a) this Agreement and the other
Loan Documents, (b) any agreements governing Permitted Liens, but only to the
extent of the Property subject to such Permitted Liens and (c) any restrictions
contained in leases and subleases of real property, licensing agreements and
franchise agreements.
8.19 Restrictions on Subsidiary Distributions. Enter into or suffer
to exist or become effective any consensual encumbrance or restriction on the
ability of any Subsidiary to (a) make Distributions in respect of any Capital
Stock of such Subsidiary held by, or pay any Debt owed to, the Borrower or any
other Subsidiary, or (b) make investments in the Borrower or any other
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Subsidiary, except for such encumbrances or restrictions existing under or by
reason of (i) any restrictions existing under the Loan Documents and (ii) any
restrictions with respect to a Subsidiary imposed pursuant to an agreement which
has been entered into on or before the Closing Date or in connection with the
Disposition of all or substantially all of the Capital Stock or assets of such
Subsidiary.
8.20 Confirmation Order. At any time seek, consent to or suffer to
exist any modification, stay, vacation or amendment of the Confirmation Order,
except for technical modifications and amendments or those mutually agreed to by
the Borrowers and the Agent.
ARTICLE 9. DEFAULT; REMEDIES
9.1 Events of Default. It shall constitute an event of default
("Event of Default") if any one or more of the following shall occur for any
reason:
(a) any failure to make any payment of principal, interest, fees or
premium on any of the Loans or any other Obligations when due;
(b) any material representation or warranty made by a Borrower or
other Loan Party in this Agreement, any of the other Loan Documents, any
Financial Statement, or any certificate furnished by or on behalf of such
Borrower or other Loan Party at any time to the Agent, the Issuing Bank, or any
Lender shall prove to be untrue in any material respect as of the date when made
or furnished or deemed to have been made or furnished;
(c) (i) default shall occur in the observance or performance of any
of the covenants and agreements contained in this Agreement (other than those
which are the subject of clauses (a) and (b) above, or are specified in
subsection (ii) and (iii) of this clause (c)), or in any of the Notes or the
other Loan Documents and the Borrowers shall fail to remedy such default within
a period of thirty (30) days after it occurs, or if any such agreement or
document shall terminate (other than in accordance with its terms or the terms
hereof or with the written consent of the Agent) or become void or unenforceable
without the written consent of the Agent, or (ii) default shall occur in the
observance or performance of any of the covenants and agreements contained in
any of Section 7.1, 7.3, 7.4, 7.5, 7.6, 7.7, 7.11 or 8.11, and the Borrowers
shall fail to remedy such default within a period of thirty (30) days after it
occurs or if such default cannot be remedied within such 30-day period and in
the Agent's judgment its continuation thereafter will not then or thereafter
have a Material Adverse Effect, the Borrowers shall fail to commence to remedy
such default during such 30-day period and to pursue the completion thereof as
expeditiously as possible thereafter or (iii) any default shall occur in the
observance of any covenant in Article 8 other than Section 8.11;
(d) any default by a Borrower or any Subsidiary in any payment of
principal of or interest on any Debt for borrowed money in an aggregate amount
in excess of $5,000,000 (other than the Obligations) beyond any period of grace
provided with respect thereto, or (unless the subject of a good faith dispute)
in the performance of any other agreement, term or condition contained in
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any agreement under which any such Debt is created, if the effect of such
default is to cause, or permit the holder or holders of such obligation to
declare, such Debt to become due prior to its stated maturity, unless such
default has been waived by the holder or the holders of such Debt or cured prior
to acceleration under Section 9.2;
(e) (i) a Borrower or any Material Subsidiary shall (x) be unable to
pay its debts generally as they become due, (y) make an assignment for the
benefit of its creditors or, (z) file a petition or application, or an answer,
or otherwise commence a proceeding, under any applicable law or statute of the
United States of America, any state thereof or any foreign country (other than
under the Bankruptcy Code), seeking reorganization or arrangement or similar
relief or otherwise to take advantage of any insolvency act, or for the
appointment of a receiver, trustee, liquidator or conservator of itself or of
the whole or any substantial part of its Property; (ii) there is commenced
against a Borrower or any Material Subsidiary any proceeding for any of the
relief described in clause (i)(z) above and such proceeding shall remain
undismissed and unstayed for a 60 day period; (iii) a Borrower or any Material
Subsidiary by any act in any such proceeding indicates its consent to or
approval of or acquiescence in such relief; or (iv) a Borrower or any Material
Subsidiary takes any action for the purpose of effecting any of the foregoing;
(f) (i) a Borrower or any Material Subsidiary shall commence a
voluntary case concerning itself under the Bankruptcy Code; (ii) there is
commenced against a Borrower or any Material Subsidiary an involuntary case
under the Bankruptcy Code and such proceeding shall remain undismissed and
unstayed for a 60 day period; or (iii) a Borrower or any Material Subsidiary by
any act in any such proceeding indicates its consent to, approval of or
acquiescence in such relief;
(g) (i) a court of competent jurisdiction shall enter (other than
under the Bankruptcy Code) an order, judgment or decree appointing a custodian,
receiver, trustee, liquidator or conservator of a Borrower or any Material
Subsidiary or of the whole or any substantial part of its Property, or (ii)
under the provisions of any law for the relief or aid of debtors other than the
Bankruptcy Code, a court of competent jurisdiction shall assume custody or
control of a Borrower or any Material Subsidiary or of the whole or any
substantial part of its Properties;
(h) a Borrower or any Material Subsidiary shall file a certificate
of dissolution under applicable state law or shall be liquidated, dissolved or
wound-up or shall commence any action or proceeding for dissolution, winding-up
or liquidation, or shall take any corporate action in furtherance thereof, in
each case, except as permitted by Section 8.1; or a Borrower or any Material
Subsidiary shall have commenced against it any action or proceeding for
dissolution, winding-up or liquidation, not otherwise permitted hereunder;
(i) all or any substantial part of the Property of a Borrower or any
Material Subsidiary shall be nationalized, expropriated or condemned, seized or
otherwise appropriated, or custody or control of such Property or of such
Borrower or such Material Subsidiary shall be assumed by any Public Authority or
any court of competent jurisdiction at the instance of any Public
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Authority, except where contested in good faith by proper proceedings diligently
pursued and where a stay of enforcement is in effect;
(j) any judgment in excess of $5,000,000 (in excess of insurance
coverage) is rendered against any Borrower or any Material Subsidiary, or there
is any attachment, injunction or execution against any Property of Penn Traffic
for an amount in excess of $5,000,000, and such judgment, attachment, injunction
or execution remains unpaid, unstayed or undismissed for a period of thirty (30)
days after the first date on which the judgment creditor is entitled to exercise
its rights and remedies with respect to such judgment, attachment, injunction or
execution;
(k) any loss, theft, damage or destruction of any item or items of
Collateral occurs which: (i) causes a Material Adverse Effect; or (ii) is in
excess of $5,000,000 and is not adequately covered by insurance;
(l) a Change in Control occurs with respect to Penn Traffic;
(m) an Environmental Claim shall have been asserted against either
Borrower or one of its Subsidiaries, or any event shall occur that could
reasonably be expected to form the basis for such an Environmental Claim; or a
Borrower or one of its Subsidiaries shall have failed to obtain any license,
permit, or approval required for its business under Environmental Laws, or any
such license, permit, or approval shall be revoked, terminated, or cease to be
in full force and effect; or a Borrower defaults in the performance of its
covenants contained in Section 7.7; provided, however, that the foregoing shall
not constitute an Event of Default if the Borrowers can establish to the Agent's
reasonable satisfaction that such event is not reasonably likely to have a
Material Adverse Effect or that the applicable Borrower or Subsidiary has
commenced and is diligently pursuing either: (i) a cure or correction of the
condition or other default described above, which it continues diligently to
pursue to completion, but only so long as there will be no Material Adverse
Effect while such cure or correction continues or after it is completed or as a
result of the cost to such Borrower or its Subsidiary of such cure or
correction; or (ii) proceedings for appropriate relief to prevent the Public
Authority or other Person from asserting the Environmental Claim, or enforcing
any remedy with respect thereto, so long as the Public Authority or other Person
is stayed from any such enforcement while such proceedings are pending;
(n) any event or condition shall occur or exist with respect to a
Plan that, in the Agent's good faith judgment, is reasonably likely to subject a
Borrower or any Subsidiary to any tax, penalty or other liabilities under ERISA
or the Code, causing a Material Adverse Effect; or
(o) The Confirmation Order shall have been modified in any material
respect without the prior written consent of the Agent or a determination shall
have been made regarding the Confirmation Order that is adverse in any material
respect to the Agent and the Lenders.
9.2 Remedies. (a) (x) If an Event of Default shall occur under
Section 9.1(f), all Revolving Credit Commitments shall terminate and all
Obligations shall become immediately due
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and payable without any action by the Agent, and (y) if any other Event of
Default shall have occurred and be continuing, the Agent may, and it shall, at
the request of the Required Lenders, without notice to or demand on the
Borrowers, do one or more of the following at any time or times thereafter and
in any order: (i) decrease one or more of the amounts or percentages used to
determine Revolving Borrowing Capacity; (ii) terminate this Agreement in
accordance with Article 10; (iii) terminate the Revolving Credit Commitments,
and all obligations of the Issuing Bank to issue Letters of Credit; (iv) declare
any or all Obligations to be immediately due and payable; and (v) pursue its
other rights and remedies under the Loan Documents and applicable law.
(b) If an Event of Default shall have occurred and be continuing,
each Borrower hereby waives (to the extent permitted under applicable law) all
rights to notice and hearing prior to the exercise by the Agent of the Agent's
rights to repossess the Collateral without judicial process or to replevy,
attach or levy upon the Collateral without notice or hearing (to the extent
permitted under applicable law).
9.3 Application of Proceeds of Collateral and Guarantee Agreements.
After the occur rence of an Event of Default and acceleration of the Obligations
as provided in this Article 9, the proceeds of the Collateral and collections
from each Guaranty Agreement shall be applied by the Agent to payment of the
Obligations in the following order, unless a court of competent jurisdiction
shall otherwise direct:
first, to payment of all costs and expenses of the Agent incurred in
connection with the preservation, collection and enforcement of the Obligations,
the Loan Documents, the Collateral or any Guaranty Agreements, or otherwise,
including, without limitation, any amounts advanced by the Agent to protect or
preserve the Collateral;
second, to payment of all costs and expenses of the Lenders,
including as a party to any Hedging Agreements (in such capacity, "Interest Rate
Parties"), incurred in connection with the preservation, collection and
enforcement of the Obligations, the Loan Documents, the Collateral, any Guaranty
Agreement or any Hedging Agreements;
third, to payment of that portion of the Obligations constituting
accrued and unpaid interest and fees payable under the Loan Documents ratably
amongst the Agent and the Lenders in accordance with the proportion which the
accrued interest and fees payable under the Loan Documents constituting the
Obligations owing to the Agent and each such Lender at such time bears to the
aggregate amount of accrued interest and fees payable under the Loan Documents
constituting the Obligations owing to the Agent and all of the Lenders at such
time until such interest and fees shall be paid in full;
fourth, to the Agent in an amount equal to the then aggregate
outstanding Letter of Credit Obligations consisting of Undrawn Amounts ("Undrawn
L/C Obligations") (to the extent that such Obligations exceed any other cash
collateral held by the Agent securing the payment of same) to be held by the
Agent for the payment of Undrawn L/C Obligations when and if due and payable;
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fifth, to payment of the principal of the Obligations (which shall
exclude all Undrawn L/C Obligations and include all the other unpaid Letter of
Credit Obligations), and all then due and payable Obligations under the Hedging
Agreements, ratably amongst the Lenders and Interest Rate Parties in accordance
with the proportion which the principal amount of the Obligations (which shall
exclude all Undrawn L/C Obligations and include all the other unpaid Letter of
Credit Obligations) and then due and payable Obligations under the Hedging
Agreements owing respectively to each such Lender and each such Interest Rate
Party bears to the aggregate principal amount of the Obligations as aforesaid
owing to all of the Lenders and then due and payable Obligations under the
Hedging Agreements owing to the Hedging Parties until such principal of the
Obligations and such then due and payable Obligations under the Hedging
Agreements shall be paid in full;
sixth, to payment of all then due and payable Obligations under the
Hedging Agreements, ratably amongst the Interest Rate Parties in accordance with
the proportion which the amount of the then due and payable Obligations under
the Hedging Agreements owing to each Interest Rate Party bears to the aggregate
amount of the then due and payable Obligations under the Hedging Agreements,
until such then due and payable Obligations under the Hedging Agreements shall
be paid in full;
seventh, to the payment of all other Obligations, ratably amongst
the Lenders and Interest Rate Parties in accordance with the proportion which
the amount of such other Obligations owing to each such Lender and Interest Rate
Party bears to the aggregate amount of such other Obligations owing to all of
the Lenders and Interest Rate Parties until such other Obligations shall be paid
in full; and
eighth, the balance, if any, after all of the Obligations has been
satisfied, shall be paid by the Agent to the Borrowers or paid over to such
other Person or Persons as may be required by law.
In the event that the amount of monies received by the Agent under
clause fourth above with respect to Undrawn L/C Obligations at the time of the
Agent's receipt of such monies shall, together with any other cash collateral
securing Undrawn L/C Obligations which is not securing other Obligations,
exceeds the amount of actual payments the Letter of Credit Issuer shall have
made with respect to such previously Undrawn L/C Obligations after the Agent's
receipt of such monies, which determination shall be made after all such Letters
of Credit have been terminated or have expired, then the Agent shall apply such
excess monies and cash collateral in accordance with this Section 9.3.
ARTICLE 10. TERMINATION OF AGREEMENT
10.1 Unless sooner terminated as provided in Section 9.2 or 10.2
hereof, the Commitments shall expire on the Revolving Commitment Expiration Date
and this Agreement shall terminate (subject to Section 10.4) on the Termination
Date.
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10.2 At any time, the Borrowers may terminate this Agreement upon
(i) the delivery to the Agent of an irrevocable notice of their intention to
terminate this Agreement and (ii) payment in full of all the Obligations (or in
the case of Letter of Credit Obligations, terminate any outstanding Letters of
Credit or cash collateralize the same in a manner reasonably acceptable to the
Agent.
10.3 The Agent may, and it shall at the request of the Required
Lenders, terminate this Agreement immediately at any time during the continuance
of an Event of Default under Section 9.1.
10.4 The termination of this Agreement shall not affect any rights
of the Borrowers, the Agent, the Issuing Bank, or any Lender arising prior to
the effective date of such termination, and the provisions hereof shall continue
to be fully operative until all transactions entered into, rights created or
Obligations incurred prior to and after such termination have been fully
disposed of, concluded or liquidated. At the termination of this Agreement, all
Obligations shall be due and payable without notice or demand. The Security
Interest granted to the Agent under the Security Agreement and under the other
Loan Documents shall continue in full force and effect, notwithstanding the
termination of this Agreement or the fact that the Borrowers' loan accounts may
from time to time be temporarily in a credit position, until all of the
Obligations have been paid in full after the termination hereof. All
representations, warranties, covenants, waivers and agreements contained herein
shall survive the termination hereof until all its Obligations have been paid in
full and the Letters of Credit have been either returned or fully
cash-collateralized.
ARTICLE 11. MISCELLANEOUS
11.1 Cumulative Remedies; No Prior Recourse to Collateral. The
enumeration herein of the Agent's, the Issuing Bank's, and the Lenders' rights
and remedies is not intended to be exclusive, and such rights and remedies are
in addition to and not by way of limitation of any other rights or remedies that
the Agent, the Issuing Bank, or any of the Lenders may have under the UCC or
other applicable law. The Agent and the Lenders shall have the right, in their
sole discretion, and in the manner set forth in this Agreement, to determine
which rights and remedies are to be exercised and in which order. The exercise
of one right or remedy shall not preclude the exercise of any others, all of
which shall be cumulative. The Agent, the Issuing Bank, and the Lenders may,
without limitation, proceed directly against the Borrowers to collect the
Obligations without any prior recourse to the Collateral.
11.2 No Implied Waivers. No act, failure or delay by the Agent, the
Issuing Bank or any Lender, or any course of dealing, shall constitute a waiver
of any of its rights and remedies. No single or partial waiver by the Agent, the
Issuing Bank, or any Lender of any provision of this Agreement or any other Loan
Document, or a breach or default hereunder or thereunder, or of any right or
remedy which the Agent, the Issuing Bank, or any Lender may have, shall operate
as a waiver of any other provision, breach, default, right or remedy or of the
same provision, breach, default, right or remedy on a future occasion. No waiver
by the Agent, the Issuing Bank or the Lenders shall affect their rights to
require strict performance of this Agreement or any other Loan Document.
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11.3 Severability. If any provision of this Agreement shall be
prohibited or invalid, under applicable law, it shall be ineffective only to
such extent, without invalidating the remainder of this Agreement.
11.4 Governing Law. THIS AGREEMENT HAS BEEN MADE IN THE STATE OF NEW
YORK AND SHALL BE GOVERNED BY AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF
SUCH STATE, PROVIDED THAT NO DOCTRINE OF CHOICE OF LAW SHALL BE USED TO APPLY
THE LAWS OF ANY OTHER STATE OR JURISDICTION.
11.5 Consent to Jurisdiction and Venue; Service of Process. Each
Borrower agrees that, in addition to any other courts that may have jurisdiction
under applicable laws, any action or proceeding to enforce or arising out of
this Agreement or any of the other Loan Documents may be commenced in the
Supreme Court of the State of New York for New York County, or in the United
States District Court for the Southern District of New York, and each Borrower
consents and submits in advance to such jurisdiction and agrees that venue will
be proper in such courts on any such matter. Each Borrower hereby waives
personal service of process and agrees that a summons and complaint commencing
an action or proceeding in any such court shall be properly served and shall
confer personal jurisdiction if served by registered or certified mail to such
Borrower. The consent to forum set forth in this Section shall not be deemed to
preclude the enforcement of any judgment obtained in such forum, or the taking
of any action under this Agreement to enforce the same, in any appropriate
jurisdiction. Each Borrower waives any objection it may now or hereafter have to
the laying of venue in the foregoing courts or that any such action has been
brought in an inconvenient forum.
11.6 Waiver of Jury Trial. TO THE EXTENT PERMITTED BY APPLICABLE
LAW, EACH BORROWER HEREBY WAIVES TRIAL BY JURY, RIGHTS OF SETOFF, AND THE RIGHT
TO IMPOSE COUNTERCLAIMS (OTHER THAN COMPULSORY COUNTERCLAIMS) IN ANY LITIGATION
IN ANY COURT WITH RESPECT TO, IN CONNECTION WITH, OR ARISING OUT OF THIS
AGREEMENT, THE OTHER LOAN DOCUMENTS, THE OBLIGATIONS OR THE COLLATERAL, OR ANY
INSTRUMENT OR DOCUMENT DELIVERED PURSUANT HERETO OR THERETO, OR ANY OTHER CLAIM
OR DISPUTE HOWSOEVER ARISING, BETWEEN THE BORROWERS AND THE AGENT OR ANY LENDER.
EACH BORROWER CONFIRMS THAT THE FOREGOING WAIVERS ARE INFORMED AND FREELY MADE.
11.7 Survival of Representations and Warranties and Indemnification.
All of the Borrowers' representations and warranties and indemnifications
contained in this Agreement shall survive the execution, delivery and acceptance
thereof by the parties, notwithstanding any investigation by the Agent, the
Issuing Bank, or any Lender or their respective agents.
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11.8 Indemnification. The Borrowers shall be jointly and severally
liable for, and each hereby indemnifies, defends and holds the Agent, the
Issuing Bank, the Bank, each Lender, and their respective directors, officers,
agents, employees and counsel (each an "Indemnitee" and collectively, the
"Indemnities"), harmless from and against any and all losses, claims, damages,
liabilities, deficiencies, judgments, penalties or expenses imposed on, incurred
by or asserted against any of them (except as a result of their bad faith, gross
negligence or wilful misconduct or material breach of a material provision of
this Agreement), whether direct, indirect or consequential, arising out of or by
reason of any litigation, investigation, claim, or proceeding (whether based on
any federal, state or local laws or other statutes or regulations, including,
without limitation, securities or commercial laws and regulations, Environmental
Laws, under common law or at equity, or on contract or otherwise) commenced or
threatened, which arise out of or are in any way related to or based upon the
negotiation, preparation, execution, delivery, enforcement, performance or
administration of this Agreement, any other Loan Document, or any undertaking or
proceeding related to any of the transactions contemplated hereby or any act,
omission to act, event or transaction related or attendant thereto or any use by
any Borrower of the proceeds of any Revolving Loan (except for losses arising on
account of the indemnitee's bad faith, gross negligence, wilful misconduct or
material breach) (collectively, "Indemnified Loss"). Indemnified Loss includes,
without limitation, amounts paid in settlement, court costs, and the reasonable
fees and expenses of counsel (based on such counsel's hours expended at such
counsel's standard hourly billing rates) reasonably incurred in connection with
any such litigation, investigation, claim or proceeding. Without limiting the
foregoing, if, by reason of any suit or proceeding of any kind, nature, or
description against any Borrower or any Subsidiary, or by any Borrower or any
Subsidiary or any other party against any Indemnitee, which in the sole
discretion of such Person makes it advisable for such Person to seek counsel for
protection and preservation of its Security Interest, or to defend its own
interest, such expenses and reasonable counsel fees (based on such counsel's
hours expended at such counsel's standard hourly billing rates) shall be allowed
to such Person. To the extent that the undertaking to indemnify, pay and hold
harmless set forth in this Section may be unenforceable, each Borrower shall
contribute the maximum portion which it is permitted to pay and satisfy under
applicable law to the payment and satisfaction of the Indemnified Loss. The
foregoing indemnity shall survive the payment of the Obligations and the
termination of this Agreement. Each Borrower's obligations under this Section
shall be part of the Obligations and shall be secured by the Collateral. The
Borrowers shall have the right to defend, with counsel reasonably acceptable to
the applicable Indemnitee, against any litigation, investigation, claim or
proceeding which could give rise to an Indemnified Loss, unless such litigation,
investigation, claim or proceeding shall have been commenced by or on behalf of
any of the Borrowers. The Agent and each Lender agrees to give the Borrowers
written notice of any such litigation, investigation, claim, or proceeding
promptly after the Agent or such Lender becomes aware thereof, but the Agent's
or such Lender's failure to give such notice shall not relieve the Borrowers of
their obligations under this Section unless it can be proved that they were
actually prejudiced by such failure. The Borrowers, if they exercise such right,
shall diligently pursue such defense and shall give the applicable Indemnitee
notice of the status of such defense and any material developments. The
Borrowers will not enter into any settlement of any litigation, investigation,
claim or proceeding in which they are conducting the
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defense without the prior written consent of the applicable Indemnitee, which
consent shall not be unreasonably withheld.
11.9 Other Security and Guaranties. The Agent may, on behalf of the
Lenders, without notice or demand and without affecting the Borrowers'
obligations hereunder, from time to time: (a) take from any Person other than
the Borrowers and/or Subsidiary Guarantor and hold collateral for the payment of
all or any part of the Obligations and exchange, enforce or release such
collateral or any part thereof; and (b) accept and hold any endorsement or
guaranty of payment of all or any part of the Obligations and release any such
endorser or Subsidiary Guarantor, or any Person who has given any Lien in any
other collateral as security for the payment of all or any part of the
Obligations, or any other Person in any way obligated to pay all or any part of
the Obligations.
