LOAN AGREEMENT
BETWEEN
FIRST UNION NATIONAL BANK,
a National Banking Association,
As "Lender"
AND
VILLAGE SUPER MARKET, INC.,
a New Jersey Corporation,
as "Borrower"
DATED: September 16, 1999
Prepared By:Xxxxxxx X. Xxxxx, Esq.
Windels, Marx, Davies & Ives
000 Xxxxxx Xxxxxx Xxxxx
Xxx Xxxxxxxxx, Xxx Xxxxxx 00000
Telephone No. (000) 000-0000
Telecopier No. (000) 000-0000
LOAN AGREEMENT
This Loan Agreement is made as of this 16th day of September, 1999,
BETWEEN: FIRST UNION NATIONAL BANK, a National Banking Association having an
office at 000 Xxxxx Xxxx, Mail Code NJ 3161, Summit, New Jersey 07901 (the
"Lender");
AND: VILLAGE SUPER MARKET, INC. (the "Borrower"), a New Jersey corporation
having its principal place of business at 000 Xxxxxxxx Xxxxxx, Xxxxxxxxxxx, Xxx
Xxxxxx 00000.
PURPOSE: This Loan Agreement is intended to set the terms of certain revolving
credit loans involving the Lender and the Borrower.
In exchange of the mutual covenants in the Loan Documents and other good and
valuable consideration, receipt and sufficiency of which is hereby acknowledged,
the parties to this Loan Agreement hereby agree to the flowing terms, conditions
and provisions:
SECTION I - DEFINITIONS
Capitalized Terms. The capitalized terms in this Loan Agreement shall be
defined as follows:
"Affiliate" of a Person means another Person who directly or indirectly
controls, is controlled by, or is under