11.10 Fees and Expenses. Whether or not the transactions
contemplated hereby are consummated, each Borrower shall pay to the Agent or the
Issuing Bank, as the case may be, on demand all out-of-pocket costs and expenses
that the Agent or the Issuing Bank pays or incurs in connection with the
negotiation, preparation, consummation, and administration of this Agreement and
the other Loan Documents, or that the Agent, the Issuing Bank, or any Lender
incurs in connection with enforcement hereof and thereof or the collection of
the Obligations, including, without limitation: (a) reasonable attorneys' and
paralegals' fees and disbursements of counsel to the Agent, the Issuing Bank, or
a Lender based on hours expended at such persons' standard hourly billing rates;
(b) costs and expenses (including reasonable attorneys' and paralegals' fees,
based on hours expended at such persons' standard hourly billing rates, and
disbursements) for any amendment, supplement, waiver, consent, or subsequent
closing in connection with the Loan Documents and the transactions contemplated
thereby; (c) costs and expenses of lien searches, surveys, and municipal and
departmental searches; (d) taxes, fees and other charges for filing financing
statements and continuation statements, and other actions to perfect, protect,
and continue the Security Interest; (e) sums paid or incurred to pay any amount
or take any action required of a Borrower under the Loan Documents that such
Borrower fails to pay or take; (f) costs of appraisals to the extent provided in
Section 2.7 of the Security Agreement, (g) costs of inspections, and
verifications of the Collateral, including, without limitation, travel, lodging,
and meals for inspections of the Collateral and the Borrowers' operations by the
Agent's employees or representatives up to four times per year and whenever an
Event of Default has occurred and is continuing; (h) costs and expenses of
forwarding loan proceeds, collecting checks and other items of payment, and
establishing and maintaining Payment Accounts and lock boxes; (i) costs and
expenses of preserving and protecting the Collateral; (j) costs and expenses
payable by or chargeable to a Borrower under any Loan Document; and (k) costs
and expenses (including reasonable attorneys' and paralegals' fees), based on
hours expended at such persons' standard hourly billing rates, and
disbursements) paid or incurred to obtain payment of the Obligations, enforce
the Security Interest, sell or otherwise realize upon the Collateral, and
otherwise enforce the provisions of the Loan Documents, or to defend any claims
made or threatened against the Agent, the Issuing Bank, the Bank, or any Lender
arising out of the transactions contemplated hereby (including, without
limitation, preparations for and consultations concerning any such matters). Any
of the foregoing costs and expenses shall be charged to the appropriate
Borrower's loan account pursuant to
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Section 2.14 or 2.15, as appropriate, either: when paid or incurred, if any
Event of Default has occurred and is continuing; or, otherwise, thirty (30) days
after the Agent's demand on the applicable Borrower for payment thereof, to the
extent not paid by such Borrower within such 30-day period.
11.11 Notices. All notices, demands, requests and other
communication that a party is required or elects to give to any other party
shall be in writing, shall be delivered (a) personally against receipt, or sent
by recognized overnight courier service, or mailed by registered or certified
mail, return receipt requested, postage prepaid, or (b) by facsimile, telecopier
or other telecommunications method, in each case with receipt confirmed and with
a copy delivered also under (a) above, and shall be addressed to the party to be
notified as follows:
If to the Agent: Fleet Capital Corporation
200 Glastonbury Boulevard
Glastonbury, CT 06033
Attention: Mr. Thomas Joyce
Fax No.: (860) 657-7759
If to any Borrower: c/o The Penn Traffic Company
411 Theodore Fremd Avenue
Rye, New York 10580
Attention: Martin A. Fox
Fax No.: (914) 921-3031
and
c/o The Penn Traffic Company
1200 State Fair Boulevard
Syracuse, New York 13221-4737
Attention: Francis O. Price, Jr.
Fax No.: 315-461-2532
If to a Lender: to its Lending Office
or to such other address as each party may designate for itself by like notice.
Any such notice, demand, request or other communication shall be deemed given
(i) when received, if personally delivered or sent by overnight courier, (ii)
four days after being sent when deposited in the United States mails, postage
paid, if sent by registered or certified mail, or (iii) when receipt is
acknowledged or is confirmed when delivered by facsimile, telecopier or other
communications method.
11.12 Waiver of Notices. Unless otherwise expressly provided herein,
each Borrower waives presentment, protest and notice of demand or dishonor and
protest as to any instrument, as well as any and all other notices to which it
might otherwise be entitled. No notice to or demand on
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any Borrower which the Agent, the Issuing Bank, or any Lender may elect to give
shall entitle any Borrower to any or further notice or demand in the same,
similar or other circumstances.
11.13 Binding Effect; Assignment; Confidentiality. (a) The
provisions of this Agreement shall be binding upon and inure to the benefit of
the parties hereto and their respective successors and assigns; provided,
however, that no right or obligation of any Borrower may be assigned or
otherwise transferred without the prior written consent of the Required Lenders,
and any purported assignment or transfer without such consent shall be void.
(b) A Lender may not assign any of its rights or obligations under
the Loan Documents without the Agent's and the Borrowers' prior written consent,
provided, that (i) any Lender may assign all or a portion of its outstanding
Term Loans A and/or Term Loans B and/or Revolving Loans and Revolving Credit
Commitment and its rights and obligations under the Loan Documents to another
Lender, (ii) with the consent of the Agent and the Borrowers (which consent by
the Agent and the Borrowers shall not be unreasonably withheld or delayed and
which consent by the Borrowers shall not be required if there is continuing an
Event or Event of Default), any Lender may assign all or a portion of its
outstanding Term Loans A and/or Term Loans B and/or Revolving Loans and
Revolving Credit Commitment and its rights and obligations under the Loan
Documents to one or more commercial banks, finance companies, insurance
companies, funds or other financial institutions (including one or more
Lenders); provided further, that no consent of the Agent or the Borrowers shall
be required with respect to the assignment by a Lender to one of its Affiliates
of all or a portion of such Lender's Term Loans A and/or Term Loans B only and
(iii) Fleet Capital may not assign any portion of its rights and obligations if,
as a result, its Revolving Credit Percentage with respect to the Revolving Loans
and the Revolving Credit Commitment that it has maintained for its own account
would be less than fourteen percent (14%). No assignment pursuant to the
immediately preceding sentence shall to the extent such assignment represents an
assignment to an institution other than one or more Lenders hereunder, be in an
aggregate amount less than $5,000,000 unless the entire Revolving Loans and
Revolving Credit Commitment and Term Loans of the assigning Lender is so
assigned. If any Lender so sells or assigns all or a part of its rights
hereunder or under the Notes, any reference in this Agreement, the Notes or the
other Loan Documents to such assigning Lender shall thereafter refer to such
Lender and to the respective assignee to the extent of their respective
interests, and the respective assignee shall have, to the extent of such
assignment (unless otherwise provided therein), the same rights and benefits as
it would if it were such assigning Lender. Each assignment pursuant to this
Section 11.13 shall be effected by the execution and delivery of an assignment
agreement substantially in the form of Exhibit X hereto (an "Assignment
Agreement"). In the event of any such assignment (A) to a commercial bank,
finance company, insurance company, fund or other financial institution not
previously a Lender hereunder, either the assigning or the assignee Lender shall
pay to the Agent a nonrefundable assignment fee of $3,000 and (B) to a Lender,
either the assigning or assignee Lender shall pay to Agent a nonrefundable
assignment fee of $2,000, and at the time of any assignment pursuant to this
Section 11.13, (1) the signature pages hereof shall be deemed to be amended to
reflect the Commitment or Commitments of the respective assignee (which shall
result in a direct reduction to the respective Commitment or Commitments of the
assigning Lender) and of the other
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Lenders, and (2) such assignee shall become a party to the Loan Documents as a
Lender and such assignee shall have, to the extent of such assignment, the
rights, benefits and obligations of a Lender under the Loan Documents. Each
Lender and the Borrowers agree to execute such documents (including without
limitation amendments to this Agreement and the other Loan Documents) as shall
be necessary to effect the foregoing. Nothing in this Section 11.13(b) shall
prevent or prohibit any Lender from pledging its Notes or Loans to a Federal
Reserve Bank in support of borrowings made by such Lender from such Federal
Reserve Bank. Each Lender initially party to this Agreement hereby represents,
and each Person that becomes a Lender pursuant to an assignment permitted by
this Section 11.13 will, upon its becoming party to this Agreement, represent
(a) that it is a commercial lender, other financial institution or other
"accredited" investor (as defined in SEC Regulation D) which makes loans in the
ordinary course of its business and (b) that it will make or acquire Loans for
its own account in the ordinary course of such business, provided that subject
to the preceding clauses (a) and (b), the disposition of any promissory notes or
other evidences of or interests in any Loans held by such Lender shall at all
times be within its exclusive control.
(c) Any Lender may at any time sell to one or more financial
institutions or other entities (a "Participating Lender") participating
interests in the Loans, the Notes held by such Lender, the Commitment of such
Lender or any other interest of such Lender hereunder, provided, however, that
(i) such Lender's obligations under the Loan Documents shall remain unchanged,
(ii) such Lender shall remain solely responsible for the performance of such
obligations, (iii) the Participating Lender shall not have any rights under the
Loan Documents (the Participating Lender's rights against such Lender in respect
of such participation to be those set forth in the agreement executed by such
Lender in favor of the Participating Lender relating thereto) and all amounts
payable by the Borrowers hereunder shall be determined as if such Lender had not
sold such participation, except that the participant shall be entitled to the
benefits of Sections 3.10 and 3.14 of this Agreement to the extent that the
granting Lender would have been entitled to such benefits if the participation
had not been entered into or sold (and accordingly, no Participating Lender
shall be entitled to receive any greater amount pursuant to such Sections than
the granting Lender would have been entitled to receive in respect of the amount
of the participation granted by such granting Lender to such Participating
Lender had no such participation been granted), (iv) the Borrowers and the Agent
shall continue to deal solely and directly with such granting Lender in
connection with such Lender's rights and obligations under the Loan Documents,
(v) no Lender shall transfer or grant any participating interest under which the
Participating Lender shall have rights to approve any amendment to, or any
consent or waiver with respect to, the Loan Documents except to the extent such
amendment, consent or waiver would require unanimous consent as described in the
fourth sentence of Section 11.14, and (vi) Fleet Capital may not sell any such
participating interest if, as a result, its Revolving Credit Percentage with
respect to the Revolving Loans and the Revolving Credit Commitment that it has
maintained for its own account would be less than fourteen percent (14%). In the
case of any participation under this Section 11.13(c), the Participating Lender
shall not have any rights under the Loan Documents, and all amounts payable by a
Borrower hereunder shall be determined as if such Lender had not sold such
participation, except that each Borrower agrees that if amounts outstanding
under this Agreement are due and unpaid, or shall have been declared or shall
have become due and payable upon the occurrence of any Event of Default, each
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Participating Lender shall be deemed to have the right of set-off in respect of
its participating interest in amounts owing under this Agreement to the same
extent as if the amount of its participating interest were owing directly to it
as a Lender under this Agreement.
(d) Each Lender and the Agent agree to take normal and reasonable
precautions and exercise due care to maintain the confidentiality of all
non-public information provided to them by the Borrowers or any Subsidiary or by
the Agent on a Borrower's or Subsidiary's behalf in connection with this
Agreement or any Loan Document and agrees and undertakes that neither they nor
any of their Affiliates shall use any such information for any purpose or in any
manner other than pursuant to the terms contemplated by this Agreement. Any
Lender or the Agent may disclose such information: (i) at the request of any
bank regulatory authority or in connection with an examination of such Lender by
any such authority; (ii) pursuant to subpoena or other court process; (iii) when
required to do so in accordance with the provisions of any applicable law; (iv)
at the express direction of any other agency of any State of the United States
of America or of any other jurisdiction in which such Lender conducts its
business; and (v) to such Lender's independent auditors and other professional
advisors. Notwithstanding the foregoing, the Borrowers authorize each Lender to
disclose to any permitted assignee or Participating Lender and any prospective
permitted assignee or Participating Lender such financial and other information
in such Lender's possession concerning the Borrowers and their Subsidiaries
which has been delivered to the Lender pursuant to this Agreement or which has
been delivered to a Lender by a Borrower or the Agent in connection with the
Lender's credit evaluation of the Borrowers prior to entering into this
Agreement, provided that such assignee or Participating Lender agrees in writing
to such Lender and the Borrowers to keep such information confidential to the
same extent required of the Lenders hereunder.
11.14 Modification. This Agreement and the Loan Documents are
intended by each Borrower, the Agent and the Lenders to be the final, complete,
and exclusive expression of the agreement between them. This Agreement
supersedes any and all prior oral or written agreements relating to the subject
matter hereof. Except as expressly set forth elsewhere in this Agreement, no
amendment or waiver of any provision of this Agreement or any Loan Document, and
no consent with respect to any departure by any Borrower therefrom, shall in any
event be effective unless the same shall be in writing and signed by the
Required Lenders, and then such waiver shall be effective only in the specific
instance and for the specific purpose for which given. Notwithstanding any
provision of this Section to the contrary, no waiver, amendment, or consent
shall, unless in writing and signed by all the Lenders, do any of the following:
(a) increase the Commitment of any Lender or subject any Lender to
any additional obligations (except pursuant to an assignment by one Lender to
another Lender in accordance with the terms and provisions of this Agreement);
(b) postpone or delay any date fixed for any payment of principal,
interest, fees, commissions or other amounts due hereunder or under any Loan
Document, or extend the termination date of this Agreement set forth in Article
10;
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(c) reduce the principal of, or the rate of interest on, any Loan or
of any fees or other amounts payable hereunder or under any Loan Document (other
than the Financing Fee under Section 3.8);
(d) change the percentage of the Commitments or of the aggregate
unpaid principal amount of the Loans which shall be required for the Lenders or
any of them to take any action hereunder;
(e) amend this Section 11.14, or the definitions of Required Lenders
and Majority Facility Lenders;
(f) release the Collateral except as otherwise provided herein or in
any other Loan Documents;
(g) amend or waive the provisions of Article 5;
(h) amend the provisions of Section 7.8;
(i) amend the provisions of Section 3.12;
(j) amend the provisions of Section 11.13;
(k) amend the definition of "Revolving Borrowing Capacity" or of any
term used in defining "Revolving Borrowing Capacity"; or
(l) amend any provision of Article 7 or 8 on or prior to the Closing
Date;
and provided, further, that no amendment, waiver or consent shall, unless in
writing and signed by the Agent in addition to the Required Lenders, affect the
rights or duties of the Agent under this Agreement or any Loan Document.
11.15 Counterparts. This Agreement may be executed in any number of
counterparts, and by the Agent, each Lender and each Borrower in separate
counterparts, each of which shall be an original, but all of which shall
together constitute one and the same agreement. Execution of the signature page
or pages of any Loan Document by the Lenders, the Agent or any Loan Party and
the delivery of such page or pages to the Agent or its counsel by facsimile
shall be fully effective as if any such party had executed and delivered an
original counterpart of such Loan Document.
11.16 Captions. The captions contained in this Agreement are for
convenience only, are without substantive meaning and should not be construed to
modify, enlarge, or restrict any provision.
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11.17 Right of Set-Off. Without limitation of any other or
additional rights granted by applicable law, whenever an Event of Default has
occurred and is continuing, each Lender is hereby authorized at any time and
from time to time, 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 any Affiliate of such Lender to
or for the credit or the account of a Borrower or any Subsidiary Guarantor
(whether or not such deposits or other indebtedness are then due and payable)
against any and all of the Obligations (including interests in obligations
purchased by a Lender under Section 4.8), whether or not then due and payable or
contingent or unmatured. Each Lender agrees promptly to notify the Borrowers
after any such set-off and application made by such Lender, provided that the
failure to give such notice shall not affect the validity of such set-off and
application.
11.18 Joint and Several Liability. The Borrowers shall be jointly
and severally liable for all Obligations, regardless of which Borrower actually
receives Loans or other extensions of credit hereunder (including the issuance
of Letters of Credit for the account of such Borrower) or the amount of such
Loans received or Letters of Credit issued or the manner in which the Agent
and/or such Lender accounts for such Loans or other extensions of credit on its
books and records. Each Borrower's Obligations with respect to Loans made to it
and Letters of Credit issued for its account, and each Borrower's Obligations
arising as a result of the joint and several liability of the Borrowers
hereunder, with respect to Loans made to the other Borrowers and Letters of
Credit issued for the account of such other Borrowers hereunder, shall be
separate and distinct Obligations.
The Borrowers' Obligations arising as a result of the joint and
several liability of the Borrowers hereunder with respect to Loans or other
extensions of credit made to the other Borrowers hereunder (including the
issuance of Letters of Credit for the account of such Borrowers) shall, to the
fullest extent permitted by law, be unconditional irrespective of (i) the
validity or enforceability, avoidance or subordination of the Obligations of any
or all other Borrowers or of any promissory note or other document evidencing
all or any part of the Obligations of any or all other Borrowers, (ii) the
absence of any attempt to collect the Obligations from any or all other
Borrowers, any other guarantor, or any other security therefor, or the absence
of any other action to enforce the same, (iii) the waiver, consent, extension,
forbearance or granting of any indulgence by the Agent and/or any Lender with
respect to any provision of any instrument evidencing the Obligations of any or
all other Borrowers, or any part thereof, or any other agreement now or
hereafter executed by any or all other Borrowers and delivered to the Agent
and/or any Lender, (iv) the failure by the Agent and/or any Lender to take any
steps to perfect and maintain its security interest in, or to preserve its
rights to, any security or collateral for the Obligations of any or all other
Borrowers, (v) the Agent's and/or any Lender's election, in any proceeding
instituted under the Bankruptcy Code, of the application of Section 1111(b)(2)
of the Bankruptcy Code, or (vi) any other circumstances which might constitute a
legal or equitable discharge or defense of a guarantor or of any or all other
Borrowers. With respect to a Borrower's' Obligations arising as a result of the
joint and several liability of the Borrowers hereunder with respect to Loans or
other extensions of credit made to any or all other Borrowers hereunder, each
Borrower waives, until the Obligations shall have been paid in full and this
Agreement shall have been terminated, any right to enforce any right of
subrogation
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or any remedy which the Agent and/or any Lender now has or may hereafter have
against any other Borrower, any endorser or any guarantor of all or any part of
the Obligations, and any benefit of, and any right to participate in, any
security or collateral given to the Agent and/or any Lender to secure payment of
the Obligations.
Upon any Event of Default, the Agent may proceed directly and at
once, without notice, against any Borrower to collect and recover the full
amount, or any portion of the Obligations, without first proceeding against any
other Borrower or any other Person, or against any security or collateral for
the Obligations. Each Borrower consents and agrees that the Agent shall be under
no obligation to marshal any assets in favor of any Borrower or against or in
payment of any or all of the Obligations.
ARTICLE 12. THE AGENT
12.1 Appointment of Agent. Each Lender hereby designates Fleet
Capital as Agent for such Lender under the Loan Documents, including without
limitation, this Agreement, the Security Agreement, the Notes and the Mortgages,
to act as specified in, under, or in respect of, any Loan Document. Each Lender
hereby irrevocably authorizes the Agent to take such action on its behalf under
the provisions of the Loan Documents, and to exercise such powers and to perform
such duties thereunder as are specifically delegated to or required of the Agent
by the terms thereof, and such other powers as are reasonably incidental
thereto. The Agent may perform any of its duties by or through agents or
attorneys-in-fact and shall be entitled to advice of counsel concerning such
duties. The Agent shall not be responsible for any acts of its agents or
attorneys-in-fact selected by it, unless such selection constituted wilful
misconduct or bad faith.
12.2 Nature of Duties of Agent. (a) The Agent shall have no duties
or responsibilities except those expressly set forth in the Loan Documents.
Neither the Agent nor any of its officers, directors, employees or agents shall
be liable for any action taken or omitted by it hereunder or in connection
herewith, unless caused by its or their gross negligence, willful misconduct or
bad faith. The Agent shall not have by reason of any Loan Document a fiduciary
relationship in respect of any Lender; and nothing in any Loan Document,
expressed or implied, is intended to or shall be so construed as to impose upon
the Agent any obligation in respect of any Loan Document except as expressly set
forth therein.
(b) The Agent shall be under no obligation or duty to take any
action under any Loan Document if taking such action (i) would subject the Agent
to a tax in any jurisdiction where it is not then subject to a tax or (ii) would
require the Agent to qualify to do business in any jurisdiction where it is not
then so qualified, unless the Agent receives security or indemnity satisfactory
to it against such tax (or equivalent liability), or any liability resulting
from such qualification, in each case as results from the taking of such action
under this Agreement or (iii) would subject the Agent to In Personam
jurisdiction in any locations where it is not then so subject.
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(c) Notwithstanding any other provision of any Loan Document,
neither the Agent nor any of its officers, directors, employees, affiliates or
Agent shall, in its individual capacity, be personally liable for any action
taken or omitted to be taken by it in accordance with any Loan Document except
for its own gross negligence or willful misconduct.
12.3 Lack of Reliance on the Agent. (a) Independently and without
reliance upon the Agent, each Lender, to the extent it deems appropriate, has
made and shall continue to make (i) its own independent investigation of the
financial condition and affairs of the Borrowers and any Subsidiary Guarantors
in connection with making and maintaining Loans hereunder and taking or not
taking any action in connection herewith, and (ii) its own appraisal of the
creditworthiness of the Borrowers and Subsidiary Guarantors (including in each
case the collectibility or adequacy of the Collateral or any part thereof) and,
except as expressly provided in any Loan Document, the Agent shall have no duty
or responsibility, either initially or on a continuing basis, to provide any
Lender with any credit or other information with respect thereto, whether coming
into its possession before the making of the Revolving Loans or at any time or
times thereafter.
(b) The Agent shall not be responsible to any Lender for any
recitals, statements, information, representations or warranties herein or in
any document, certificate or other writing delivered in connection herewith, or
for the execution, effectiveness, genuineness, validity, enforceability,
collectibility, priority or sufficiency of any Loan Document, or the financial
condition of any Borrower or any Subsidiary Guarantor, or the existence, value,
collectibility or adequacy of the Collateral or any part thereof, or the
validity, effectiveness, perfection or relative priority of the Security
Interest or the Liens of any other Person therein, or be required to make any
inquiry concerning either the performance or observance of any of the terms,
provisions or conditions of any Loan Document, or the existence or possible
existence of any Event or Event of Default.
12.4 Certain Rights of the Agent. If the Agent shall request
instructions from the Required Lenders or all the Lenders, as the case may be,
with respect to any act or action (including the failure to act) in connection
with or any Loan Document, the Agent shall be entitled to refrain from such act
or action unless and until the Agent shall have received instructions from the
Required Lenders or all the Lenders, as the case may be; and the Agent shall not
incur liability to any Person by reason of so refraining. Without limiting the
foregoing, no Lender shall have any right of action whatsoever against the Agent
as a result of the Agent acting or refraining from acting hereunder in
accordance with the instructions of the Required Lenders or all the Lenders, as
the case may be. The Agent shall be fully justified in failing or refusing to
take any action under any Loan Document (i) if such action would, in the opinion
of the Agent, be contrary to law or the terms of any Loan Document, (ii) if it
shall not receive such advice or concurrence of the Required Lenders as it deems
appropriate, or (iii) if it shall not first be indemnified to its satisfaction
by the Lenders against any and all liability and expense which may be incurred
by it by reason of taking or continuing to take any such action. The Agent shall
in all cases be fully protected in acting, or in refraining from acting, under
any Loan Document in accordance with a request or consent of the Required
Lenders or the Lenders, and such request and any action taken or failure to act
pursuant thereto shall be binding upon all the Lenders and all future holders of
the Loans. Notwithstanding the foregoing, where the Agent has requested
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authority from the Required Lenders or all the Lenders, as the case may be, to
take or refrain from taking a specified action, the Agent may deem that it has
been given such authority from any Lender from which it has not received a
response ten days after such request has been made; provided, however, that
nothing contained herein shall limit the Agent's right to refrain from acting in
the absence of an actual response from the Lender or Lenders in question.
12.5 Reliance by Agent. The Agent shall be entitled to rely, and
shall be fully protected in relying, upon any writing, resolution, notice,
consent, certificate, affidavit, letter, cablegram, telegram, telecopy, telex or
teletype message, statement, order or other document or conversation believed by
it to be genuine and correct and to have been signed, sent or made by the proper
Person or Persons, and upon advice and statements of legal counsel (including,
without limitation, counsel to the Borrowers or a Subsidiary Guarantor),
independent accountants and other experts selected by the Agent.
12.6 Notice of Default. The Agent shall not be deemed to have
knowledge or notice of the occurrence of any Event or Event of Default, except
with respect to a failure of payment, unless: (a) the Agent shall have received
notice from a Lender referring to this Agreement or other relevant Loan
Document, describing such Event or Event of Default and stating that such notice
is a "notice of default"; (b) the Agent shall have received a notice of such
Event or Event of Default from a Borrower pursuant to Section 7.3, or such Event
or Event of Default is disclosed in a certificate or Financial Statement
delivered to the Agent pursuant to Section 7.2; or (c) the Agent has actual
knowledge of such Event or Event of Default. In the event that the Agent
receives such a notice, the Agent shall give prompt notice thereof to the
Lenders. The Agent shall take such action with respect to such Event or Event of
Default as shall be requested by the Required Lenders in accordance with Article
9 or Article 10; provided, however, that unless and until the Agent shall have
received such request, the Agent may (but shall not be obligated to) take such
action, or refrain from taking such action, with respect to such Event or Event
of Default as it shall deem advisable in the best interests of the Lenders. Each
Lender agrees to use its best efforts, upon becoming aware of any development or
other information which may materially and adversely affect the Property, the
Collateral, business, prospects, profits or condition (financial or otherwise)
of a Borrower or any of its Subsidiaries, or a Subsidiary Guarantor, or the
ability of a Borrower or Subsidiary Guarantor to perform or comply with any Loan
Document or to pay any Obligations, promptly to notify the Agent and the other
Lenders of same. The Agent agrees that it shall promptly deliver to each Lender
copies of all notices, demands, statements and communications which the Agent
gives to a Borrower, except for routine notices of payments due under the Loan
Documents and other miscellaneous notices, demands, statements and
communications. The Agent shall not have any liability to any Lender, nor shall
a cause of action arise against the Agent, as a result of the failure of the
Agent to deliver to any Lender any such notice, demand, statement or
communication, except for any such failure with respect to any material notice,
demand, statement or communication arising solely from the Agent's gross
negligence, bad faith or willful misconduct.
12.7 Collateral Matters. (a) Without limiting the generality of any
other provision of this Article 12, the Agent is hereby authorized on behalf of
all the Lenders and the Secured Parties,
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without the necessity of any notice to or further consent from the Lenders or
the Secured Parties, from time to time, to take any action with respect to any
Collateral or the Loan Documents which may be necessary to protect, perfect and
maintain perfected the Security Interest.
(b) The Lenders hereby irrevocably authorize the Agent, at its
option and in its discretion, to release any Lien granted to or held by the
Agent upon any Collateral: (i) upon termination of the Commitments and payment
and satisfaction of all Obligations which have matured and which the Agent has
been notified in writing are then due and payable; (ii) constituting Property
sold or to be sold or disposed of as part of or in connection with any
disposition permitted hereunder or under the Security Documents; (iii)
constituting Property in which neither Borrower owned any interest at the time
the Lien was granted or at any time thereafter; (iv) constituting Property
leased to a Borrower under a lease which has expired or been terminated in a
transaction permitted under this Agreement or is about to expire and which has
not been, and is not intended by such Borrower to be, renewed or extended; (v)
consisting of an instrument evidencing indebtedness, if the indebtedness
evidenced thereby has been paid in full; (vi) the release of which is otherwise
permitted hereunder or under any other Loan Document; or (vii) if approved,
authorized or ratified in writing by all the Lenders. Upon request by the Agent
at any time, the Lenders will confirm in writing the Agent's authority to
release particular types or items of Collateral pursuant to this Section.
(c) The Agent shall not be responsible for insuring the Collateral
or for the payment of taxes, charges or assessments or discharging of liens upon
the Collateral or otherwise as to the maintenance of the Collateral.
(d) The Agent makes no representations as to the value or condition
of the Collateral or any part thereof, or as to the title of any Grantor thereto
(as defined in any Security Document) or as to the security afforded by the
Security Documents or any other Loan Document.
(e) If Dairy Dell or another Subsidiary of Penn Traffic is Disposed
of as permitted by Section 8.1, the Lenders hereby irrevocably authorize the
Agent to release the obligations of Dairy Dell or such Subsidiary under the Loan
Documents and the Security Interest on the Capital Stock of Dairy Dell and the
Property of Dairy Dell or such other Subsidiary pursuant to the Security
Agreement.
12.8 Indemnification of Agent. To the extent the Agent is not
reimbursed and indemnified by the Borrowers, each Lender will reimburse and
indemnify the Agent, in accordance with such Lender's Pro-Rata Share, for and
against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses (including counsel fees and
disbursements) or disbursements of any kind of nature whatsoever which may be
imposed on, incurred by or asserted against the Agent in performing its duties
hereunder or under any of the other Loan Documents, in any way relating to or
arising out of this Agreement or any of the other Loan Documents (including, but
not limited, to the taking, protection, perfection, enforcement or disposition
of any Collateral); provided, however, that no Lender shall be liable for any
portion of such liabilities, obligations,
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losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements resulting from the Agent's gross negligence, willful misconduct or
bad faith; and, provided, further, that such indemnification of the Agent shall
not release any Borrower from its obligations hereunder or under any of the
other Loan Documents. Without limitation of the foregoing, each Lender agrees to
reimburse the Agent promptly upon demand for such Lender's Pro-Rata Share of any
out-of-pocket expenses (including reasonable attorneys' fees and the allocated
cost of staff counsel) incurred by the Agent in connection with the preparation,
execution, delivery, administration, modification, amendment or enforcement
(whether through negotiations, legal proceedings or otherwise) of, or legal
advice in respect of rights or responsibilities under, this Agreement or any
Loan Documents to the extent that the Agent is not reimbursed for such expenses
by or on behalf of the Borrowers. The agreements in this Section 12.8 shall
survive the termination or expiration of this Agreement and the payment of the
Loans and all other Obligations.
12.9 The Agent in its Individual Capacity. With respect to its
obligation as a Lender to lend under this Agreement, the Loans made by it and
the Notes issued to it, Fleet Capital shall have the same rights and powers
hereunder as any other Lender or holder of a Note and may exercise the same as
though it were not also performing the duties of the Agent specified herein; and
the terms "Lenders", "Required Lenders", or any similar terms shall, unless the
context clearly otherwise indicates, include Fleet Capital in its individual
capacity. Fleet Capital may accept deposits from, lend money to, and generally
engage in any kind of banking, trust, financial advisory or other business with
a Borrower or any Affiliate of a Borrower as if Fleet Capital were not
performing the duties specified herein (including, without limitation, in
connection with any Hedge Obligations), and may receive payments on such loans,
extensions of credit, and other transactions, and may accept fees and other
consideration from a Borrower or any Affiliate of the Borrower for services in
connection with this Agreement and otherwise, without having to account for the
same to the Lenders.
12.10 Holders of Notes. The Agent may deem and treat the payee of
any Note as the owner thereof for all purposes of any Loan Document unless and
until a written notice of the assignment or transfer thereof shall have been
filed with the Agent as provided in Section 11.13. Any request, authority or
consent of any Person who, at the time of making such request or giving such
authority or consent, is the holder of any Note shall be conclusive and binding
on any subsequent holder, transferee or assignee of such Note or of any Note or
Notes issued in exchange therefor.
12.11 Successor Agent. (a) The Agent may resign at any time by
giving written notice thereof to the Lenders and the Borrowers, and may be
removed at any time with or without cause by all of the Lenders. Upon any such
resignation or removal, the Required Lenders shall have the right, upon five (5)
days' notice to the Borrowers, to appoint a successor Agent. If no successor
Agent shall have been so appointed by the Required Lenders, and shall have
accepted such appointment, within thirty (30) days after the retiring Agent
gives notice of resignation or the Required Lenders remove the retiring Agent,
then the retiring Agent may, at its sole option, either (i) on behalf of the
Lenders, appoint a successor Agent, which shall be a bank which maintains an
office in the United States of America, or a commercial bank organized under the
laws of the United
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States of America or of any State thereof (or any Affiliate of such bank),
having a combined capital and surplus of at least $500,000,000 or (ii) assign
all of the rights and delegate all of the duties of the Agent to the Lenders,
collectively, in which event all actions to be taken by the Agent hereunder or
under the other Loan Documents shall be taken by or on behalf of the Lenders
upon the written consent of the Required Lenders.
(b) Upon the acceptance of any appointment as Agent hereunder by a
successor agent, such successor Agent shall thereupon succeed to and become
vested with all the rights, powers, privileges and duties of the retiring Agent,
and the retiring Agent shall be discharged from its duties and obligations under
this Agreement and the other Loan Documents. After any retiring Agent's
resignation or removal hereunder as Agent, the provisions of this Article 12
shall inure to its benefit as to any actions taken or omitted to be taken by it
while it was Agent under this Agreement and the other Loan Documents.
(c) The provisions of this Section 12.11 shall be applicable mutatis
mutandis in the event that the Agent shall retire as Agent under some but not
all of the Loan Documents.
12.12 The Documentation Agent and the Co-Agents. The Documentation
Agent and the Co- Agents (a) are so nominated by the Lenders, (b) shall not have
any duties or responsibilities except as specifically provided in the Loan
Documents, (c) have not been relied upon by the Lenders, and (d) shall have the
same rights and protection as the Agent under Sections 11.8, 12.8 and 12.9.
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IN WITNESS WHEREOF, the parties hereto have caused this Revolving
Credit and Term Loan Agreement to be executed and delivered by their duly
authorized officers as of the date first above written.
BORROWERS:
THE PENN TRAFFIC COMPANY
By: ________________________
Title:
DAIRY DELL, INC.
By: ________________________
Title:
BIG M SUPERMARKETS, INC.
By: ________________________
Title:
PENNY CURTISS BAKING COMPANY
INC.
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LENDERS:
Lending Office:
60 East 42nd Street
New York, New York 10017
FLEET CAPITAL CORPORATION
By: ________________________
Title:
GMAC BUSINESS CREDIT, LLC
By: ________________________
Title:
AMSOUTH BANK
By: ________________________
Title:
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION
By: ________________________
Title:
HELLER FINANCIAL, INC.
By: ________________________
Title:
LASALLE BUSINESS CREDIT, INC.
By: ________________________
Title:
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CITIZENS BUSINESS CREDIT COMPANY
By: ________________________
Title:
THE CIT GROUP/BUSINESS CREDIT,
INC.
By: ________________________
Title:
IBJ WHITEHALL BUSINESS CREDIT
CORPORATION
By: ________________________
Title:
FOOTHILL CAPITAL CORPORATION
By: ________________________
Title:
GREEN TREE FINANCIAL SERVICING
CORPORATION
By: ________________________
Title:
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ADMINISTRATIVE AGENT
FLEET CAPITAL CORPORATION
By: ________________________
Title:
DOCUMENTATION AGENT
GMAC BUSINESS CREDIT, LLC
By: ________________________
Title:
CO-AGENTS
AMSOUTH BANK
By: ________________________
Title:
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION
By: ________________________
Title:
112
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Annex A
COMMITMENTS
<TABLE>
<CAPTION>
REVOLVING A TERM B TERM TOTAL
LENDER COMMITMENT COMMITMENT COMMITMENT COMMITMENT
------ ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Fleet Capital Corporation $ 33,046,875 $ 9,375,000 $ 17,578,125 $ 60,000,000
GMAC Business Credit, LLC $ 28,828,125 $ 5,625,000 $ 10,546,875 $ 45,000,000
AmSouth Bank $ 22,421,875 $ 4,375,000 $ 8,203,125 $ 35,000,000
Bank of America National
Trust and Savings
Association $ 22,421,875 $ 4,375,000 $ 8,203,125 $ 35,000,000
Foothill Capital
Corporation $ 19,218,750 $ 3,750,000 $ 7,031,250 $ 30,000,000
Heller Financial, Inc. $ 16,015,625 $ 3,125,000 $ 5,859,375 $ 25,000,000
LaSalle Business Credit,
Inc. $ 16,015,625 $ 3,125,000 $ 5,859,375 $ 25,000,000
CIT Group/Business Credit,
Inc. $ 12,812,500 $ 2,500,000 $ 4,687,500 $ 20,000,000
Citizens Business Credit
Company $ 9,609,375 $ 1,875,000 $ 3,515,625 $ 15,000,000
IBJ Whitehall Business
Credit Corporation $ 9,609,375 $ 1,875,000 $ 3,515,625 $ 15,000,000
Green Tree Financial
Servicing Corporation $ 15,000,000 -0- -0- $ 15,000,000
Total $ 205,000,000 $ 40,000,000 $ 75,000,000 $ 320,000,000
</TABLE>
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ANNEX B
PRICING GRID
(Rates and fees in basis points)
<TABLE>
<CAPTION>
Total Funded Revolver Term Loans A Term Loans B Unused
Debt/EBITDA Libor + Base Rate + Libor + Base Rate + Libor + Base Rate + Line Fee
----------- ------------------- ------------------- ------------------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Tier I: 4.75+ 237.5 137.5 237.5 137.5 300 200 50
Tier II: 4.26 - 4.75 212.5 112.5 212.5 112.5 300 200 50
Tier III: 3.76 - 4.25 187.5 87.5 187.5 87.5 275 175 37.5
Tier IV: 3.26 - 3.75 162.5 62.5 162.5 62.5 * * 25
Tier V: <3.25 150 50 150 50 * * 25
----------- ------------------- ------------------- ------------------- --------
</TABLE>
* To be agreed by Penn Traffic and the Term Loan B Lenders, but not greater than
the Tier III levels.
There will be no pricing adjustment prior to May 1, 2000 (the
"Adjustment Date"). The initial review for pricing adjustment will occur
following receipt of the Borrowers' financial statements delivered pursuant to
Section 7.2(a) for Fiscal Year 2000. Thereafter, rate adjustments based on the
Pricing Grid will be made following receipt from the Borrowers of the financial
statements delivered pursuant to Section 7.2(a) or 7.2(b), and of a request for
a rate adjustment accompanied by a schedule reflecting the appropriate
calculation.
Quarterly adjustments based on the Pricing Grid shall occur 45 and
90 days after the end of the quarter or year-end, as appropriate, based on the
financial statements for the corresponding periods respectively.
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TABLE OF CONTENTS
Page
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ARTICLE 1. DEFINITIONS................................................2
1.1 Specific Definitions.............................................2
1.2 Other Definitional Provisions...................................37
1.3 Other Terms.....................................................37
ARTICLE 2. LOANS AND LETTERS OF CREDIT...............................38
2.1 Total Facility..................................................38
2.2 Revolving Loans.................................................38
2.3 Revolving Loan Notes............................................39
2.4 Borrowing Revolving Loans.......................................39
2.5 Term Loans A....................................................39
2.6 Term Loans B....................................................39
2.7 Notes Evidencing Term Loans.....................................40
2.8 Borrowing of Term Loans.........................................40
2.9 Conversions; Renewals, etc. of Loans............................40
2.10 Notices of Borrowings, Conversions and Renewals.................41
2.11 Funding of Revolving Loans......................................41
2.12 Swing Line Commitment...........................................42
2.13 Procedure for Swing Line Borrowing; Refunding of Swing Line
Loans...........................................................43
2.14 Revolving Loan Account; Charges.................................44
2.15 Funding of Term Loans; Term Loans Account; Charges..............45
2.16 Letters of Credit...............................................45
2.17 Indemnification by Revolving Credit Lenders.....................47
2.18 Responsibilities of Issuing Bank................................48
2.19 No Limitation on Obligation to Reimburse or Participate.........48
2.20 Issuing Bank's Agreements Control...............................49
2.21 Use of Proceeds of Initial Loans................................49
ARTICLE 3. INTEREST AND OTHER CHARGES................................49
3.1 Prime-Based Rate Interest.......................................49
3.2 Eurodollar Rate-Based Interest..................................49
3.3 Default Rate....................................................50
3.4 Maximum Interest Rate...........................................50
3.5 Computation of Interest.........................................50
3.6 Agency and Collateral Monitoring Fee............................50
3.7 Commitment Fee..................................................50
3.8 Financing Fee...................................................51
3.9 Letter of Credit Fees...........................................51
3.10 Taxes...........................................................51
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3.11 Requirements of Law.............................................52
3.12 Capital Adequacy Costs..........................................53
3.13 Inability to Determine Interest Rate............................53
3.14 Indemnity.......................................................54
3.15 Illegality......................................................54
ARTICLE 4. PAYMENTS AND PREPAYMENTS..................................54
4.1 Revolving Loans; Application of Payments to Loans...............54
4.2 Scheduled Installments of Term Loans............................56
4.3 Optional Prepayments of Term Loans..............................56
4.4 Mandatory Prepayments and Commitment Reductions.................56
4.5 Pro Rata Treatment and Payments.................................58
4.6 Place and Form of Payments; Extension of Time...................58
4.7 Settlements between the Agent and the Lenders...................58
4.8 Sharing of Payments.............................................59
4.9 [Intentionally left blank.......................................60
4.10 Indemnity for Returned Payments.................................60
4.11 Regulatory Replacement of Lender................................60
4.12 Agent's and Lenders' Books and Records; Monthly Statements......61
ARTICLE 5. CONDITIONS PRECEDENT......................................61
5.1 Conditions Precedent to Initial Loans...........................61
5.2 Conditions Precedent to All Subsequent Loans and Other
Extensions of Credit............................................63
ARTICLE 6. GENERAL WARRANTIES AND REPRESENTATIONS....................63
6.1 Authorization, Validity, and Enforceability of this Agreement
and the Loan Documents..........................................63
6.2 Organization and Qualification..................................64
6.3 Subsidiaries and Affiliates.....................................64
6.4 Financial Statements and Projections............................65
6.5 Capitalization..................................................65
6.6 Solvency........................................................65
6.7 Title to Property...............................................65
6.8 Real Property; Leases...........................................66
6.9 Proprietary Rights..............................................66
6.10 Trade Names.....................................................66
6.11 Litigation......................................................66
6.12 Restrictive Agreements..........................................66
6.13 Debt............................................................67
6.14 Distributions...................................................67
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6.15 Labor Disputes..................................................67
6.16 Environmental Laws..............................................67
6.17 No Violation of Law.............................................68
6.18 No Default......................................................68
6.19 ERISA...........................................................68
6.20 Taxes...........................................................69
6.21 Regulations U and X.............................................69
6.22 Broker's Fees...................................................70
6.23 Disclosure......................................................70
6.24 Security Documents..............................................70
6.25 Reorganization Matters..........................................70
6.26 Year 2000.......................................................71
ARTICLE 7. AFFIRMATIVE COVENANTS.....................................71
7.1 Books and Records...............................................71
7.2 Financial and Other Information.................................71
7.3 Notices to the Agent............................................73
7.4 Taxes and Other Obligations.....................................76
7.5 Corporate Existence and Good Standing...........................76
7.6 Maintenance of Property and Insurance...........................76
7.7 Environmental Laws..............................................77
7.8 Deposits to Accounts; Payments..................................77
7.9 End of Fiscal Years; Fiscal Quarters............................79
7.10 Further Assurances..............................................79
7.11 Subsidiary Guaranty; Subsidiary Pledge Agreement and Subsidiary
Security Agreement..............................................79
7.12 Plan of Reorganization..........................................79
7.13 Year 2000.......................................................79
ARTICLE 8. NEGATIVE COVENANTS........................................79
8.1 Mergers, Consolidations or Sales................................79
8.2 Distributions...................................................80
8.3 Guaranties......................................................80
8.4 Debt............................................................80
8.5 Prepayment......................................................82
8.6 Terms of Senior Notes...........................................82
8.7 Transactions with Affiliates....................................82
8.8 Business Conducted..............................................83
8.9 Liens...........................................................83
8.10 Financed Capital Expenditures...................................83
8.11 Subsidiaries....................................................83
iii
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Page
----
8.12 Restricted Investments..........................................83
8.13 Cash Capital Expenditures.......................................83
8.14 Consolidated EBITDA.............................................84
8.15 Consolidated Funded Debt Ratio..................................86
8.16 Consolidated Interest Coverage Ratio............................87
8.17 Consolidated Fixed Charge Coverage Ratio........................87
8.18 Negative Pledge Clauses.........................................88
8.19 Restrictions on Subsidiary Distributions........................88
8.20 Confirmation Order..............................................88
ARTICLE 9. DEFAULT; REMEDIES.........................................89
9.1 Events of Default...............................................89
9.2 Remedies........................................................91
9.3 Application of Proceeds of Collateral and Guarantee Agreements..92
ARTICLE 10. TERMINATION OF AGREEMENT..................................93
ARTICLE 11. MISCELLANEOUS.............................................94
11.1 Cumulative Remedies; No Prior Recourse to Collateral............94
11.2 No Implied Waivers..............................................94
11.3 Severability....................................................94
11.4 Governing Law...................................................94
11.5 Consent to Jurisdiction and Venue; Service of Process...........94
11.6 Waiver of Jury Trial............................................95
11.7 Survival of Representations and Warranties and Indemnification..95
11.8 Indemnification.................................................95
11.9 Other Security and Guaranties...................................96
11.10 Fees and Expenses...............................................96
11.11 Notices.........................................................97
11.12 Waiver of Notices...............................................98
11.13 Binding Effect; Assignment; Confidentiality.....................98
11.14 Modification...................................................101
11.15 Counterparts...................................................102
11.16 Captions.......................................................102
11.17 Right of Set-Off...............................................102
11.18 Joint and Several Liability....................................102
ARTICLE 12. THE AGENT................................................103
12.1 Appointment of Agent...........................................103
12.2 Nature of Duties of Agent......................................104
12.3 Lack of Reliance on the Agent..................................104
iv
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Page
----
12.4 Certain Rights of the Agent....................................105
12.5 Reliance by Agent..............................................105
12.6 Notice of Default..............................................105
12.7 Collateral Matters.............................................106
12.8 Indemnification of Agent.......................................107
12.9 The Agent in its Individual Capacity...........................107
12.10 Holders of Notes...............................................108
12.11 Successor Agent................................................108
12.12 The Documentation Agent and the Co-Agents......................109
v
<PAGE>
ANNEX A Schedule of Commitments
ANNEX B Pricing Grid (Definition of "Pricing Grid")
EXHIBIT A Form of Guaranty Agreement (Definition of
"Guaranty Agreement")
EXHIBIT B Other Permitted Liens (Definition of "Permitted
Liens")
EXHIBIT C Form of Borrowing Base Certificate (ss. 7.8)
EXHIBIT D-1 Form of Revolving Credit Notes (ss.2.3)
EXHIBIT D-2 Form of Term Loans A Notes (ss.2.7)
EXHIBIT D-3 Form of Term Loans B Notes (ss.2.7)
EXHIBIT D-4 Form of Loan Swing Line Loans Notes (ss.2.12(c))
EXHIBIT E [Intentionally Omitted]
EXHIBIT F Confirmation Order (ss.6.27)
EXHIBIT G Consolidated Subsidiaries; Other Subsidiaries (ss.6.4)
EXHIBIT H Material Affiliates (ss.6.4)
EXHIBIT I Guaranties (ss.8.3)
EXHIBIT J Trade Names (ss.6.11)
EXHIBIT K Real Property and Leases (ss.6.9)
EXHIBIT L Proprietary Rights (Definition of "Proprietary
Rights"; ss.6.10)
EXHIBIT M Litigation (ss.6.12)
EXHIBIT N Environmental Matters (ss.6.17)
EXHIBIT O Tax Matters (ss.6.21)
EXHIBIT P Labor Matters (ss.6.16)
EXHIBIT Q Employee Plans (ss.6.20)
EXHIBIT R Further Assurances (ss.7.10)
EXHIBIT S Outstanding Debt (ss.8.4)
EXHIBIT T Existing Capital Leases (ss.8.4)
EXHIBIT U Documents To Be Delivered (ss.6.1)
EXHIBIT V Form of Security and Collateral Agreement
(Definition of "Security Agreement")
EXHIBIT W Categories of Perishable Inventory
(Definition of "Excess Perishable Inventory")
EXHIBIT X Form of Assignment and Acceptance Agreement
(ss.11.13(b))
EXHIBIT Y Form of Notice of Borrowing, Conversion, etc.
(ss.2.10)
EXHIBIT Z Form of Opinion of Borrower's Counsel (ss.5.1(a))
vi
================================================================================
SECURITY AND COLLATERAL AGREEMENT
AMONG
THE PENN TRAFFIC COMPANY
and the Grantors
and
FLEET CAPITAL CORPORATION
as Agent
Dated as of June 29, 1999
================================================================================
<PAGE>
TABLE OF CONTENTS
Page
----
SECTION 1. DEFINED TERMS..............................................1
1.1 Definitions................................................1
1.2 Other Definitional Provisions..............................7
SECTION 2. GRANT OF SECURITY INTERESTS AND LIENS; RIGHTS OF
AGENT AND LENDERS..........................................7
2.1 Grant of Security Interest and Liens.......................7
2.2 Perfection and Protection of Security Interest.............8
2.3 Perfecting and Protecting Security Interests and Liens With
Respect to Collateral Real Estate Interests; Application
of Repayments..............................................9
2.4 Appraisals.................................................9
2.5 Access and Examination.....................................9
2.6 Insurance.................................................10
2.7 Collateral Reporting......................................10
2.8 Right to Cure.............................................11
2.9 Power of Attorney.........................................11
2.10 Recourse..................................................11
SECTION 3. REPRESENTATIONS, WARRANTIES AND COVENANTS.................11
3.1 Necessary Filings.........................................12
3.2 Title to, Liens on, and Sale and Use of Collateral........12
3.3 Other Financing Statements................................12
3.4 Chief Executive Office; Records...........................12
3.5 Location of Inventory And Equipment.......................13
3.6 Trade Names; Change of Name...............................14
3.7 Accounts..................................................14
3.8 Inventory.................................................15
3.9 Franchise Agreements......................................16
3.10 [Intentionally Deleted]...................................17
3.11 Additional Representations, Warranties and Covenants
With Respect to Equipment.................................17
3.12 Additional Representations, Warranties and Covenants
With Respect to Collateral Real Estate Interests..........17
3.13 Special Provisions Concerning Intellectual Property.......19
3.14 Special Provisions as to Pledged Collateral...............23
3.15 Further Assurances; Additional Grantors; Additional
Actions, etc..............................................27
SECTION 4. REMEDIES UPON OCCURRENCE OF SPECIFIED EVENTS..............27
4.1 Remedies; Obtaining the Collateral upon Default...........27
4.2 Remedies; Disposition of the Collateral...................29
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Page
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4.3 Remedies; Collateral Real Estate Interests................30
4.4 Waiver of Claims..........................................30
4.5 Application of Proceeds...................................31
4.6 Remedies Cumulative; No Waiver............................31
SECTION 5. INDEMNITY.................................................31
5.1 Indemnity.................................................31
5.2 Indemnity Obligations Secured by Collateral; Survival.....32
5.3 Agent's Rights, Duties, and Liabilities...................32
SECTION 6. THE AGENT.................................................33
SECTION 7. MISCELLANEOUS.............................................33
7.1 Notices...................................................33
7.2 Waiver; Amendment.........................................33
7.3 Obligations Absolute......................................33
7.4 Successors and Assigns....................................34
7.5 Headings Descriptive......................................34
7.6 Severability..............................................34
7.7 GOVERNING LAW.............................................34
7.8 Grantors' Duties..........................................34
7.9 Termination; Release......................................34
7.10 Counterparts..............................................35
EXHIBIT A Collateral Real Estate Interests
EXHIBIT B Pledged Notes; Pledged Stock
EXHIBIT C UCC Filing Offices
EXHIBIT D Chief Executive Offices; Location of Books and Records; Location of
Collateral; Locations of Other Places of Business; Leased Facilities
and Locations
EXHIBIT E Trade Names; Fictitious Names; Other Names; Trade Names
EXHIBIT F Franchise Agreements; Operators
EXHIBIT G Trademarks
EXHIBIT H Intellectual Property Licenses and Agreements
EXHIBIT I Form of Borrowing Base Certificate
EXHIBIT J Excluded Receivables
ANNEX 1 U.S. Trademark Security Agreement
ANNEX 2 U.S. Patent Security Agreement
ANNEX 3 U.S. Copyright Security Agreement
ii
<PAGE>
SECURITY AND COLLATERAL AGREEMENT, dated as of June 29, 1999, made
by each of the signatories hereto (the "Initial Grantors" and, together with any
other entity that may become a party hereto as a "Grantor", the "Grantors"), in
favor of Fleet Capital Corporation, a Rhode Island corporation ("Fleet"), as
Agent (the "Agent") for the financial institutions (the "Lenders") from time to
time parties to the Revolving Credit and Term Loan Agreement, dated as of June
29, 1999 (as amended, supplemented or otherwise modified from time to time, the
"Credit Agreement"), among THE PENN TRAFFIC COMPANY, a Delaware corporation
("Penn Traffic"), DAIRY DELL, INC., a Pennsylvania corporation, BIG M
SUPERMARKETS, INC., a New York corporation and PENNY CURTISS BAKING COMPANY
INC., a New York corporation (collectively, the "Borrowers"), the Agent, GMAC
Business Credit, LLC as documentation agent, and AmSouth Bank and Bank of
America National Trust and Savings Association as co-agents.
W I T N E S S E T H:
WHEREAS, pursuant to the Credit Agreement, the Lenders have
severally agreed to make extensions of credit to the Borrowers upon the terms
and subject to the conditions set forth therein;
WHEREAS, each of the Initial Grantors is, and each additional
Grantor will be, a member of an affiliated group of companies that includes the
Borrowers, and the proceeds of the extensions of credit under the Credit
Agreement will be used in part to enable the Borrowers to finance their own and
the related businesses of the Grantors; and
WHEREAS, it is a condition precedent to the obligation of the
Lenders to make their respective extensions of credit to the Borrowers under the
Credit Agreement that the Initial Grantors shall have executed and delivered
this Security and Collateral Agreement to the Agent for the benefit of the
Secured Parties (as defined in the Credit Agreement);
NOW, THEREFORE, in consideration of the premises and to induce the
Lenders and the Agent to enter into the Credit Agreement and to induce the
Lenders to make their respective extensions of credit to the Borrowers
thereunder, each Grantor hereby agrees with the Agent, for the benefit of the
Secured Parties, as follows:
SECTION 1. DEFINED TERMS
1.1 Definitions. (a) Unless otherwise defined herein, terms defined
in the Credit Agreement and used herein shall have the meanings given to them in
the Credit Agreement.
<PAGE>
(b) The following terms shall have the specified meanings:
"Account": a Grantor's right to payment for a sale or lease of goods
or rendition of services.
"After-Acquired Real Estate Interest": any Real Estate Interest of a
Grantor acquired after the Closing Date excluding any Real Estate Interest (a)
consisting of a Real Property Leasehold, (i) as to which the granting by a
Grantor to the Agent of a Lien thereon will violate a Lien Prohibition, (b)
consisting of Real Property Owned (i) which is subject to any Lien otherwise
permitted under the Credit Agreement and (ii) as to which the granting by a
Grantor to the Agent of a Lien thereon will violate a Lien Prohibition or (c),
which the Agent determines in its sole discretion to be of minimal value;
provided, that for the purposes of this definition, the term "acquired" shall
not include the renewal, extension or modification after the Closing Date of a
Real Property Leasehold.
"Agreement": this Security Agreement, as the same may be amended,
supplemented or otherwise modified from time to time.
"Borrowers' Obligations": the Obligations as defined in the Credit
Agreement.
"Collateral": as defined in Section 2.
"Collateral Account": any collateral account established by the
Agent as provided in the Credit Agreement.
"Collateral Real Estate Interests": The Scheduled Real Estate
Interests and all After-Acquired Real Estate Interests.
"Copyright Office": the United States Copyright Office of the
Library of Congress.
"Copyright License": any written agreement naming any Grantor as
licensor or licensee (including, without limitation, those listed in Exhibit H)
granting any right under any Copyright, including, without limitation, the grant
of rights to manufacture, distribute, exploit and sell materials derived from
any Copyright, in each case, not subject to a Lien Prohibition.
"Copyrights": (i) all copyrights arising under the laws of the
United States, whether registered or unregistered and whether published or
unpublished (including, without limitation, those listed in Exhibit H), all
registrations and recordings thereof, and all applications in connection
therewith, including, without limitation, all registrations, recordings and
applications in the Copyright Office, and (ii) the right to obtain all renewals
thereof.
2
<PAGE>
"Equipment": "Equipment" as defined in the Credit Agreement, except
that the term "Borrower" as used therein shall be deemed replaced by the term
"Grantor" for the purposes of this Agreement.
"General Intangibles": all "general intangibles" as such term is
defined in Section 9-106 of the Uniform Commercial Code in effect in the State
of New York on the date hereof and, in any event, including, without limitation,
with respect to any Grantor, all forms of obligations owing to such Grantor
(including by any of its Subsidiaries and Affiliates) and all contracts,
agreements, instruments and indentures in any form, and portions thereof, to
which such Grantor is a party or under which such Grantor has any right, title
or interest or to which such Grantor or any property of such Grantor is subject,
as the same may from time to time be amended, supplemented or otherwise
modified, including, without limitation, (i) all rights of such Grantor to
receive moneys due and to become due to it thereunder or in connection
therewith, (ii) all rights of such Grantor to damages arising thereunder and
(iii) all rights of such Grantor to perform and to exercise all remedies
thereunder, in each case to the extent the grant by such Grantor of a security
interest pursuant to this Agreement in its right, title and interest in such
contract, agreement, instrument or indenture is not prohibited by such contract,
agreement, instrument or indenture without the consent of any other party, would
not give any other party the right to terminate its obligations under such
contract, agreement, instrument or indenture, or is permitted with consent if
all necessary consents to such grant of a security interest have been obtained
from the other parties thereto (it being understood that the foregoing shall not
be deemed to obligate such Grantor to obtain such consents); provided, that the
foregoing limitation shall not affect, limit, restrict or impair the grant by
such Grantor of a security interest pursuant to this Agreement in any Receivable
or any money or other amounts due or to become due under any such contract,
agreement, instrument or indenture; and (iv) all causes of action, tax refunds,
tax refund claims, Reversions and other amounts payable to such Grantor from
pension and employee benefit plans, rights and claims against shippers and
carriers, rights to indemnification, and business interruption insurance.
"Guarantor Obligations": with respect to any Subsidiary Guarantor,
all obligations and liabilities of such Subsidiary Guarantor which may arise
under or in connection with its Guaranty Agreement or this Agreement or any
other Loan Document to which such Subsidiary Guarantor is a party, in each case
whether on account of guarantee obligations, reimbursement obligations, fees,
indemnities, costs, expenses or otherwise (including, without limitation, all
fees and disbursements of counsel to the Agent or to the Lenders that are
required to be paid by such Subsidiary Guarantor pursuant to the terms of its
guaranty, this Agreement or any other Loan Document).
"Initial Pledged Securities": as defined in Section 3.14(a).
"Intellectual Property": the collective reference to all rights,
priorities and privileges relating to intellectual property, including, without
limitation, the Copyrights, the Copyright Licenses, the Patents, the Patent
Licenses, the Trademarks and the Trademark
3
<PAGE>
Licenses, and all rights to sue at law or in equity for any infringement or
other impairment thereof, including the right to receive all proceeds and
damages therefrom.
"Intercompany Note": any promissory note evidencing loans made by
any Grantor to any of its Subsidiaries, or to any other Grantor or any such
Grantor's Subsidiaries.
"Inventory": "Inventory" as such term is defined in the Credit
Agreement, except that the term "Borrower" as used therein shall be deemed
replaced by the term "Grantor" for the purposes of this Agreement.
"Issuers": the collective reference to each issuer of a Pledged
Security.
"Legal Requirements": statutes, laws, rules, orders, regulations,
ordinances, judgments, decrees and injunctions of any Public Authority affecting
any Grantor, any Loan Document or all or part of any Collateral Real Estate
Interests or the construction, ownership, use, alteration or operation thereof,
whether now or hereafter enacted and in force, and all permits, licenses and
authorizations and regulations relating thereto, and all covenants, agreements,
restrictions and encumbrances contained in any instrument, either of record or
known to any Grantor, at any time in force affecting all or part of any
Collateral Real Estate Interests, including any that may (i) require repairs,
modifications or alterations in or to all or part of any Collateral Real Estate
Interests, or (ii) in any way limit the use and enjoyment thereof.
"Lien Prohibition": means an agreement, instrument or document
evidencing Intellectual Property, or evidencing a Lien on Equipment or
evidencing a Real Property Leasehold, the terms of which would be breached by
the creation thereon of a Lien on such Intellectual Property, Equipment or Real
Property Leasehold in favor of the Agent, but only so long as such terms are in
effect.
"Mortgage Forms": shall mean the various forms of fee and leasehold
mortgages and fee and leasehold deeds of trust contained in the Mortgage Forms
Appendix bound separately from, but which is a part of, this Agreement.
"New York UCC": the Uniform Commercial Code as from time to time in
effect in the State of New York.
"Obligations": (i) in the case of the Borrowers, the Borrowers'
Obligations, and (ii) in the case of each Guarantor, its Guarantor Obligations,
and (iii) all liabilities and obligations of any Grantor hereunder or under any
other Loan Document.
"Patent": shall mean any United States patents and all reissues,
divisions, continuations, continuations-in-part, renewals and extensions
thereof, now held or hereafter made or acquired by any Grantor, as well as any
application for a United States patent now held or
4
<PAGE>
hereafter made or acquired by any Grantor, and all inventions (including
software and operating systems) and improvements described and claimed in any of
the foregoing.
"Patent License": any written agreement naming any Grantor as
licensor or licensee (including, without limitation, those listed in Exhibit H)
granting any right under any Patent, including, without limitation, the grant of
rights to manufacture, distribute, exploit and sell materials derived from any
Patent, in each case, not subject to a Lien Prohibition.
"Pledge Grantor": means each Grantor granting a Security Interest in
any Pledged Collateral.
"Pledged Collateral": shall have the meaning set forth in Section
3.14.
"Pledged Notes": all promissory notes listed on Exhibit B, all
Intercompany Notes at any time issued to any Grantor and, to the extent
permitted under the instruments or agreements evidencing such notes, all other
promissory notes issued to or held by any Grantor (other than promissory notes
issued in connection with extensions of trade credit by any Grantor in the
ordinary course of business, but including promissory notes of Franchisees
issued to a Grantor) while this Agreement is in effect.
"Pledged Securities": collectively, the Initial Pledged Securities
and the Subsequent Pledged Securities.
"PTO": The United States Patent and Trademark Office.
"Real Estate Interests": with respect to a Grantor, all Real
Property Owned and all Real Property Leaseholds.
"Real Estate Records": all books, records, information and data, in
whatever form, maintained or compiled by or on behalf of any Grantor with
respect to Collateral Real Estate Interests.
"Real Property Leaseholds": all leases now or hereafter owned or
held by a Grantor, of real property whether improved or unimproved and all
rights, interests and estates, real and personal, arising under or in connection
with such leases and such real property, including without limitation all
buildings and all personal property and fixtures included under such leases.
"Real Property Owned": means all parcels of land now or hereafter
owned by a Grantor, together with the right, title and interest of the Grantor
in and to adjacent streets, the air space and development rights, all rights of
way, privileges, tenements, hereditaments and appurtenances thereto, and
fixtures, easements, all royalties and rights pertaining to the use of the real
property, including, without limitation, all alleys, vaults and drainage
together with all buildings and other improvements now or hereafter erected
thereon and all fixtures and personal
5
<PAGE>
property appertaining thereto and all additions thereto and all substitutions
and replacements thereof.
"Receivables": with respect to a Grantor, all of such Grantor's now
owned and hereafter arising or acquired: Accounts (whether or not earned by
performance), including, without limitation, Accounts owed to such Grantor by
any of its Subsidiaries or Affiliates, together with all interest, late charges,
penalties, collection fees, and other sums which shall be due and payable in
connection with any Account; proceeds of any letters of credit naming such
Grantor as beneficiary, chattel paper, instruments, documents, General
Intangibles and guarantees and other security for any of the foregoing; rights
of stoppage in transit, replevin, and reclamation; and other rights or remedies
of an unpaid vendor, lienor, or secured party.
"Scheduled Real Estate Interests": means the Real Estate Interests
listed on Exhibit A.
"Securities Act": the Securities Act of 1933, as amended.
"Subject Equipment": means all Equipment of each Grantor, other than
Equipment subject to a Permitted Lien and a Lien Prohibition.
"Subsequent Pledged Securities": as defined in Section 3.14(a).
"Trademarks": (i) all trademarks, trade names, corporate names,
company names, business names, fictitious business names, service marks, logos
and other source or business identifiers, and all goodwill associated therewith,
now existing or hereafter adopted or acquired, all registrations and recordings
thereof, and all applications in connection therewith, whether in the United
States Patent and Trademark Office or in any similar office or agency of the
United States, or any State thereof and all common-law rights related thereto,
including, without limitation, any of the foregoing referred to in Exhibits E
and G, and (ii) the right to obtain all renewals thereof.
"Trademark License": any agreement, whether written or oral,
providing for the grant by or to any Grantor of any right to use any Trademark,
including, without limitation, any of the foregoing referred to in Exhibit G and
in Exhibit H, in each case, which is not subject to a Lien Prohibition.
"Vehicles": all cars, trucks, trailers, construction and earth
moving equipment and other vehicles covered by a certificate of title law of any
state and all tires and other appurtenances to any of the foregoing.
6
<PAGE>
1.2 Other Definitional Provisions. (a) The words "hereof," "herein",
"hereto" and "hereunder" and words of similar import when used in this Agreement
shall refer to this Agreement as a whole and not to any particular provision of
this Agreement, and Section and Exhibit references are to this Agreement unless
otherwise specified.
(b) The meanings given to terms defined herein shall be equally
applicable to both the singular and plural forms of such terms.
(c) Where the context requires, terms relating to the Collateral or
rights or remedies of the Secured Parties, shall, unless otherwise defined
herein, have the meanings set forth in the New York UCC, and when used in
relation to a Grantor, shall refer to such Grantor's Collateral or the relevant
part thereof.
SECTION 2. GRANT OF SECURITY INTERESTS AND LIENS; RIGHTS OF AGENT
AND LENDERS.
2.1 Grant of Security Interest and Liens. As security for the full
and prompt payment and performance when due of all Obligations, each Grantor
hereby grants to the Agent, for the benefit of the Secured Parties, a continuing
security interest in, lien on, and assignment of, all of such Grantor's right,
title and interest in the following, whether now owned or hereafter acquired or
arising: (a) (i) Receivables (other than the Receivables identified on Exhibit J
hereto (the "Excluded Receivables")), General Intangibles, Subject Equipment,
Inventory, Intellectual Property, Collateral Real Estate Interests, and the
Pledged Collateral; (ii) moneys, securities and other Property and accounts
relating thereto, now or hereafter held or received by, or in transit to, the
Agent, the Bank or any Lender from or for such Grantor, whether for safekeeping,
pledge, custody, transmission, collection or otherwise, including, without
limitation, all of such Grantor's deposit accounts, credits, and balances with
the Agent, the Bank or any Lender, (iii) any Collateral Account and any deposit
accounts with any financial institution with which the Grantor maintains
deposits (other than trust accounts and other accounts excluded with the
approval of the Agent); and (iv) books, records and other Property relating to
or referring to any of the foregoing, including, without limitation, all books,
records, ledger cards, data processing records, computer software and other
Property, including without limitation the Real Estate Records; and (b) all
Proceeds of all of the foregoing, wherever located and whether now existing or
hereafter arising or acquired (all of the foregoing under subsections (a) and
(b) above, together with all other Property in which the Agent may at any time
be granted a Lien to secure any of the Obligations, being herein collectively
referred to as the "Collateral"). The Agent, for the benefit of the Secured
Parties, shall have all of the rights of a secured party with respect to the
Collateral under the New York UCC and other applicable laws. Notwithstanding
anything herein, in any Mortgage or in any filing relating hereto or thereto, no
grant of a security interest in Equipment (other than Subject Equipment), is
intended to be given hereby or thereby to the extent such Equipment is subject
to a Permitted Lien and a Lien Prohibition.
7
<PAGE>
2.2 Perfection and Protection of Security Interest. (a) Without
limiting the application of Section 3.13 with respect to Intellectual Property
or Section 3.14 with respect to Pledged Collateral, each Grantor shall, at its
expense, perform all steps to more fully perfect, maintain, protect, and enforce
the Security Interest including, without limitation: (i) executing and filing
(A) financing or continuation statements, and amendments thereof, in form and
substance satisfactory to the Agent, including without limitation for filing in
the Uniform Commercial Code filing offices listed on Exhibit C hereto and (B)
with respect to Intellectual Property, short-form security agreements in the
form of Annex 1 and Annex 2 (for filing with the PTO) and Annex 3 (for filing
with the Copyright Office) (and, in each case, the Power of Attorney attached
thereto); (ii) delivering to the Agent the originals of all instruments,
documents, and chattel paper, and all other Collateral of which the Agent
determines it should have physical possession in order to more fully perfect and
protect the Security Interest therein, duly endorsed or assigned to the Agent
without restriction; (iii) placing notations on such Grantor's books of account
to disclose the Security Interest; and (iv) at the Agent's request, delivering
to the Agent all letters of credit on which such Grantor is named beneficiary.
(b) The Agent may file, without any Grantor's signature, one or more
financing statements describing the Collateral in whole or part. Each Grantor
agrees that a carbon, photographic, photostatic, or other reproduction of this
Agreement or of a financing statement is sufficient as a financing statement.
(c) If any Collateral is at any time in the possession or control of
any warehouseman or bailee, then the Grantors shall notify the Agent thereof and
shall notify such Person of the Security Interest in such Collateral and, upon
the Agent's request following the occurrence and during the continuance of an
Event of Default, instruct such Person to hold all such Collateral for the
Agent's account subject to the Agent's instructions. If at any time any
Collateral is located on any premises that are not owned by a Grantors (except
for retail stores or warehouses leased by a Grantor, then, if the Agent so
requests, the Grantors shall use commercially reasonable efforts to obtain
written waivers, in form and substance satisfactory to the Agent, of all present
and future Liens which the owner or lessor or any mortgagee of such premises may
be entitled to assert against the Collateral.
(d) From time to time, each Grantor shall, upon the Agent's request,
execute and deliver confirmatory written instruments pledging to the Agent the
Collateral, but a Grantor's failure to do so shall not affect or limit the
Security Interest. So long as this Agreement is in effect and until all
Obligations have been fully satisfied (other than any surviving indemnity
obligations in the Loan Documents), the Security Interest shall continue in full
force and effect in the Collateral (whether or not deemed eligible for the
purpose of calculating the Revolving Borrowing Capacity of any Borrower or as
the basis for any advance, loan, extension of credit, or other financial
accommodation).
8
<PAGE>
(e) The Liens granted to the Agent for the benefit of the Secured
Parties shall constitute valid and perfected Liens, free and clear of any Liens
other than Permitted Liens.
2.3 Perfecting and Protecting Security Interests and Liens With
Respect to Collateral Real Estate Interests; Application of Repayments. (a) Each
Grantor shall, at its expense, perform all steps reasonably requested by the
Agent to more fully perfect, maintain, protect, and enforce the Security
Interest and Liens on Collateral Real Estate Interests constituting Scheduled
Real Estate Interests; and
(b) With respect to any Collateral Real Estate Interest constituting
an After-Acquired Real Estate Interest (i) promptly execute and deliver to the
Agent a Mortgage substantially in the form of the Mortgage Form appropriate in
respect of each such Collateral Real Estate Interest; (ii) cause such executed
and delivered Mortgages to be duly recorded in the appropriate recording office
or offices, and (iii) pay all fees and taxes and recording charges payable in
connection therewith.
(c) Notwithstanding anything herein or in any other Loan Document,
including Section 30(b) of the Mortgages, to the contrary, the Grantors may, in
the ordinary course of business and without the consent of the Agent, (i)
modify, amend, surrender, cancel or terminate any Real Property Leasehold or
(ii) operate, repair, make additions to or demolish the Property or improvements
relating to any Real Estate Interest, in each case, to the extent it is
commercially reasonable to do so in such Grantors' good faith business judgment
and subject in the case of a cancellation or termination to the giving of notice
as provided in Section 7.3(d)(ii) and compliance with Section 8.1(e).
2.4 Appraisals. The Grantors shall, at the request of the Agent,
provide the Agent with, or give the Agent access to obtain, appraisals or
updates thereof of any or all of the Collateral from an appraiser satisfactory
to the Agent. If an Event of Default has occurred and is continuing, such
appraisals or updates shall be at the expense of the Grantors. Otherwise, such
appraisals or updates shall be at the Lenders' expense.
2.5 Access and Examination. The Agent may at all reasonable times,
and with reasonable notice, have access to examine, audit, make copies and
extracts from, and inspect each Grantor's records, files, and books of account
and the Collateral and to discuss each Grantor's affairs with such Grantor's
officers and management. Each Lender may, at its own cost and expense, provide a
representative or agent to accompany the Agent on any such examination, audit,
or inspection. At the Agent's request, each Grantor will deliver to the Agent
any instrument necessary for the Agent to obtain records from any service bureau
maintaining records for such Grantor. The Agent may, without expense to the
Agent or any Secured Party, use such of each Grantor's personnel, supplies, and
premises as may be reasonably necessary for maintaining or enforcing the
Security Interest. The Agent shall have the right, at any time, in the Agent's
or any Secured Party's name or in the name of a nominee of the Agent, to verify
the validity, amount or any other matter relating to the Accounts, by mail,
telephone, or otherwise.
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2.6 Insurance. The Grantors shall insure the Collateral (other than
Collateral no longer used or useful in the Grantors' business) for amounts and
on terms (including deductibles) prudently determined by each Grantor in the
context of industry practice against standard, all-risk perils, including
without limitation loss or damage by fire with extended coverage, flood (for any
Collateral Real Estate Interests located in an area identified by the Federal
Emergency Management Agency ("FEMA") as an area having special flood hazards),
theft, burglary, pilferage, loss in transit, and such other hazards as the Agent
shall reasonably specify, under policies and by insurers reasonably acceptable
to the Agent. The Grantors shall cause the Agent, on behalf of the Secured
Parties, to be named in each such policy as secured party and loss payee or
additional insured as its interests may appear, in a manner reasonably
acceptable to the Agent. Each policy of insurance shall contain a clause or
endorsement requiring the insurer to give not less than ten (10) days' prior
written notice to the Agent in the event of cancellation of the policy for any
reason whatsoever. Upon request of the Agent, each Grantor shall deliver to the
Agent original or certified duplicate policies, or certificates or other
evidence reasonably satisfactory to the Agent of its compliance herewith. All
premiums for such insurance shall be paid by the Grantors when due, and
certificates of insurance and photocopies of the policies shall be delivered to
the Agent. The Grantors shall promptly notify the Agent, in accordance with the
terms of the Credit Agreement of any material loss, damage, or destruction to,
or arising from the use of any Collateral. Following the occurrence and during
the continuation of an Event of Default, the Agent is hereby authorized to
collect all insurance proceeds directly.
2.7 Collateral Reporting. Each Grantor will provide the Agent with
the following documents at the following times in form satisfactory to the
Agent: (a) no later than Friday of each week, a Borrowing Base Certificate in
the form of Exhibit I hereto (a "Borrowing Base Certificate"), calculated as of
a date no earlier than the end of the preceding week, except as otherwise
provided below; (b) if requested by the Agent within seven days after the end of
each month, a monthly aging of Accounts for such month; (c) if requested by the
Agent with each Borrowing Base Certificate, weekly warehouse Inventory turnover
reports and weekly store Inventory reports; (d) if requested by the Agent,
monthly perpetual inventory reports, reporting Inventory by location and major
category; (e) such other reports as to the Collateral as the Agent shall
reasonably request from time to time; and (f) certificates of an officer of such
Grantor certifying as to the foregoing. If any Grantor's records or reports of
the Collateral are prepared by an accounting service or other agent, such
Grantor hereby authorizes such service or agent to deliver copies of such
records, reports, and related documents to the Agent. If the Agent determines,
in its sole discretion, that more timely reporting is necessary in order to
administer effectively the terms hereof or to protect adequately the Secured
Parties' rights and remedies hereunder, then the Grantors shall (to the extent
feasible without the necessity of hiring additional employees or materially
changing its accounting and reporting systems) calculate the Accounts and the
Inventory in each Borrowing Base Certificate on a more timely basis.
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2.8 Right to Cure. The Agent may, in its sole discretion, pay any
amount or do any act required of a Grantor hereunder in order to preserve,
protect, maintain or enforce the Obligations, the Collateral or the Security
Interest, and which such Grantor fails to pay or do, including, without
limitation, payment of any judgment against such Grantor, any insurance premium,
any warehouse charge, any processing charge, any landlord's claim, and any other
Lien upon the Collateral. All payments that the Agent makes under this Section
and all out-of-pocket costs and expenses that the Agent pays or incurs in
connection with any action taken by it hereunder shall be charged to such
Grantor's loan accounts as set forth in Sections 2.14, 2.15 and 11.10 of the
Credit Agreement. Any payment made or other action taken by the Agent under this
Section shall be without prejudice to any right to assert an Event or Event of
Default hereunder and to proceed accordingly.
2.9 Power of Attorney. Each Grantor hereby appoints the Agent and
the Agent's designees as such Grantor's attorney, with power: (a) if an Event of
Default has occurred and is continuing: (i) to endorse such Grantor's name on
any checks, notes, acceptances, money orders, or other forms of payment or
security that come into the Agent's possession; (ii) to sign such Grantor's name
on drafts against customers and notices of assignment, financing statements and
other public records; (iii) to sign such Grantor's name on notices to Account
Debtors and on any invoice, bill of lading, or other document of title relating
to any Collateral; and (iv) to do all things necessary to carry out this
Agreement; and (b) to send requests for verification of Accounts to Account
Debtors. Each Grantor ratifies and approves all acts of such attorney. The Agent
will give each Grantor prior notice of any material act it intends to take as
such Grantor's attorney when an Event of Default has not occurred. Neither the
Agent nor the attorney will be liable for any acts or omissions or for any error
of judgment or mistake of fact or law, except those due to the Agent's bad
faith, willful misconduct or gross negligence. This power, being coupled with an
interest, is irrevocable until this Agreement has been terminated and the
Obligations have been finally paid and performed in full (other than any
surviving indemnity obligations under Section 11.8 of the Credit Agreement).
2.10 Recourse. This Agreement is made with full recourse to each
Grantor and pursuant to and upon all the warranties, representations, covenants,
and agreements on the part of each Grantor contained herein, in the other Loan
Documents, or otherwise in writing in connection herewith or therewith.
SECTION 3. REPRESENTATIONS, WARRANTIES AND COVENANTS
Each Grantor represents, warrants and covenants, which
representations, warranties and covenants shall survive execution and delivery
of this Agreement, as follows:
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3.1 Necessary Filings. All filings, registrations and recordings,
including filings in the PTO or the Copyright Office or similar agencies in any
State or political subdivision thereof necessary or appropriate to create,
preserve, protect and perfect the security interest granted by each Grantor to
the Agent hereby in respect of the Collateral have been delivered to the Agent
or its counsel on or before the Closing Date (or thereafter, as agreed by the
Agent) and (after such filings have been made) the security interest granted to
the Agent pursuant to this Agreement in and to the Collateral constitutes or
shall constitute a perfected security interest therein (as provided in the
Uniform Commercial Code) to the extent that perfection is effected through such
filings, registrations or recordings, and is or shall be entitled to all the
rights, priorities and benefits afforded by the Uniform Commercial Code or other
relevant law as enacted in any relevant jurisdiction to security interests.
3.2 Title to, Liens on, and Sale and Use of Collateral. Each Grantor
represents and warrants to the Agent and each Lender that: (a) the Collateral is
and will continue to be owned (or with respect to certain Intellectual Property,
licensed) by the Grantors (except for Collateral disposed of in accordance with
clause (d) of this provision), free and clear of all Liens whatsoever, except
for the Security Interest and other Permitted Liens; (b) the Grantors will use
the Collateral for lawful purposes only, and each Guarantor assumes all
liability arising from the ownership or use of the Collateral; and (c) except as
otherwise specifically provided herein or in any other Loan Document, the
Grantors will not, without the Agent's prior written approval, sell, or dispose
of or permit the sale or disposition of any Collateral, except as permitted
hereunder or under the Credit Agreement. The inclusion of Proceeds in the
Collateral shall not be deemed to constitute the Agent's consent to any sale or
other disposition of the Collateral.
3.3 Other Financing Statements. As of the Closing Date, there is no
financing statement (or similar statement or instrument of registration under
the law of any jurisdiction) on file or of record in any relevant jurisdiction
covering or purporting to cover any interest of any kind in the Collateral
except as disclosed in Exhibit B to the Credit Agreement and so long as any of
the Obligations (other than any surviving indemnity obligations under the Credit
Agreement) remain unpaid (or any Commitments are in effect), no Grantor will
execute or authorize to be filed in any public office any financing statement
(or similar statement or instrument of registration under the law of any
jurisdiction) or statements relating to the Collateral, except financing
statements or other registrations filed or to be filed in respect of Permitted
Liens.
3.4 Chief Executive Office; Records. As of the Closing Date, the
location of the chief executive office of each Grantor is listed on Exhibit D.
No Grantor will move its chief executive office except to such new location as
such Grantor may establish in accordance with this Section 3.4. The originals of
all documents evidencing all Receivables of each Grantor and the only original
books of account and records of such Grantor relating thereto are, and will
continue to be, kept at such chief executive office, at such other locations
shown on Exhibit D hereto or at such new locations as such Grantor may establish
in accordance with this Section 3.4 or Section 3.5; provided, that, so long as
(x) true and correct copies of all documents evidencing such Receivables and
copies of such books and records are kept at such chief executive office or
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at such other locations shown on Exhibit D hereto, or at such new locations as
Grantor may establish in accordance with this Section 3.4 or section 3.5, and
(y) the failure to maintain any original copies of the foregoing at such
locations could not have an adverse effect upon the validity, perfection or
priority of any security interest granted hereunder, each Grantor shall be
permitted to keep original copies of the foregoing at other locations to be
determined in a manner consistent with its past practices. No Grantor shall
establish a new location for its chief executive office until (i) it shall have
given to the Agent not less than 30 days' prior written notice of its intention
so to do, clearly describing such new location and providing such other
information in connection therewith as the Agent may reasonably request, and
(ii) with respect to such new location, it shall have taken all action to
maintain the Security Interest of the Agent in the Collateral at all times to be
fully perfected and in full force and effect, and at the request of the Agent,
it shall execute and deliver all filing of financing statements or continuations
and amendments or supplements thereto, as necessary, for filing in appropriate
filing offices, and taken all other actions (including, without limitation, the
payment of all filing fees and taxes, if any, payable in connection with such
filings) necessary in order to perfect (and maintain the perfection and priority
of) the Security Interest. Any such notice of a change or addition to the
locations on Exhibit D shall, after compliance with the immediately preceding
sentence, be deemed to amend such Exhibit to reflect such change or addition, to
the same extent as if the Grantors, the Agent and each Lender entered into a
formal written amendment hereof for that purpose.
3.5 Location of Inventory And Equipment. As of the Closing Date, all
Inventory and Equipment (other than Vehicles) held on the date hereof by each
Grantor is located at the addresses shown for such Grantor on Exhibit D hereto.
Each Grantor agrees that all Inventory and all Equipment (other than Vehicles)
now held or subsequently acquired by it shall be kept at (or shall be in
transport to) the locations shown on Exhibit D hereto; provided, that each
Grantor may establish a new location for Inventory and Equipment only if (i) it
shall give to the Agent written notice of such new location as promptly as
practicable and in no event later than 60 days after the establishment thereof,
clearly describing such new location and providing such other information in
connection therewith as the Agent may reasonably request, (ii) with respect to
such new location, as promptly as practicable and in no event later than 75 days
after the establishment thereof, it shall have taken all action to maintain the
security interest of the Agent in the Collateral intended to be granted hereby
to be at all times fully perfected and in full force and effect, and at the
request of the Agent shall execute and deliver all filing of financing or
confirmation statements and amendments or supplements thereto, as necessary, for
filing in the appropriate filing office or offices, and taken all other actions
(including, without limitation, the payment of all filing fees and taxes, if
any, payable in connection with such filings) necessary, in order to perfect
(and maintain the perfection and priority of) the Security Interest; provided
further, that the requirements of the foregoing clauses (i) and (ii) shall not
apply to Vehicles. Any such notice of a change or addition to the locations on
Exhibit D shall, after compliance with the immediately preceding sentence, be
deemed to amend such Exhibit to reflect such change or addition, to the same
extent as if the Grantors, the Agent and each Lender entered into a formal
written amendment hereof for that purpose.
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3.6 Trade Names; Change of Name. As of the Closing Date, no Grantor
operates in any jurisdiction under, or in the preceding 12 months has operated
in any jurisdiction under, any trade names, fictitious names or other names
(including, without limitation, any names of divisions or operations) except its
legal name and such other trade, fictitious or other names as are listed for
such Grantor on Exhibit E hereto. No Grantor shall change its legal name or
assume or operate in any jurisdiction under any trade, fictitious or other name
except those names listed for such Grantor on Exhibit E hereto and new names
(including, without limitation, any names of divisions or operations)
established in accordance with this Section 3.6. No Grantor shall assume or
operate in any jurisdiction under any new trade, fictitious or other name until
(i) it shall have given to the Agent not less than 30 days' prior written notice
of its intention so to do, clearly describing such new name and the
jurisdictions in which such new name shall be used and providing such other
information in connection therewith as the Agent may reasonably request, (ii)
with respect to such new name, it shall have taken all action to maintain the
security interest of the Agent in the Collateral intended to be granted hereby
at all times to be fully perfected and in full force and effect and at the
request of the Agent, it shall have furnished to the Agent all financing or
continuation statements and amendments or supplements thereto, as necessary, for
filing in the appropriate filing office or offices, and taken all other actions
(including, without limitation, the payment of all filing fees and taxes, if
any, payable in connection with such filings) necessary, in order to perfect
(and maintain the perfection and priority of) the Security Interest. Any such
notice of change in or additions to trade, fictitious or other names on Schedule
E, shall, after compliance with the immediately preceding sentence, be deemed to
amend such Exhibit to reflect such change or addition, to the same extent as if
the Grantor, the Agent and each Lender entered into a formal written amendment
hereof for such purpose.
3.7 Accounts. (a) (i) Each existing Account of each Grantor
represents, and each future Account of such Grantor will represent, a bona fide
sale or lease of goods by such Grantor, or the rendition of services by such
Grantor; (ii) each existing Account of such Grantor is, and each future Account
of such Grantor will be, for a liquidated amount payable by the Account Debtor
thereon on the terms set forth in the invoice therefor or in the schedule
thereof delivered to the Agent, without deduction other than such allowances or
credits given or allowed and in accordance with the Grantor's ordinary business
practices or as otherwise permitted hereunder or under the Credit Agreement;
(iii) all payments received with respect to each Account of such Grantor, and
all credits, discounts, allowances, and extensions with respect to each such
Account, will be accurately reflected in each report of Accounts given to the
Agent under the Loan Documents; and (iv) all goods described in each invoice
will have been delivered to the Account Debtor and all services of such Grantor
described in each invoice will have been performed.
(b) A Grantor shall not re-date any invoice or sale or make sales on
extended dating beyond that customary in such Grantor's business. Together with
each Borrowing Base Certificate delivered, Grantor shall deliver a schedule of
all Account Debtors with an outstanding account balance of more than $250,000,
50% or more of which is over 30 days past due, the foregoing schedule to be true
and correct as of the date of delivery thereof.
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(c) Without the Agent's prior written consent, a Grantor shall not
accept any note or other instrument (except a check or other instrument for the
immediate payment of money) with respect to any Account other than (i) in
connection with a Permitted Inducement, (ii) as part of or in connection with a
Permitted Claim Settlement or (iii) to the extent consistent with such Grantor's
prior business practices. Any instrument accepted by a Grantor (with the Agent's
prior consent or as permitted hereunder) shall be considered as evidence of the
Account and not payment thereof and upon the Agent's request, such Grantor will
promptly deliver such instrument to the Agent appropriately endorsed.
(d) Each Grantor shall, consistent with prior practice, promptly
settle or adjust all disputes and claims with or against Account Debtors without
expense to the Agent or any Lender. The Agent's prior written consent shall be
required in connection with any discount, credit or allowance made or given if
(i) the amount thereof exceeds $100,000 and an Event of Default has occurred and
is continuing, or (ii) such discount, credit or allowance is made or given other
than as a part of or in connection with a Permitted Inducement or Permitted
Claim Settlement or otherwise in the ordinary course of such Grantor's business,
or (iii)(x) an individual discount, credit or allowance exceeds $500,000 in
amount (excluding the amount described in the proviso hereto) or (y) the
aggregate amount of all such discounts, credits and allowances made or given by
all Grantors since the date of the most recently delivered Borrowing Base
Certificate exceeds $1,000,000 (excluding the amount described in the proviso
hereto); provided, however, that so long as no Event of Default has occurred and
is continuing, the Agent's consent shall not be required for discounts, credits
or allowances made or given by a Grantor in favor of M&G Markets, Inc. and M.
Ray & T. Carole Overdorff and their respective Affiliates. At all times when an
Event of Default exists and is continuing, each Grantor shall promptly notify
the Agent of disputes and claims, and the Agent may settle or adjust disputes
and claims directly with Account Debtors for amounts and upon terms which the
Agent considers advisable. In such cases, the Agent will credit the applicable
Grantor's loan accounts with only the net amounts received by the Agent in
payment of an Account.
(e) If an Account Debtor returns any Inventory to a Grantor, then
such Grantor shall promptly determine the reason for such return and, subject to
Section 3.7(d), shall issue a credit memorandum to the Account Debtor in the
appropriate amount. All returned Inventory shall remain subject to the Security
Interest. Whenever any Inventory is returned, the related Account of such
Grantor shall be deemed ineligible and, unless such return has been
appropriately reflected in a Borrowing Base Certificate, the Revolving Borrowing
Capacity of such Grantor shall be adjusted accordingly.
3.8 Inventory. All of the Inventory of such Grantor is and will be
held for sale or lease, or to be furnished in connection with the rendition of
services, in the ordinary course of such Grantor's business. Each Grantor will
keep its Inventory in good and marketable condition, at its own expense. Each
Grantor will maintain a perpetual inventory reporting system at all times. Each
Grantor will conduct a physical count of the Inventory at least once each Fiscal
Year, and, after an Event of Default has occurred and so long as it is
continuing, at such other
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times as the Agent requests, and shall promptly supply the Agent with a copy of
such count accompanied by a report of the value of such Inventory (valued at the
lower of cost, on a first-in, first-out basis, or market value, computed in the
same manner as the Value of Eligible Inventory). On any report of Inventory or
Accounts provided to the Agent pursuant to Section 2.7 or otherwise, the
Grantors will identify the amount of all Inventory reported therein which was
acquired or accepted, and the amount of all Accounts reported therein which
arose from sales of Inventory, on a bill-and-hold, guaranteed sale, sale and
return, sale on approval, consignment, or other repurchase or return basis; and
the Grantors will not include any such Inventory or Accounts as Eligible
Inventory or Eligible Accounts in any Borrowing Base Certificate.
3.9 Franchise Agreements. As of, and after giving effect to, the
Closing Date, (a) Exhibit F hereto is a complete list of the name of each Person
which operates a Riverside Markets, Bi-Lo Markets, or Big M franchise on the
date hereof, and the location of each such franchise; (b) each of the Franchise
Agreements is in full force and effect; and (c) none of the Grantors or, to the
best of their knowledge, any other party to the Franchise Agreements is in
default under one or more of the Franchise Agreements in any material respect.
If the Grantors add any new franchise to the Riverside Markets, Bi-Lo Markets,
or Big M franchise programs, or terminate any such franchise, or change the
Person operating any such franchise, then the Grantors shall give the Agent
written notice thereof within 30 days after such event occurs. Each Grantor
shall fully perform all of its obligations under the Franchise Agreements in all
material respects, and shall enforce all of its rights and remedies thereunder,
in each case as it deems appropriate in its business judgment; provided,
however, that none of the Grantors shall (x) take any action or fail to take any
action with respect to the Franchise Agreements that would result in a waiver or
other loss of any material right or remedy of any Grantor thereunder, or (y)
without the Agent's prior written consent, modify, amend, supplement,
compromise, satisfy, release, or discharge any of the Franchise Agreements or
any Person liable directly or indirectly with respect thereto if an Event of
Default has occurred and is continuing or would occur after giving effect
thereto and if in the case of each of (x) or (y), such action (or inaction) is
reasonably likely to have a Material Adverse Effect. If an Event of Default has
occurred and is continuing, then to the extent permitted by applicable law or
the relevant agreements, the Agent may directly enforce the Franchise Agreements
in its own or any Grantor's name and may enter into such settlements or other
agreements with respect thereto as the Agent determines. All amounts thereby
recovered by the Agent, after deducting the Agent's costs and expenses in
connection therewith, shall be applied to the Obligations in such order as
provided in the Credit Agreement. In any proceeding or action brought by the
Agent under any of the Franchise Agreements for any sum owing thereunder, each
of the Grantors shall jointly and severally indemnify and hold the Agent
harmless from and against all expense, loss or damage suffered by reason of any
defense, setoff, counterclaim, recoupment, or reduction of liability whatsoever
of the obligor thereunder arising out of a breach by any Grantor of any
obligation thereunder or arising out of any other agreement or liability at any
time owing from any Grantor to such obligor. All such obligations of the
Grantors shall be and remain enforceable only against the Grantors and shall not
be enforceable against any of the Secured Parties. Notwithstanding any provision
hereof to the contrary, each of the Grantors shall at all times remain liable to
observe and perform all of its duties and
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obligations under the Franchise Agreements, and the Secured Parties' exercise of
any of their rights with respect to the Collateral shall not release a Grantor
from any of such duties and obligations. The Agent shall not be obligated to
perform or fulfill any of the Grantor's duties and obligations under the
Franchise Agreements or to make any payment thereunder, or to make any inquiry
as to the nature or sufficiency of any payment or Property received by it
thereunder.
3.10 [Intentionally Deleted]
3.11 Additional Representations, Warranties and Covenants With
Respect to Equipment. (a) The Agent shall at all times have free access to and
right of inspection of the Equipment and Equipment records (and the right to
make extracts therefrom and to receive true copies thereof and of any papers or
instruments relating to the Equipment); (b) the Subject Equipment is and shall
remain personal property, and no Grantor will permit, other than in the ordinary
course of business, any of the Subject Equipment to become a part of or affixed
to real property with the effect that the owner thereof or the mortgagee of such
owner shall obtain rights therein superior to those of the Agent, without prior
written notice to and consent by the Agent; (c) each Grantor shall keep the
Subject Equipment in good order, repair, running and marketable condition
(ordinary wear and tear excepted); and shall use the Subject Equipment with all
reasonable care and caution and in accordance with applicable standards of any
insurance and in conformity with all applicable laws, and Grantors assume all
responsibility and liability arising from the use of the Subject Equipment; and
(d) without the prior written consent of the Agent, a Grantor will not Dispose
of (except as provided in Section 8.1 of the Credit Agreement) or grant a Lien
upon, (except as permitted by Section 8.9 of the Credit Agreement) the Subject
Equipment, or any part thereof; and (e) the Subject Equipment valued in the
Daley-Hodkin Appraisal Corporation Appraisal dated March 12, 1999, is, as of the
Closing Date, owned by one or more of the Grantors.
3.12 Additional Representations, Warranties and Covenants With
Respect to Collateral Real Estate Interests.
(a) (i) The Collateral Real Estate Interests of each Grantor are
owned, and will be so owned, free and clear of any Lien (other than Permitted
Liens); (ii) the Real Estate Records are located at the addresses of the
locations set forth on Exhibit D hereto, and Grantors will not change the same
without prior written notice to the Agent; and (iii) the Collateral Real Estate
Interests are being used and will be used in the business of the Grantors and
not for personal, family, household or farming use, for lawful purposes only,
with all reasonable care and caution and in conformity with Legal Requirements;
(b) Each Grantor covenants and agrees that: (i) the Agent shall at
all times have free access to and right of inspection of the Collateral Real
Estate Interests and Real Estate Records (and the right to make extracts
therefrom and to receive originals or true copies thereof and of any papers or
instruments relating to the Collateral Real Estate Interests); (ii) it assumes
all responsibility and liability arising from the use of the Collateral Real
Estate Interests; and (iii) it will not Dispose of (except as provided in
Section 8.1 of the Credit Agreement) or grant a
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Lien upon, (except as permitted by Section 8.9 of the Credit Agreement) the
Collateral Real Estate Interests, or any part thereof;
(c) In addition to the requirements of Section 2.3(a) with respect
to the execution, delivery and recording of Mortgages, with respect to
After-Acquired Real Estate Interests, and if requested by the Agent, the Agent
shall receive as soon as commercially reasonable:
(i) a mortgagee's title insurance policy (or policies) or
marked up unconditional binder for such insurance. Each such policy shall (A) be
in an amount reasonably satisfactory to the Agent; (B) be issued at ordinary
rates; (C) insure that the Mortgage insured thereby creates a valid Lien on such
Real Property owned free and clear of all defects and Liens except for Permitted
Liens; (D) name the Agent for the benefit of the Secured Parties as the insured
thereunder; (E) be in the form of ALTA Loan Policy - 1970 (Amended 10/17/70 and
10/17/84) (or equivalent policies); (F) contain such endorsements and
affirmative coverage as the Agent may reasonably request and (G) be issued by
title companies satisfactory to the Agent (including any such title companies
acting as co-insurers or reinsurers, at the option of the Agent). The Agent
shall have received evidence satisfactory to it that all premiums in respect of
each such policy, all charges for mortgage recording tax, and all related
expenses, if any, have been paid;
(ii) (and the title insurance companies issuing the policies
referred to in clause (i) above (collectively, the "Title Insurance Company"
shall have received), maps or plats of an as-built survey of the sites of any
After-Acquired Real Estate Interest, certified to the Agent and the Title
Insurance Company in a manner reasonably satisfactory to them, dated a date
satisfactory to the Agent and the Title Insurance Company by an independent
professional licensed land surveyor reasonably satisfactory to the Agent and the
Title Insurance Company, which maps or plats and the surveys on which they are
based shall be made in accordance with the Minimum Standard Detail Requirements
for Land Title Surveys jointly established and adopted by the American Land
Title Association and the American Congress on Surveying and Mapping in 1992,
and, without limiting the generality of the foregoing, there shall be surveyed
and shown on such maps, plats or surveys the following: (A) the locations and
heights on such sites of all the buildings, structures and other improvements,
the established building setback lines and other zoning requirements, together
with a certification setting forth the Legal Requirements with respect to the
foregoing; (B) the number of striped parking spaces together with the minimum
number of spaces required to comply with all Legal Requirements; (C) the lines
of streets abutting the sites and width thereof; (D) all access and other
easements appurtenant to the sites; (E) all roadways, paths, driveways,
easements, encroachments and overhanging projections and similar encumbrances
affecting the site, whether recorded, apparent from a physical inspection of the
sites or otherwise known to the surveyor; (F) any encroach ments on any
adjoining property by the building structures and improvements on the sites; (G)
if the site is described as being on a filed map, a legend relating the survey
to said map; and (H) the flood zone designations, if any, in which the Real
Property Owned is located.
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(iii) (A) a policy of flood insurance which (1) covers any
After-Acquired Real Estate Interest constituting Real Property Owned and which
is located in an area identified by FEMA as an area having special flood
hazards, and is to be encumbered by any Mortgage, (2) is written in an amount
not less than the outstanding principal amount of the indebtedness secured by
such Mortgage which is reasonably allocable to such Real Property Owned or the
maximum limit of coverage made available with respect to the particular type of
property under the National Flood Insurance Act of 1968, whichever is less, and
(3) has a term ending not later than one year after the Termination Date; (B)
confirmation that the Grantor has received the notice required pursuant to
Section 208(e)(3) of Regulation H of the Board; and (C) (1) "Phase One"
environmental reports, (2) Property condition reports, (3) evidence as to zoning
compliance and (4) a certificate of occupancy.
(iv) The Agent shall have received a copy of all recorded
documents referred to, or listed as exceptions to title in, the title policy or
policies referred to in clause (ii) above and a copy of all other material
documents affecting such Collateral Real Estate Interest.
(d) Each Grantor shall notify the Agent in writing not later than 30
days after the end of each month of the acquisition of any After-Acquired Real
Estate Interest during such month, setting forth in such notice the nature of
such Property and such other information as may be reasonably requested by the
Agent, including copies of all material agreements and documents with respect to
such acquisition.
3.13 Special Provisions Concerning Intellectual Property.
(a) Trademarks.
(i) Additional Representations and Warranties. Each Grantor
represents and warrants as of the Closing Date that: (1) it is the true and
lawful, sole and exclusive owner of the Trademarks listed for such Grantor on
Exhibit G hereto with respect to the goods and services sold by such Grantor (or
its licensee) thereunder and that Exhibit G includes all the material Trademarks
that are registered or applied for and all material unregistered Trademarks that
such Grantor now has trademark rights in connection with its business; (2) it
owns or is licensed to use all material Trademarks that it uses, and that all
licenses to Grantor to use any material Trademarks, to the best of such
Grantor's knowledge, are in full force and effect; (3) it is the owner of record
of all registrations and applications listed for such Grantor on Exhibit G
hereto and that said registrations are, to the best of such Grantor's knowledge,
valid, subsisting, have not been canceled and that such Grantor is not aware of
any third-party claim pending, threatened, or supportable that any of said
registrations is invalid or unenforceable; (4) all registration and maintenance
fees that have become due and payable in respect of any Trademarks listed on
Exhibit G have been paid and, to the best knowledge of such Grantor, no act has
been done or omitted to be done by such Grantor which act or omission entitles
any governmental authority to cancel, forfeit, modify or declare abandoned any
of the material Trademarks listed on Exhibit G; and (5) to the knowledge of such
Grantor, there are no
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pending or threatened suits, claims, oppositions, or other challenges by any
person against the ownership by such Grantor of any of the material Trademarks
listed on Exhibit G and to the knowledge of such Grantor, the conduct of the
business of such Grantor and its use of any material Trademark listed on Exhibit
G in connection therewith does not infringe upon or otherwise violate any right
of any third party. Each Grantor hereby grants to the Agent an absolute power of
attorney to sign, upon the occurrence and during the continuance of an Event of
Default, any document which may be required by the PTO in order to effect an
absolute assignment of all right, title and interest in each Trademark, and
record the same, in connection with the sale or transfer of that portion of the
Grantor's business to which the Trademark relates.
(ii) Licenses and Assignments. Each Grantor represents and
warrants that the documents listed on Exhibit H and the Franchise Agreements
listed on Exhibit F (and any other Franchise Agreements or licensing agreements
entered into after the Closing Date in the ordinary course of business) set
forth, as of the Closing Date, a complete and accurate list of all material
license agreements and other agreements pursuant to which such Grantor has
granted to any third party any right in and to any of the Trademarks. Other than
the license agreements listed for each Grantor on Exhibit H and the Franchise
Agreements listed on Exhibit F (and any other franchise agreements or licensing
agreements entered into after the Closing Date in the ordinary course of
business) and any extensions or renewals thereof, such Grantor hereby agrees not
to divest itself of any right under any material Trademark absent prior written
approval of the Agent, unless, in each case, the management of the Grantor
concludes that the Trademark in question is of minimal value to the Grantor.
(iii) Infringements. Each Grantor agrees, promptly upon
learning thereof, to notify the Agent in writing of the name and address of, and
to furnish such pertinent information that may be available with respect to, any
party who, in any material respect, may be infringing or otherwise violating any
of such Grantor's rights in and to any material Trademark, or with respect to
any party claiming that such Grantor's use of any material Trademark violates or
infringes upon in any material respect any right of that party. Each Grantor
further agrees, unless otherwise agreed by the Agent, to prosecute diligently
(to the extent it is commercially reasonable to do so in the Grantor's good
faith business judgment) any Person infringing, in any material respect, any
material Trademark, unless, in each case, the management of the Grantor
concludes that the Trademark is of minimal value to the Grantor.
(iv) Preservation of Trademarks. Except in a case in which the
management of the Grantor concludes that the Trademark in question is of minimal
value to such Grantor, each Grantor agrees to use its reasonable best efforts:
(A) to use each of its material Trademarks in interstate commerce in each and
every trademark class of goods and/or services in which such Trademark is
currently used during the time in which this Agreement is in effect,
sufficiently to preserve such Trademarks as Trademarks or service Trademarks
under the laws of the United States, any State thereof or any political
subdivision thereof, (B) to maintain at a level at least in accordance with past
practice the quality of products and services offered under material Trademarks,
(C) to employ such material Trademarks as are registered with the notice of
Federal or other registration as the case may be, if such violation would have a
Material Adverse
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Effect, (D) not to use any material Trademark or otherwise operate its business
in material violation of any third party's rights to the extent it could
reasonably be expected to have a Material Adverse Effect, and (E) not to do any
act or knowingly omit to do any act that could result in cancellation,
forfeiture, modification or abandonment of any material Trademark, if such
result would have a Material Adverse Effect.
(v) Maintenance of Registration. Each Grantor shall (i) at its
own expense use commercially reasonable efforts to diligently process all
documents required by the Trademark Act of 1946, 15 U.S.C. Sections 1051 et seq.
to maintain trademark registration (or, with respect to applications, to make
commercially reasonable efforts to have a registration issue therefrom),
including but not limited to affidavits of use and applications for renewals of
registration in the PTO for all of its material Trademarks pursuant to 15 U.S.C.
Sections 1058(a), 1059 and 1065, and shall pay all fees and disbursements in
connection therewith and (ii) not abandon any registration or application for
any material Trademark prior to the exhaustion of all administrative and
judicial remedies (to the extent it is commercially reasonable to do so in the
good faith judgment of the Grantor) without prior written consent of the Agent,
unless, in each case, the management of the Grantor concludes that the Trademark
is of minimal value to the Grantor.
(vi) Future Registered Trademarks. If any Trademark
registration issues hereafter to any Grantor as a result of any application now
or hereafter pending before the PTO or any similar office or agency of any
jurisdiction, or if any Grantor acquires any Trademarks, then within thirty (30)
days of receipt of any certificate evidencing such registration or the
effectiveness of the acquisition thereof, as appropriate, such Grantor shall
deliver a copy of such certificate or sufficient documents to evidence such
acquisition, and a grant of a security interest in such mark to the Agent,
confirming the grant thereof hereunder substantially in the form of Annex 1
hereto.
(vii) Remedies. If there shall occur and be continuing an
Event of Default, the Agent may, by written notice to any Grantor, take any or
all of the following actions in addition to any rights and remedies that the
Agent may have under any Loan Document or applicable law: (x) declare the entire
right, title and interest of such Grantor in and to each of the Trademarks,
together with all trademark rights and rights of protection to the same, vested,
in which event such rights, title and interest shall immediately vest, in the
Agent for the benefit of the Lenders, in which case the Agent shall be entitled
to exercise the power of attorney referred to in Section 3.13(a)(i) hereof to
execute, cause to be acknowledged and notarized and record said absolute
assignment with the applicable agency; (y) take and use or sell the Trademarks
and the goodwill of such Grantor's business symbolized by the Trademarks and the
right to carry on the business and use the assets of such Grantor in connection
with which the Trademarks have been used; and (z) direct such Grantor to
refrain, in which event such Grantor shall refrain, from using the Trademarks in
any manner whatsoever, directly or indirectly, and, if requested by the Agent,
change such Grantor's corporate name to eliminate therefrom any use of any
Trademark and execute such other and further documents that the Agent may
reasonably request to further
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confirm this and to transfer ownership of the Trademarks and registrations and
any pending trademark application in the PTO to the Agent.
(b) Patents and Copyrights.
(i) Additional Representations and Warranties. Each Grantor
represents and warrants that: as of the Closing Date, it does not own any
Patents or Copyrights. Each Grantor hereby grants to the Agent an absolute power
of attorney to sign, upon the occurrence and during the continuance of an Event
of Default, any document which may be required by the Copyright Office or the
PTO in order to effect an absolute assignment of all right, title and interest
in each Patent and Copyright, and record the same.
(ii) Licenses and Assignments. Other than franchise agreements
or licensing agreements entered into in the ordinary course of business, and any
extensions or renewals thereof, such Grantor hereby agrees not to divest itself
of any right under any material Patent or material Copyright absent prior
written approval of the Agent, unless in each case the management of the Grantor
concludes that the Patent or Copyright is of minimal value to the Grantor.
(iii) Infringements. Each Grantor agrees that it shall not use
its Patents or Copyrights or otherwise operate its business, in violation of any
third party's rights known to such Grantor, to the extent such violation is
likely to have a Material Adverse Effect. Each Grantor agrees, promptly upon
learning thereof, to furnish the Agent in writing with all pertinent information
available to such Grantor with respect to any material infringement or other
material violation of such Grantor's rights in any Patent or Copyright, or with
respect to any claim that the use of any Patent or Copyright materially violates
any right of any party. Each Grantor further agrees, absent direction of the
Agent to the contrary, diligently to prosecute (to the extent it is commercially
reasonable to do so in the good faith judgment of the Grantor) any Person
infringing, in any material respect, any material Patent or material Copyright
unless in each case the management of the Grantor concludes that the Patent or
Copyright is of minimal value.
(iv) Maintenance of Patents and Copyrights. At its own
expense, each Grantor shall make timely payment of all post-issuance fees
required pursuant to 35 U.S.C. Section 41 to maintain in force rights under each
Patent (to the extent it is commercially reasonable to do so in the good faith
judgment of the Grantor). Each Grantor agrees that it shall not do or knowingly
omit any act that could result in the impairment, cancellation, forfeiture,
modification, abandonment, or dedication to the public of any material Patent or
material Copyright unless in each case the management of the Grantor concludes
that the Patent or Copyright is of minimal value.
(v) Other Patents and Copyrights. Within 30 days of
acquisition, issuance or registration of a Patent or Copyright, or of filing of
an application for a United States Patent or Copyright, such Grantor shall
deliver to the Agent a copy of said Patent or Copyright or such application, as
the case may be, with a grant of security as to such Patent or Copyright, as
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the case may be, confirming the grant thereof hereunder, the form of such
confirmatory grant to be substantially in the form of Annex 3 hereto (for
Patents) or Annex 2 hereto (for Copyrights), as appropriate.
(vi) Remedies. If there shall occur and be continuing an Event
of Default, the Agent may by written notice to any Grantor, take any or all of
the following actions: (x) declare the entire right, title, and interest of such
Grantor in each of the Patents and Copyrights vested, in which event such right,
title, and interest shall immediately vest in the Agent for the benefit of the
Secured Parties, in which case the Agent shall be entitled to exercise the power
of attorney referred to in Section 3.13(b)(i) of this Agreement to execute,
cause to be acknowledged and notarized and record said absolute assignment with
the applicable agency; (y) take and use or sell the Patents and Copyrights; and
(z) direct such Grantor to refrain, in which event such Grantor shall refrain,
from using the Patents and Copyrights directly or indirectly, and such Grantor
shall execute such other and further documents as the Agent may request further
to confirm this and to transfer ownership of the Patents and Copyrights to the
Agent for the benefit of the Secured Parties, as the Agent may reasonably
request.
3.14 Special Provisions as to Pledged Collateral.
(a) Specific Grant. As security for the payment and performance in
full of the Obligations, each Pledge Grantor hereby transfers, grants, bargains,
sells, conveys, hypothecates, pledges, sets over and delivers to the Agent, and
grants to the Agent, for the benefit of the Secured Parties, a security interest
in all its right, title and interest in the following:
(i) (A) the shares of common stock listed on Exhibit B (the
"Initial Pledged Securities") with respect to each Issuer identified on such
Exhibit B (the "Initial Issuers") and (B) any additional shares of Capital Stock
of an Initial Issuer owned by any Grantor or the Capital Stock of any other
Subsidiary of a Borrower to the extent this Agreement or the Credit Agreement
requires that such Capital Stock become subject to the Security Interest at any
time after the Closing Date (the "Subsequent Pledged Securities");
(ii) the Pledged Notes; and
(iii) subject to Section 3.14(e) below, all proceeds of the
Pledged Securities and the Pledged Notes including, without limitation, all
cash, securities or other property at any time and from time to time received by
or otherwise distributed to the Pledge Grantor in respect of or in exchange for
any of or all the Pledged Securities or the Pledged Notes (the items referred to
in clauses (i) through (iii) being collectively called the "Pledged Col
lateral").
(b) Delivery of Pledged Collateral. (i) Pledged Securities. Each
Pledge Grantor shall deliver to the Agent, on the Closing Date, the Initial
Pledged Securities, and agrees promptly to deliver or cause to be delivered to
the Agent any and all Subsequent Pledged Securities, in each case in such manner
that the Agent shall have "control" thereof as defined in
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the New York UCC (including, in the case of certificated securities, accompanied
by undated stock powers duly executed in blank and any and all certificates or
other instruments or documents representing any of such Pledged Securities),
together with other instruments of transfer reasonably satisfactory to the Agent
as the Agent may reasonably request.
(ii) Pledged Notes. Upon the written request of the Agent
given in its sole discretion, each Pledge Grantor shall deliver any Pledged Note
held by it to the Agent together with an endorsement to the order of the Agent,
which endorsement may be without recourse.
(iii) Schedule. Each delivery after the Closing Date of
Subsequent Pledged Securities or Pledged Notes shall be accompanied by a
schedule showing a description of the Pledged Collateral then being pledged
hereunder, which schedule shall be attached hereto as a supplement to Exhibit B
and made a part hereof. Each schedule so delivered shall, to the extent complete
and accurate, supersede any prior schedules so delivered.
(c) Representations, Warranties and Covenants. (i) Each Pledge
Grantor hereby represents, warrants and covenants to and with the Agent that:
(A) except as otherwise permitted under the Credit Agreement,
such Pledge Grantor (1) is and will at all times continue to be the direct
owner, beneficially and of record, of the Pledged Securities and the Pledged
Notes that it pledges hereunder, (2) will hold the Pledged Collateral free and
clear of all Liens other than Permitted Liens, and (3) will make no assignment,
pledge, hypothecation or transfer of, or create any Lien on, the Pledged
Collateral, except as permitted under the Credit Agreement;
(B) such Pledge Grantor (1) has good right and legal authority
to pledge the Pledged Collateral it is pledging hereunder in the manner hereby
done or contemplated and (2) 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, other than Permitted Liens;
(C) no consent or approval of any governmental body or
regulatory authority or any securities exchange was or is necessary to the
validity of the pledge effected hereby;
(D) by virtue of the execution and delivery by such Pledge
Grantor of this Agreement, when the Agent obtains control of the Property
constituting the Pledged Securities and possession of the Pledged Notes,
including by delivery to the Agent in accordance with this Agreement of the
certificates, instruments or other documents representing or evidencing the
Pledged Securities and the Pledged Notes, the Agent will obtain a valid and per
fected first lien upon and security interest in the Pledged Collateral as
security for the repayment of the Obligations (to the extent perfection is so
effectuated), free and clear of all other Liens other than Permitted Liens;
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(E) at the Closing Date, the Initial Pledged Securities
constitutes all of the issued outstanding shares of Capital Stock of each
Initial Issuer and such Grantor owns no other equity securities of such Initial
Issuers;
(ii) all of the Initial Pledged Securities have been validly
issued, fully paid and are non-assessable. There is no existing option, warrant,
call, commitment or other agreement to which Penn Traffic or any Initial Issuer
is a party requiring, and there are no convertible securities of Penn Traffic or
any Initial Issuer outstanding which upon conversion would require, the issuance
of any additional stock of any Initial Issuer or other securities convertible
into stock of any Initial Issuer, there are no stockholders' preemptive rights
created by agreement, or rights of first refusal or other similar rights with
respect to the issuance of stock of any Initial Issuer.
(d) Registration in Nominee Name; Denominations. To the extent
permitted under applicable law, and any agreement governing the Pledged Notes,
upon the occurrence and during the continuance of an Event of Default, the Agent
shall have the right (in its sole and absolute discretion with subsequent notice
to the relevant Securities Grantor) 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.
(e) Voting Rights; Dividends; etc. (i) Unless and until an Event of
Default shall have occurred and be continuing:
(A) The Pledge Grantor shall be entitled to exercise any and
all voting and/or consensual rights and powers accruing to an owner of the
Pledged Securities or any part thereof for any purpose not inconsistent with the
terms of this Agreement and the Credit Agreement.
(B) The Agent shall execute and deliver to the Pledge Grantor,
or cause to be executed and delivered to the Pledge Grantor, all such proxies,
powers of attorney, and other instruments as the Pledge Grantor may reasonably
request for the purpose of enabling the Pledge Grantor to exercise the voting
and/or consensual rights and powers which they are entitled to exercise pursuant
to subparagraph (A) above.
(C) The Pledge Grantor shall be entitled to receive and retain
any and all cash dividends paid on the Pledged Securities only to the extent
that such interest or 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,
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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 permitted by
this Section 3.14 (e)(C)), whether paid or payable in
cash or otherwise, whether resulting from a subdivision,
combi nation or reclassification of the outstanding
capital stock of any Issuer of any Pledged Securities or
received in exchange for Pledged Collateral 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 Pledged Collateral, and, if received by the
Pledge Grantor, shall not be commingled by the Pledged 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 Secured Parties and shall be
forthwith delivered to the Agent in the same form as so received (in the manner
required for delivery under Section 3.14(b).
(ii) Upon the occurrence and during the continuance of an
Event of Default, all rights of the Pledge Grantor to receive any dividends
which the Pledge Grantor is authorized to receive pursuant to paragraph (i)(C)
of this Section 3.17 (e) shall cease, and all such rights shall thereupon become
vested in the Agent, which shall have the sole and exclusive right and authority
to receive and retain such dividends. All dividends which are received by the
Pledge Grantor contrary to the provisions of this Section shall be received in
trust for the benefit of the Secured Parties, shall be segregated from other
property or funds of the Pledge Grantor and shall be forthwith delivered to the
Agent as Collateral in the same form as so received (with any necessary
endorsement). Any and all money and other property paid over to or received by
the Agent pursuant to the provisions of this Section shall be retained by the
Agent in an account to be established by the Agent upon receipt of such money or
other property and shall be applied in accordance with the applicable provisions
of the Credit Agreement.
(iii) Upon the occurrence and during the continuance of an
Event of Default, all rights of the Pledge Grantor to exercise the voting and
consensual rights and powers which it is entitled to exercise pursuant to
Section 3.14(e) 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.
(f) Issuance of Additional Securities. Each Pledge Grantor agrees
that, it will cause each Issuer not to issue any equity 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.
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3.15 Further Assurances; Additional Grantors; Additional Actions,
etc. (a) Each Grantor agrees, upon the request of the Agent, to take such
actions, including the execution and delivery to the Agent of such amendments to
this Agreement or such other documents as the Agent deems necessary or advisable
to create and perfect the Security Interest granted under this Agreement, free
and clear of any Liens except Permitted Liens, including without limitation, the
filing of Uniform Commercial Code financing statements or amendments or
continuations in such jurisdictions as may be required by this Agreement or by
law or as may be requested by the Agent.
(b) With respect to any new Subsidiary created or acquired after the
Closing Date, by a Grantor or any of such Grantor's Subsidiaries, promptly (i)
(A) execute and deliver to the Agent such amendments to this Agreement as the
Agent deems necessary or advisable to grant to the Agent, for the benefit of the
Secured Parties, a perfected first priority security interest in the securities
of such new Subsidiary which are owned by such Grantor or any of its
Subsidiaries, and (B) take the action required by Section 3.14(b) and (ii) cause
such new Subsidiary (A) to become a party to this Agreement and (B) to take such
actions necessary or advisable to grant to the Agent for the benefit of the
Secured Parties a perfected security interest in the Collateral (free and clear
of any Lien other than a Permitted Lien) in which such new Subsidiary has an
interest (other than such Property as is subject to a Permitted Lien and a Lien
Prohibition), including, without limitation, the filing of Uniform Commercial
Code financing statements in such jurisdictions as may be required by this
Agreement or by law or as may be requested by the Agent.
SECTION 4. REMEDIES UPON OCCURRENCE OF SPECIFIED EVENTS
4.1 Remedies; Obtaining the Collateral upon Default. Each Grantor
agrees that, if there shall have occurred and be continuing any Event of
Default, then and in every such case, subject to any mandatory requirements of
applicable law then in effect, the Agent, in addition to any rights now or
hereafter existing under applicable law, shall have all rights as a secured
creditor under the Uniform Commercial Code in all relevant jurisdictions (and,
with respect to Intellectual Property, the Lanham Act, the Copyright Act and the
Patent Act) and may also:
(a) personally, or by any agent or attorneys, immediately retake
possession of the Collateral or any part thereof, from each Grantor or any other
Person who then has possession of any part thereof with or without (to the
extent permitted by applicable law) notice or process of law, and for that
purpose may enter upon such Grantor's premises or, to the extent that any
Grantor has a right to consent thereto, such other Person's premises where any
of the Collateral is located and remove the same and use in connection with such
removal any and all services, supplies, aids and other facilities of such
Grantor; and
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(b) instruct the obligor or obligors on any agreement, instrument or
other obligation (including, without limitation, the Receivables and the
Contracts) constituting the Collateral to make any payment required by the terms
of such agreement, instrument or other obligation directly to the Agent and may
exercise any and all remedies of such Grantor in respect of such Collateral; and
(c) sell, assign or otherwise liquidate, or direct each Grantor to
sell, assign or otherwise liquidate, any or all of the Collateral or any part
thereof, and take possession of the proceeds of any such sale or liquidation;
and
(d) take possession of the Collateral or any part thereof, by
directing each Grantor in writing to deliver the same to the Agent at any place
or places designated by the Agent, in which event such Grantor shall at its own
expense:
(i) forthwith cause the same to be moved to the place or
places so designated by the Agent and there delivered to the Agent, and
(ii) store and keep any Collateral so delivered to the Agent
at such place or places pending further action by the Agent as provided in
Section 4.2, and
(iii) while the Collateral shall be so stored and kept,
provide such guards and maintenance services as shall be necessary to protect
the same and to preserve and maintain them in good condition; and
(e) license or sublicense, whether on an exclusive or nonexclusive
basis, any Intellectual Property included in the Collateral for such term and on
such conditions and in such manner as the Agent shall in its sole judgment
determine; and
(f) without consent from any Grantor, sue upon or otherwise collect,
extend the time for payment of, modify or amend the terms of, compromise or
settle for cash or credit, grant other indulgences, extensions, renewals,
compositions, or releases (to Persons directly or indirectly liable in
connection with the foregoing Collateral), and take or omit to take any other
action with respect to the Collateral, any security therefor, any agreement
relating thereto, or any insurance applicable thereto.
it being understood that each Grantor's obligation so to deliver the Collateral
is of the essence of this Agreement and that, accordingly, upon application to a
court of equity having jurisdiction, the Agent shall be entitled to a decree
requiring specific performance by such Grantor of said obligation.
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4.2 Remedies; Disposition of the Collateral. Any Collateral
repossessed by the Agent under or pursuant to Section 4.1 and any other
Collateral whether or not so repossessed by the Agent, may be sold, assigned,
leased or otherwise disposed of under one or more contracts or as an entirety,
and without the necessity of gathering at the place of sale the property to be
sold, and in general in such manner, at such time or times, at such place or
places and on such terms as the Agent may, in compliance with any mandatory
requirements of applicable law, determine to be commercially reasonable. Any of
the Collateral may be sold, leased or otherwise disposed of, in the condition in
which the same existed when taken by the Agent or after any overhaul or repair
which the Agent shall determine to be commercially reasonable. Any such
disposition which shall be a private sale or other private proceedings permitted
by such requirements shall be made upon not less than 10 days' written notice to
such Grantor specifying the time at which such disposition is to be made and the
intended sale price or other consideration therefor, and shall be subject, for
the 10 days after the giving of such notice, to the right of such Grantor or any
nominee of such Grantor to acquire the Collateral involved at a price or for
such other consideration at least equal to the intended sale price or other
consideration so specified. Any such disposition which shall be a public sale
permitted by such requirements shall be made upon not less than 10 days' written
notice to such Grantor specifying the time and place of such sale and, in the
absence of applicable requirements of law, shall be by public auction (which
may, at the Agent's option, be subject to reserve), after publication of notice
of such auction not less than 10 days prior thereto in two newspapers in general
circulation in the City of New York as well as the City of Syracuse, New York.
To the extent permitted by any such requirement of law, any of the Secured
Parties may bid for and become the purchaser of the Collateral or any item
thereof, offered for sale in accordance with this Section without accountability
to such Grantor. In the payment of the purchase price of the Collateral, the
purchaser shall be entitled to have credit on account of the purchase price
thereof of amounts owing to such purchaser on account of any of the Obligations
which would be payable to it in accordance with the terms and provisions of the
Credit Agreement, and any such purchaser may deliver notes, claims for interest,
or claims for other payment with respect to such Obligations in lieu of cash up
to the amount which would, upon distribution of the net proceeds of such sale,
be payable thereon. Such notes, if the amount payable hereunder shall be less
than the amount due thereon, shall be returned to the holder thereof after being
appropriately stamped to show partial payment. If, under mandatory requirements
of applicable law, the Agent shall be required to make disposition of the
Collateral within a period of time which does not permit the giving of notice to
such Grantor as hereinabove specified, the Agent need give such Grantor only
such notice of disposition as shall be reasonably practicable in view of such
mandatory requirements of applicable law. Such Grantor agrees to do or cause to
be done all such other acts and things as may be reasonably necessary to make
such sale or sales of all or any portion of the Collateral valid and binding and
in compliance with any and all applicable laws, regulations, orders, writs,
injunctions, decrees or awards of any and all courts, arbitrators or
governmental instrumentalities, domestic or foreign, having jurisdiction over
any such sale or sales, all at such Grantor's expense.
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<PAGE>
4.3 Remedies; Collateral Real Estate Interests. Upon the occurrence
and during the continuance of an Event of Default, or at any time after
acceleration under Section 9.2 of the Credit Agreement, the Agent shall have the
right (in addition to any other rights the Agent may have under this Agreement,
any Mortgage or applicable law) at any time and from time to time, (i) with or
without judicial process or the aid or assistance of others, to enter upon any
premises constituting any Collateral Real Estate Interest and, without
resistance or interference by a Grantor, take possession and control of the
Collateral Real Estate Interest; (ii) take possession of all Real Estate
Records; (iii) exercise all rights and powers of the Grantor including to
collect all revenues, rents and profits; (iv) to sell or otherwise dispose of
any or all of the Collateral Real Estate Interests, by foreclosure, public or
private sale or otherwise. Rights of the Agent under this Section 4.3 shall be
exercised consistently with any superior rights under applicable law of holders
of prior Liens.
4.4 Waiver of Claims. Except as otherwise provided in this
Agreement, EACH GRANTOR HEREBY WAIVES, TO THE EXTENT PERMITTED BY APPLICABLE
LAW, NOTICE AND JUDICIAL HEARING IN CONNECTION WITH THE AGENT'S TAKING
POSSESSION OR THE AGENT'S DISPOSITION OF ANY OF THE COLLATERAL, INCLUDING,
WITHOUT LIMITATION, ANY AND ALL PRIOR NOTICE AND HEARING FOR ANY PREJUDGMENT
REMEDY OR REMEDIES AND ANY SUCH RIGHT WHICH SUCH GRANTOR WOULD OTHERWISE HAVE
UNDER THE CONSTITUTION OR ANY STATUTE OF THE UNITED STATES OR OF ANY STATE, and
each Grantor hereby further waives, to the extent permitted by law:
(a) all damages occasioned by such taking of possession except any
damages which are the direct result of the Agent's gross negligence or willful
misconduct, but in no event any consequential or punitive damages;
(b) all other requirements as to the time, place and terms of sale
or other requirements with respect to the enforcement of the Agent's rights
hereunder; and
(c) all rights of redemption, appraisement, valuation, stay,
extension or moratorium now or hereafter in force under any applicable law in
order to prevent or delay the enforcement of this Agreement or the absolute sale
of the Collateral or any portion thereof, and each Grantor, for itself and all
who may claim under it, insofar as it or they now or hereafter lawfully may,
hereby waives the benefit of all such laws.
Any sale of, or the grant of options to purchase, or any other
realization upon, any Collateral shall operate to divest all right, title,
interest, claim and demand, either at law or in equity, of each Grantor therein
and thereto, and shall be a perpetual bar both at law and in equity against each
Grantor and against any and all Persons claiming or attempting to claim the
Collateral so sold, optioned or realized upon, or any part thereof, from,
through and under such Grantor.
30
<PAGE>
4.5 Application of Proceeds. All moneys collected by the Agent upon
any sale or other disposition of the Collateral, together with all other moneys
received by the Agent hereunder, or under any Guaranty Agreement or other Loan
Document, shall be applied in the manner provided in the Credit Agreement.
4.6 Remedies Cumulative; No Waiver. Each and every right, power and
remedy hereby specifically given to the Agent shall be in addition to every
other right, power and remedy specifically given under this Agreement, Hedging
Agreements or the other Loan Documents or now or hereafter existing at law or in
equity, or by statute and each and every right, power and remedy whether
specifically herein given or otherwise existing may be exercised from time to
time or simultaneously and as often and in such order as may be deemed expedient
by the Agent. All such rights, powers and remedies shall be cumulative and the
exercise or the beginning of exercise of one shall not be deemed a waiver of the
right to exercise of any other or others. No delay or omission of the Agent in
the exercise of any such right, power or remedy and no renewal or extension of
any of the Obligations shall impair any such right, power or remedy or shall be
construed to be a waiver of any Event or Event of Default or an acquiescence
therein. No notice to or demand on any Grantor in any case shall entitle it to
any other or further notice or demand in similar or other circumstances or
constitute a waiver of any of the rights of the Agent to any other or further
action in any circumstances without notice or demand. In the event that the
Agent shall bring any suit to enforce any of its rights hereunder and shall be
entitled to judgment, then in such suit the Agent may recover reasonable
expenses, including attorneys' fees, and the amounts thereof shall be included
in such judgment.
SECTION 5. INDEMNITY
5.1 Indemnity. (a) Each Grantor agrees to indemnify, reimburse and
hold each Indemnitee harmless from any and all liabilities, obligations,
damages, injuries, penalties, claims, demands, actions, suits, judgments and any
and all costs, expenses or disbursements (including reasonable attorneys' fees
and expenses) (for the purposes of this Section 5.1 the foregoing are
collectively called "expenses") of whatsoever kind and nature imposed on,
asserted against or incurred by any of the Indemnitees in any way relating to or
arising out of this Agreement, any other Security Document or any other document
executed in connection herewith and therewith or in any other way connected with
the administration of the transactions contemplated hereby and thereby or the
enforcement of any of the terms of, or the preservation of any rights under any
thereof, or in any way relating to or arising out of the ownership, ordering,
purchase, delivery, control, acceptance, lease, financing, possession,
operation, condition, sale, return or other disposition, or use of the
Collateral (including, without limitation, latent or other defects, whether or
not discoverable), any contract claim or, to the maximum extent permitted under
applicable law, the violation of the laws of any country, state or other
governmental body or unit, or any tort (including, without limitation, claims
arising or imposed under the doctrine of strict liability, or for or on account
of injury to or the death of any Person (including any Indemnitee), or property
damage); provided that no Indemnitee shall be indemnified pursuant to this
Section 5.1(a) for expenses to the extent caused by the gross negligence, bad
faith, breach of
31
<PAGE>
a material obligation under a Loan Document, or willful misconduct of such
Indemnitee. Each Grantor agrees that upon written notice by any Indemnitee of
the assertion of such a liability, obligation, damage, injury, penalty, claim,
demand, action, suit or judgment, such Grantor shall assume full responsibility
for the defense thereof. Each Indemnitee agrees to use its best efforts to
promptly notify such Grantor of any such assertion to which such Indemnitee has
knowledge.
(b) Without limiting the application of Section 5.1(a), each Grantor
agrees to pay, or reimburse the Agent for (if the Agent shall have incurred
fees, costs or expenses because such Grantor shall have failed to comply with
its obligations under this Agreement or any other Loan Document), any and all
fees, costs and expenses of whatever kind or nature incurred in connection with
the creation, preservation or protection of the Agent's Liens on, and security
interest in, the Collateral, including, without limitation, all fees and taxes
in connection with the recording or filing of instruments and documents in
public offices, payment or discharge of any taxes or Liens upon or in respect of
the Collateral, premiums for insurance with respect to the Collateral and all
other fees, costs and expenses in connection with protecting, maintaining or
preserving the Collateral and the Agent's interest therein, whether through
judicial proceedings or otherwise, or in defending or prosecuting any actions,
suits or proceedings arising out of or relating to the Collateral.
(c) Without limiting the application of Section 5.1(a) or (b), each
Grantor agrees to pay, indemnify and hold each Indemnitee harmless from and
against any loss, costs, damages and expenses which such Indemnitee may suffer,
expend or incur in consequence of or growing out of any misrepresentation by
such Grantor in this Agreement, any other Loan Document, or in any writing
contemplated by or made or delivered pursuant to or in connection with this
Agreement or any other Loan Document.
(d) If and to the extent that the obligations of any Grantor under
this Sec tion 5.1 are unenforceable for any reason, such Grantor hereby agrees
to make the maximum contribution to the payment and satisfaction of such
obligations which is permissible under applicable law.
5.2 Indemnity Obligations Secured by Collateral; Survival. Any
amounts paid by any Indemnitee as to which such Indemnitee has the right to
reimbursement shall constitute Obligations secured by the Collateral. The
indemnity obligations of the Grantors contained in this Section 5 shall continue
in full force and effect notwithstanding the full payment of all the Obligations
and notwithstanding the discharge thereof.
5.3 Agent's Rights, Duties, and Liabilities. Unless the Agent has
acted in bad faith or engaged in willful misconduct, neither the Agent nor any
of its officers, directors, employees, and Agent shall be liable or responsible
in any way for the safekeeping of any of the Collateral, or for any act or
failure to act with respect to the Collateral, or for any loss or damage
thereto, or for any loss or claim arising from or related to the use, sale, or
other disposition of the Collateral, or for any diminution in the value thereof,
or for any act or default by any warehouseman, carrier, forwarding agency or
other person whomsoever, all of which shall be at
32
<PAGE>
each Grantor's sole risk. The Obligations shall not be affected by any failure
of the Agent to take any steps to perfect the Security Interest or to collect or
realize upon the Collateral. Neither any loss of nor damage to the Collateral
shall release any Grantor from any of the Obligations.
SECTION 6. THE AGENT
All provisions of Article 12 of the Credit Agreement are hereby
incorporated in full by reference.
SECTION 7. MISCELLANEOUS
7.1 Notices. Except as otherwise specified herein, all notices,
requests, demands or other communications to or upon the respective parties
hereto shall be given and shall be effective as provided in Section 11.11 of the
Credit Agreement.
7.2 Waiver; Amendment. None of the terms and conditions of this
Agreement may be changed, waived, modified or varied in any manner whatsoever
unless in writing duly signed by the Grantors and the Agent with the consent of
the Required Lenders, subject to the limitations set forth in Section 11.14(f)
of the Credit Agreement.
7.3 Obligations Absolute. The obligations of each Grantor hereunder
shall be absolute and unconditional in accordance with its terms and shall
remain in full force and effect without regard to, and shall not be impaired,
released, discharged, terminated or otherwise affected by any circumstance or
occurrence whatsoever (other than full satisfaction of the Obligations),
including, without limitation: (a) any bankruptcy, insolvency, reorganization,
arrangement, readjustment, composition, liquidation or the like of such Grantor;
(b) any exercise or non-exercise, or any waiver of, any right, remedy, power or
privilege under or in respect of this Agreement, the Credit Agreement, or any
other Loan Document (including without limitation, any sale, compromise,
collection or liquidation of any Collateral) except as specifically set forth in
a waiver granted pursuant to Section 7.2 hereof; (c) any furnishing of any
additional security to the Agent, the other Lenders or their assignees or any
acceptance thereof or any release of any security by the Agent, the other
Lenders or their assignees; (d) any lack of validity or enforceability of the
Credit Agreement, any Note, any other Loan Document or any other documents,
instruments or agreements referred to therein or any assignment or transfer of
any thereof; (e) any limitation on any party's liability or obligations under
any such instrument or agreement or any invalidity or unenforceability, in whole
or in part, of any such instrument or agreement or any term thereof; (f) any
amendment, indulgence, renewal, extension, modification or addition, consent or
supplement to or deletion from any Loan Document or any security for any of the
Obligations; whether or not such Grantor shall have notice or knowledge of any
of the foregoing or (g) any other circumstance which might otherwise constitute
a defense available to, or a discharge of such Grantor. The rights and remedies
of the Agent herein provided are cumulative and not exclusive of any rights or
remedies which the Agent would otherwise have.
33
<PAGE>
7.4 Successors and Assigns. This Agreement shall be binding upon
each Grantor and its successors and assigns and shall inure to the benefit of
the Agent and each Lender and their respective successors and assigns, provided
that no Grantor may transfer or assign any or all of its rights or obligations
hereunder without the written consent of the Required Lenders. All agreements,
statements, representations and warranties made by any Grantor herein or in any
certificate or other instrument delivered by such Grantor or on its behalf under
this Agreement shall be considered to have been relied upon by the Lenders and
shall survive the execution and delivery of this Agreement and the other Loan
Documents regardless of any investigation made by the Secured Creditors or on
their behalf.
7.5 Headings Descriptive. The headings of the several sections of
this Agreement are inserted for convenience only and shall not in any way affect
the meaning or construction of any provision of this Agreement.
7.6 Severability. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
7.7 GOVERNING LAW. THIS AGREEMENT SHALL, IN ACCORDANCE WITH SECTION
5-1401 OF THE GENERAL OBLIGATION LAW OF THE STATE OF NEW YORK, BE GOVERNED BY
THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO ANY CONFLICTS OF LAWS
PRINCIPLES THEREOF THAT WOULD CALL FOR THE APPLICATION OF THE LAWS OF ANY OTHER
JURISDICTION (OTHER THAN THE PROVISIONS OF ss. 9-103 OF THE NEW YORK UCC).
7.8 Grantors' Duties. It is expressly agreed, anything herein
contained to the contrary notwithstanding, that each Grantor shall remain liable
to perform all of the obligations, if any, assumed by it with respect to the
Collateral and the Agent shall not have any obligations or liabilities with
respect to any Collateral by reason of or arising out of this Agreement, nor
shall the Agent be required or obligated in any manner to perform or fulfill any
of the obligations of any Grantor under or with respect to any Collateral.
7.9 Termination; Release. (a) After the Termination Date, this
Agreement shall terminate and the Agent, at the request and expense of the
Grantors, will execute and deliver to the Grantors a proper instrument or
instruments acknowledging the satisfaction and termination of this Agreement,
and will duly assign, transfer and deliver to the Grantors (without recourse and
without any representation or warranty) such of the Collateral of the Grantors
as may be in the possession of the Agent and as has not theretofore been sold or
otherwise applied or released pursuant to this Agreement. As used in this
Agreement, "Termination Date" shall mean the date upon which the Revolving
Credit Commitments have been terminated, no Note
34
<PAGE>
remains outstanding, all Letters of Credit have been terminated (or fully
cash-collateralized) and all Obligations have been paid in full.
(b) It is expressly acknowledged and agreed that all or a portion of
the Collateral shall be released from the Liens and security interests created
hereunder upon any sale thereof from time to time to the extent permitted by,
and in accordance with the terms of, the Credit Agreement or this Agreement.
Upon any sale of the type described in the preceding sentence, the Agent shall,
at the request and expense of any Grantor, and without the further consent of,
or liability to, any Lender, release such Collateral and execute and deliver to
such Grantor a proper instrument or instruments acknowledging the release of
such Collateral from this Agreement, and will duly assign, transfer and deliver
to such Grantor (without recourse and without any representation or warranty)
the Collateral being sold or released as described above.
(c) At any time that any Grantor desires that the Agent take any
action to acknowledge or give effect to any release of Collateral pursuant to
the foregoing Section 7.9(a) or (b), it shall deliver to the Agent a certificate
signed by its chief financial officer stating that the release of the respective
Collateral is permitted pursuant to Section 7.9(a) or (b). The Agent shall have
no liability whatsoever to any Lender as the result of any release of Collateral
by it as permitted by this Section 7.9. Upon any release of Collateral pursuant
to Section 7.9(a) or (b), none of the Lenders shall have any continuing right or
interest in such Collateral, or the proceeds thereof.
7.10 Counterparts. This Agreement may be executed in any number of
counterparts and by the different parties hereto on separate counterparts, each
of which when so executed and delivered shall be an original, but all of which
shall together constitute one and the same instrument.
[Remainder of Page Intentionally Left Blank]
35
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Collateral
and Security Agreement to be executed and delivered by their duly authorized
officers as of the date first above written.
THE PENN TRAFFIC COMPANY
DAIRY DELL, INC.
BIG M SUPERMARKETS, INC.
PENNY CURTISS BAKING COMPANY INC.
SUNRISE PROPERTIES, INC.
By: ____________________________
Name: Martin A. Fox
in his capacity as Vice Chairman, Finance of
The Penn Traffic Company and as Vice
President for each other Initial Grantor
36
<PAGE>
FLEET CAPITAL CORPORATION, as Agent
By: ____________________________
Name: Thomas Joyce
Title: Senior Vice President
37
<PAGE>
EXHIBIT A
Collateral Real Estate Interests
A-1
<PAGE>
EXHIBIT B
Pledged Notes; Pledged Stock
B-1
<PAGE>
EXHIBIT C
UCC Filing Offices; Permitted Filings; Other Filings
C-1
<PAGE>
EXHIBIT D
Chief Executive Offices; Location of Books and Records;
Location of Collateral; Locations of Other Places of Business;
Leased Facilities and Locations
D-1
<PAGE>
EXHIBIT E
Trade Names; Fictitious Names; Other Names
E-1
<PAGE>
EXHIBIT F
Franchise Agreements; Operators
F-1
<PAGE>
EXHIBIT G
Trademarks
G-1
<PAGE>
EXHIBIT H
Intellectual Property Licenses and Agreements
H-1
<PAGE>
EXHIBIT I
Form of Borrowing Base Certificate
I-1
<PAGE>
EXHIBIT J
Excluded Receivables
J-1
<PAGE>
Annex 1 to
Security and Collateral Agreement
SECURITY AGREEMENT
(TRADEMARKS)
WHEREAS, _________________________, a [____________] corporation
(herein referred to as "Assignor"), having an address at _______________________
_______, __________, (1) has adopted, used and is using, or (2) has intended to
use and filed an application indicating that intention, but has not yet filed an
allegation of use under Section 1(c) or 1(d) of the Trademark Act, or (3) has
filed an application based on an intention to use and has since used and has
filed an allegation of use under Section 1(c) or 1(d) of the Trademark Act, the
trademarks, trade names, trade styles and service marks listed on the attached
Schedule 1, which trademarks, trade names, trade styles and service marks are
registered in the United States Patent and Trademark Office (the "Trademarks");
WHEREAS, The Penn Traffic Company, a Delaware corporation, Dairy
Dell, Inc., a Pennsylvania corporation, Big M Supermarkets, Inc., a New York
corporation and Penny Curtis Baking Company Inc. (the "Borrowers"), are entering
into a Revolving Credit and Term Loan Agreement dated as of June __, 1999 (said
Agreement as it may be hereafter amended, supplemented, restated or otherwise
modified from time to time being the "Credit Agreement") with the financial
institutions now or hereafter parties thereto (collectively, the "Lenders"),
Fleet Capital Corporation, as agent (the "Agent", and together with any
successor in such capacity, is herein referred to as the "Assignee"), and
certain additional agents;
WHEREAS, Assignor, together with certain of its affiliates, has
entered into a Security and Collateral Agreement dated as of June __, 1999 (said
Agreement, as it may hereafter be amended, supplemented or otherwise modified
from time to time being the "Security Agreement"; capitalized terms used therein
and not otherwise defined herein being used herein as therein defined) in favor
of the Assignee; and
WHEREAS, pursuant to the Security Agreement, Assignor has granted to
Assignee a security interest in, and mortgage on, all right, title and interest
of Assignor in and to the Trademarks, designs and general intangibles of like
nature, now existing or hereafter adopted or acquired, and the goodwill of the
business symbolized by the Trademarks and the applications, registrations and
recordings in the United States Patent and Trademark Office or in any similar
office or agency of the United States or any State thereof, all whether now or
hereafter owned or licensable by Assignor, and all reissues, extensions or
renewals thereof and all proceeds thereof, including, without limitation, any
claims by Assignor against third parties for infringement thereof (the
"Collateral"), to secure the payment, performance and observance of the
Obligations;
ANNEX 1-1
<PAGE>
NOW, THEREFORE, for good and valuable consideration, receipt of
which is hereby acknowledged, Assignor does hereby grant to Assignee a security
interest in, and mortgage on, the Collateral and, effective upon the occurrence
of and for so long as an Event of Default is continuing under the Credit
Agreement, assigns the Collateral to Assignee, in order to secure the prompt
payment, performance and observance of the Obligations.
Assignor does hereby further acknowledge and affirm that the rights
and remedies of Assignee with respect to the security interest in and mortgage
on and assignment of the Collat eral made and granted hereby are more fully set
forth in the Security Agreement, the terms and provisions of which are hereby
incorporated herein by reference as if fully set forth herein.
Assignee's address is 60 East 42nd Street, New York, New York 10017.
Concurrently with the execution and delivery hereof, the Assignor
shall execute and deliver to the Agent, in the form of Exhibit 1 hereto, three
originals of a Power of Attorney for the implementation of the rights of the
Assignee to dispose of and transfer the Collateral, and the Assignor hereby
releases the Agent and the Secured Parties from any claims, causes of action or
demands at any time arising out of or with respect to any actions taken or
omitted to be taken by the Agent under such Power of Attorney, other than
actions taken or omitted to be taken through the gross negligence or willful
misconduct of the Agent.
IN WITNESS WHEREOF, Assignor has duly executed or caused this
Assignment to be duly executed by its officer thereunto duly authorized as of
the __ day of June, 1999.
[Seal] [_________________________]
By: _____________________________
Name:
Title:
ANNEX 1-2
<PAGE>
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On this ____ day of ________________, 1999, before me personally
appeared _____________________________________, to me known, who, being by me
duly sworn, did depose and say that he/she resides at __________________________
and that he/she is ________________________ of the Assignor; that he/she knows
the seal of said corporation; that the seal affixed to said instrument is such
corporate seal; that it was affixed pursuant to authority of the Board of
Directors of said corporation and that he/she signed his/her name thereto in
his/her capacity as an authorized officer of said corporation pursuant to such
authority.
------------------------------
Notary Public
ANNEX 1-3
<PAGE>
SCHEDULE 1 TO SECURITY AGREEMENT (TRADEMARKS)
TRADEMARKS
Application
Application or Serial No. or
Trademark Registration Date Registration No.
- --------- ----------------- ----------------
ANNEX 1-4
<PAGE>
Exhibit 1 to
Security Agreement (Trademarks)
SPECIAL POWER OF ATTORNEY
-------------------------
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
KNOW ALL MEN BY THESE PRESENTS, THAT ________________________, a
__________ [corporation] [general] [limited] [partnership] [ ] with its
principal office at __________________________, __________ (hereinafter called
"Assignor"), hereby appoints and constitutes FLEET CAPITAL CORPORATION, as
Assignee as described in the Security Agreement referred to below (hereinafter
called "Assignee"), its true and lawful attorney, with full power of
substitution, and with full power and authority to perform the following acts on
behalf of Assignor:
1. For the purpose of assigning, selling, licensing or otherwise
disposing of all right, title and interest of Assignor in and to any
letters patent, design and plant patents, utility models, industrial
designs, inventor certificates and statutory invention registrations of
the United States or any other country or political subdivision thereof,
and all registrations, recordings, reissues, continuations,
continuations-in-part, term restorations and extensions thereof, and all
pending applications therefor, and for the purpose of the recording,
registering and filing of, or accomplishing any other formality with
respect to the foregoing, to execute and deliver any and all agreements,
documents, instruments of assignment or other papers necessary or
advisable to effect such purpose; and
2. For the purpose of assigning, selling, licensing or otherwise
disposing of all right, title and interest of Assignor in and to any
trademarks, trade names, trade styles and service marks, and all
registrations, recordings, reissues, extensions and renewals thereof, and
all pending applications therefor, and for the purpose of the recording,
registering and filing of, or accomplishing any other formality with
respect to the foregoing, to execute and deliver any and all agreements,
documents, instruments of assignment or other papers necessary or
advisable to effect such purpose;
ANNEX 1-5
<PAGE>
3. For the purpose of assigning, selling, licensing or otherwise
disposing of all right, title and interest of Assignor in and to any
copyrights, and all registrations, recordings, extensions and renewals
thereof, and all pending applications therefor, and for the purpose of the
recording, registering and filing of, or accomplishing any other formality
with respect to the foregoing, to execute and deliver any and all
agreements, documents, instruments of assignment or other papers necessary
or advisable to effect such purpose; and
4. To execute any and all documents, statements, certificates or
other papers necessary or advisable in order to obtain the purposes
described above as Assignee may in its sole discretion determine.
This power of attorney is made pursuant to a Security Agreement
(Trademarks) executed and delivered pursuant to a Security and Collateral
Agreement, dated as of June __, 1999 (as amended from time to time, the
"Security Agreement") by Assignor and certain other grantors named therein in
favor of Assignee and will take effect solely for the purposes of Section ___
thereof and is subject to the conditions thereof and may not be revoked until
the payment or performance in full of all "Obligations" as defined in such
Security Agreement and expiration or termination of all "Commitments" as such
term is used in the Credit Agreement (as defined in Security Agreement) and the
expiration or termination of any further commitment of any Lender or Letter of
Credit Issuer as such term is used in the Credit Agreement (as defined in
Security Agreement) to open or cause to be opened Letters of Credit under the
Credit Agreement (or the payment in full of the obligations in respect of
Letters of Credit).
Dated: ________ __, 1999
[Seal] [__________________________]
By: ____________________________
Name:
Title:
ANNEX 1-6
<PAGE>
Annex 2 to
Security and Collateral Agreement
SECURITY AGREEMENT
------------------
(PATENTS)
---------
WHEREAS, __________________________, a [________] corporation
(herein referred to as "Assignor"), whose address is __________________________,
__________, owns the letters patent, and/or applications for letters patent, of
the United States, more particularly described on Schedule 1 attached hereto as
part hereof (the "Patents");
WHEREAS, The Penn Traffic Company, a Delaware corporation, Dairy
Dell, Inc., a Pennsylvania corporation, Big M Supermarkets, Inc., a New York
corporation and Penny Curtis Baking Company Inc., a New York corporation (the
"Borrowers"), are entering into a Revolving Credit and Term Loan Agreement dated
as of June __, 1999 (said Agreement as it may be hereafter amended,
supplemented, restated or otherwise modified from time to time being the "Credit
Agreement") with the financial institutions now or hereafter parties thereto
(collectively, the "Lenders"), Fleet Capital Corporation, as agent (the "Agent",
and together with any successor in such capacity, is herein referred to as the
"Assignee"), and certain additional agents;
WHEREAS, Assignor, together with certain of its affiliates, has
entered into a Security and Collateral Agreement dated as of June __, 1999 (said
Agreement, as it may hereafter be amended, supplemented or otherwise modified
from time to time being the "Security Agreement"; capitalized terms used therein
and not otherwise defined herein being used herein as therein defined) in favor
of the Assignee; and
WHEREAS, pursuant to the Security Agreement, Assignor has granted to
Assignee a security interest in, and mortgage on, all right, title and interest
of Assignor in and to the Patents, together with all registrations thereof,
including, without limitation, applications and statutory invention
registrations in the United States Patent and Trademark Office or in any similar
office or agency of the United States, or any State thereof, all whether now or
hereafter owned or licensable by Assignor, and all reissues, continuations,
continuations-in-part, term restorations or extensions thereof and all proceeds
thereof, including, without limitation, any claims by Assignor against third
parties for infringement thereof for the full term of the Patents (the
"Collateral"), to secure the prompt payment, performance and observance of the
Obligations;
NOW, THEREFORE, for good and valuable consideration, receipt of
which is hereby acknowledged, Assignor does hereby grant to Assignee a security
interest in, and mortgage on, the Collateral and, effective upon the occurrence
of and for so long as an Event of Default is continuing under the Credit
Agreement, assigns the Collateral to Assignee, in order to secure the prompt
payment, performance and observance of the Obligations.
ANNEX 2-1
<PAGE>
Assignor does hereby further acknowledge and affirm that the rights
and remedies of Assignee with respect to the security interest in and mortgage
on and assignment of the Collateral made and granted hereby are more fully set
forth in the Security Agreement, the terms and provisions of which are hereby
incorporated herein by reference as if fully set forth herein.
Assignee's address is 60 East 42nd Street, New York, New York 10017.
Concurrently with the execution and delivery hereof, the Assignor
shall execute and deliver to the Agent, in the form of Exhibit 1 hereto, three
originals of a Power of Attorney for the implementation of the rights of the
Assignee to dispose of and transfer the Collateral, and the Assignor hereby
releases the Agent and the Secured Parties from any claims, causes of action or
demands at any time arising out of or with respect to any actions taken or
omitted to be taken by the Agent under such Power of Attorney, other than
actions taken or omitted to be taken through the gross negligence or willful
misconduct of the Agent.
IN WITNESS WHEREOF, Assignor has duly executed or caused this
Assignment to be duly executed by its officer thereunto duly authorized as of
the ____ day of June, 1999.
[Seal] [_______________________________]
By: _____________________________
Name:
Title:
ANNEX 2-2
<PAGE>
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On this ____ day of ________________, 1999, before me personally
appeared _____________________________________, to me known, who, being by me
duly sworn, did depose and say that he/she resides at __________________________
and that he/she is ________________________ of the Assignor; that he/she knows
the seal of said corporation; that the seal affixed to said instrument is such
corporate seal; that it was affixed pursuant to authority of the Board of
Directors of said corporation and that he/she signed his/her name thereto in
his/her capacity as an authorized officer of said corporation pursuant to such
authority.
------------------------------
Notary Public
ANNEX 2-3
<PAGE>
SCHEDULE 1 TO SECURITY AGREEMENT (PATENTS)
PATENTS
Date Filed First Named
Title or Granted Inventor Patent No.
- ----- ---------- -------- ----------
PATENT APPLICATIONS
First Named
Title Date Filed Inventor Serial No.
- ----- ---------- -------- ----------
ANNEX 2-4
<PAGE>
Exhibit 1 to
Security Agreement (Patents)
SPECIAL POWER OF ATTORNEY
-------------------------
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
KNOW ALL MEN BY THESE PRESENTS, THAT ________________________, a
__________ [corporation] [general] [limited] [partnership] [ ] with its
principal office at __________________________, __________ (hereinafter called
"Assignor"), hereby appoints and constitutes FLEET CAPITAL CORPORATION, as
Assignee as described in the Security Agreement referred to below (hereinafter
called "Assignee"), its true and lawful attorney, with full power of
substitution, and with full power and authority to perform the following acts on
behalf of Assignor:
1. For the purpose of assigning, selling, licensing or otherwise
disposing of all right, title and interest of Assignor in and to any
letters patent, design and plant patents, utility models, industrial
designs, inventor certificates and statutory invention registrations of
the United States or any other country or political subdivision thereof,
and all registrations, recordings, reissues, continuations,
continuations-in-part, term restorations and extensions thereof, and all
pending applications therefor, and for the purpose of the recording,
registering and filing of, or accomplishing any other formality with
respect to the foregoing, to execute and deliver any and all agreements,
documents, instruments of assignment or other papers necessary or
advisable to effect such purpose; and
2. For the purpose of assigning, selling, licensing or otherwise
disposing of all right, title and interest of Assignor in and to any
trademarks, trade names, trade styles and service marks, and all
registrations, recordings, reissues, extensions and renewals thereof, and
all pending applications therefor, and for the purpose of the recording,
registering and filing of, or accomplishing any other formality with
respect to the foregoing, to execute and deliver any and all agreements,
documents, instruments of assignment or other papers necessary or
advisable to effect such purpose;
ANNEX 2-5
<PAGE>
3. For the purpose of assigning, selling, licensing or otherwise
disposing of all right, title and interest of Assignor in and to any
copyrights, and all registrations, recordings, extensions and renewals
thereof, and all pending applications therefor, and for the purpose of the
recording, registering and filing of, or accomplishing any other formality
with respect to the foregoing, to execute and deliver any and all
agreements, documents, instruments of assignment or other papers necessary
or advisable to effect such purpose; and
4. To execute any and all documents, statements, certificates or
other papers necessary or advisable in order to obtain the purposes
described above as Assignee may in its sole discretion determine.
This power of attorney is made pursuant to a Security Agreement
(Patents) executed and delivered pursuant to a Security and Collateral
Agreement, dated as of June __, 1999 (as amended from time to time, the
"Security Agreement") by Assignor and certain other grantors named therein in
favor of Assignee and will take effect solely for the purposes of Section ___
thereof and is subject to the conditions thereof and may not be revoked until
the payment or performance in full of all "Obligations" as defined in such
Security Agreement and expiration or termination of all "Commitments" as such
term is used in the Credit Agreement (as defined in Security Agreement) and the
expiration or termination of any further commitment of any Lender or Letter of
Credit Issuer as such term is used in the Credit Agreement (as defined in
Security Agreement) to open or cause to be opened Letters of Credit under the
Credit Agreement (or the payment in full of the obligations in respect of
Letters of Credit).
Dated: ________ __, 1999
[Seal] [__________________________]
By: ____________________________
Name:
Title:
ANNEX 2-6
<PAGE>
Annex 3 to
Security and Collateral Agreement
SECURITY AGREEMENT
------------------
(COPYRIGHTS)
------------
WHEREAS, ________________________, a [_____________] corporation
(herein referred to as "Assignor"), has adopted, used and is using the
copyrights listed on the attached Schedule 1, which copyrights are registered in
the United States Copyright Office (the "Copyrights");
WHEREAS, The Penn Traffic Company, a Delaware corporation, Dairy
Dell, Inc., a Pennsylvania corporation, Big M Supermarkets, Inc., a New York
corporation and Penny Curtis Baking Company Inc., a New York corporation (the
"Borrowers"), are entering into a Revolving Credit and Term Loan Agreement dated
as of June __, 1999 (said Agreement as it may be hereafter amended,
supplemented, restated or otherwise modified from time to time being the "Credit
Agreement") with the financial institutions now or hereafter parties thereto
(collectively, the "Lenders"), Fleet Capital Corporation, as agent (the "Agent",
and together with any successor in such capacity, is herein referred to as the
"Assignee"), and certain additional agents;
WHEREAS, Assignor, together with certain of its affiliates, has
entered into a Security and Collateral Agreement dated as of June __, 1999 (said
Agreement, as it may hereafter be amended, supplemented or otherwise modified
from time to time being the "Security Agreement"; capitalized terms used therein
and not otherwise defined herein being used herein as therein defined) in favor
of the Assignee; and
WHEREAS, pursuant to the Security Agreement, Assignor has granted to
Assignee a security interest in, and mortgage on, all right, title and interest
of Assignor in and to the Copyrights, and the registrations and recordings
thereof in the United States or any State thereof, all whether now or hereafter
owned or licensable by Assignor and all extensions or renewals thereof and all
licenses thereof and all proceeds thereof, including, without limitation, any
claims by Assignor against third parties for infringement thereof (the
"Collateral"), to secure the payment, performance and observance of the
Obligations;
NOW, THEREFORE, for good and valuable consideration, receipt of
which is hereby acknowledged, Assignor does hereby grant to Assignee a security
interest in, and mortgage on, the Collateral and, effective upon the occurrence
of and for so long as an Event of Default is continuing under the Credit
Agreement, assigns the Collateral to Assignee, in order to secure the prompt
payment, performance and observance of the Obligations.
ANNEX 3-1
<PAGE>
Assignor does hereby further acknowledge and affirm that the rights
and remedies of Assignee with respect to the security interest in and mortgage
on and assignment of the Collateral made and granted hereby are more fully set
forth in the Security Agreement, the terms and provisions of which are hereby
incorporated herein by reference as if fully set forth herein.
Assignee's address is 60 East 42nd Street, New York, New York 10017.
Concurrently with the execution and delivery hereof, the Assignor
shall execute and deliver to the Agent, in the form of Exhibit 1 hereto, three
originals of a Power of Attorney for the implementation of the rights of the
Assignee to dispose of and transfer the Collateral, and the Assignor hereby
releases the Agent and the Secured Parties from any claims, causes of action or
demands at any time arising out of or with respect to any actions taken or
omitted to be taken by the Agent under such Power of Attorney, other than
actions taken or omitted to be taken through the gross negligence or willful
misconduct of the Agent.
IN WITNESS WHEREOF, Assignor has duly executed or caused this
Agreement to be duly executed by its officer thereunto duly authorized as of the
__ day of June, 1999.
[Seal] [_________________________]
By: ____________________________
Name:
Title:
ANNEX 3-2
<PAGE>
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On this ____ day of ________________, 1999, before me personally
appeared _____________________________________, to me known, who, being by me
duly sworn, did depose and say that he/she resides at __________________________
and that he/she is ________________________ of the Assignor; that he/she knows
the seal of said corporation; that the seal affixed to said instrument is such
corporate seal; that it was affixed pursuant to authority of the Board of
Directors of said corporation and that he/she signed his/her name thereto in
his/her capacity as an authorized officer of said corporation pursuant to such
authority.
------------------------------
Notary Public
ANNEX 3-3
<PAGE>
SCHEDULE 1 TO SECURITY AGREEMENT (COPYRIGHTS)
---------------------------------------------
COPYRIGHTS
----------
Issue or
Titles Filing Date Copyright No.
- ------ ----------- -------------
ANNEX 3-4
<PAGE>
Exhibit 1 to
Security Agreement (Copyrights)
SPECIAL POWER OF ATTORNEY
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
KNOW ALL MEN BY THESE PRESENTS, THAT ________________________, a
__________ [corporation] [general] [limited] [partnership] [ ] with its
principal office at __________________________, __________ (hereinafter called
"Assignor"), hereby appoints and constitutes FLEET CAPITAL CORPORATION, as
Assignee as described in the Security Agreement referred to below (hereinafter
called "Assignee"), its true and lawful attorney, with full power of
substitution, and with full power and authority to perform the following acts on
behalf of Assignor:
1. For the purpose of assigning, selling, licensing or otherwise
disposing of all right, title and interest of Assignor in and to any
letters patent, design and plant patents, utility models, industrial
designs, inventor certificates and statutory invention registrations of
the United States or any other country or political subdivision thereof,
and all registrations, recordings, reissues, continuations,
continuations-in-part, term restorations and extensions thereof, and all
pending applications therefor, and for the purpose of the recording,
registering and filing of, or accomplishing any other formality with
respect to the foregoing, to execute and deliver any and all agreements,
documents, instruments of assignment or other papers necessary or
advisable to effect such purpose; and
2. For the purpose of assigning, selling, licensing or otherwise
disposing of all right, title and interest of Assignor in and to any
trademarks, trade names, trade styles and service marks, and all
registrations, recordings, reissues, extensions and renewals thereof, and
all pending applications therefor, and for the purpose of the recording,
registering and filing of, or accomplishing any other formality with
respect to the foregoing, to execute and deliver any and all agreements,
documents, instruments of assignment or other papers necessary or
advisable to effect such purpose;
3. For the purpose of assigning, selling, licensing or otherwise
disposing of all right, title and interest of Assignor in and to any
copyrights, and all registrations, recordings, extensions and renewals
thereof, and all pending applications therefor, and for the purpose of the
recording, registering and filing of, or accomplishing any other formality
ANNEX 3-5
<PAGE>
with respect to the foregoing, to execute and deliver any and all
agreements, documents, instruments of assignment or other papers necessary
or advisable to effect such purpose; and
4. To execute any and all documents, statements, certificates or
other papers necessary or advisable in order to obtain the purposes
described above as Assignee may in its sole discretion determine.
This power of attorney is made pursuant to a Security Agreement
(Copyrights) executed and delivered pursuant to a Security and Collateral
Agreement, dated as of June __, 1999 (as amended from time to time, the
"Security Agreement") by Assignor and certain other grantors named therein in
favor of Assignee and will take effect solely for the purposes of Section ___
thereof and is subject to the conditions thereof and may not be revoked until
the payment or performance in full of all "Obligations" as defined in such
Security Agreement and expiration or termination of all "Commitments" as such
term is used in the Credit Agreement (as defined in Security Agreement) and the
expiration or termination of any further commitment of any Lender or Letter of
Credit Issuer as such term is used in the Credit Agreement (as defined in
Security Agreement) to open or cause to be opened Letters of Credit under the
Credit Agreement (or the payment in full of the obligations in respect of
Letters of Credit).
Dated: ________ __, 1999
[Seal] [__________________________]
By: ____________________________
Name:
Title:
ANNEX 3-6
<PAGE>
SCHEDULE OF RECORD LOCATIONS
<TABLE>
<CAPTION>
LOCATION COUNTY
<S> <C>
THE PENN TRAFFIC COMPANY
------------------------
------------------------
</TABLE>
7/13/99 Reuters Business Briefing
06/29/99 USA: PENN TRAFFIC ANNOUNCES EMERGENCE FROM CHAPTER 11. SYRACUSE,
N.Y.-(BUSINESS WIRE)-June 29, 1999-The Penn Traffic Company (OTC:PETRV)
announced today that it has officially emerged from the Chapter 11 process. The
Company said that its Joint Plan of Reorganization, which the U.S. Bankruptcy
Court in Delaware confirmed on May 27, 1999, became effective today. The
restructuring has canceled all of Penn Traffic's formerly outstanding $1.13
billion of senior and subordinated notes. In connection with the restructuring,
the Company's formerly outstanding senior notes are being exchanged for $100
million of new senior notes and 19,000,000 shares of new common stock. The
Company's formerly outstanding senior subordinated notes are being exchanged for
1,000,000 shares of new common stock and six-year warrants to purchase 1,000,000
shares of new common stock having an exercise price of $18.30 per share. In
addition, Penn Traffic's stockholders will receive one share of new common stock
for each 100 shares of common stock held by them immediately prior to the
restructuring, for a total of 106,955 new shares. The new shares of common stock
and the new warrants issued will initially be traded on the OTC Bulletin Board
under the symbols "PETRV" and "PETWV," respectively. The Company has pending an
application for listing the new common stock and warrants on the Nasdaq National
Market System. The Company also announced that it has entered into a new $320
million secured credit agreement with a bank group led by Fleet Capital
Corporation, as agent. The credit facility currently has more than $100 million
in unused borrowing capacity. -0-
Certain statements included above which are not statements of historical fact
are intended to be, and are hereby identified as, "forward-looking statements"
as defined in the Securities Exchange Act of 1934, as amended, and involve 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. Such factors include, among other things, the
success or failure of the Company in implementing its current business and
operational strategies; the availability and terms of necessary or desirable
financing or refinancing; and the success of Penn Traffic's application for
approval to list the shares of new common stock and warrants on the Nasdaq
National Market System.
The Penn Traffic Company operates 213 supermarkets in Pennsylvania, upstate New
York, Ohio and West Virginia under the "Big Bear," "Big Bear Plus," "Bi-Lo
Foods," "P&C Foods," and "Quality Markets" trade names. Penn Traffic also
operates wholesale food distribution businesses serving 93 licensed franchises
and 75 independent operators.
CONTACT: Marc Jampole Jampole Communications, Inc. 412-471-2463.
BUSINESS WIRE 29/06/1999
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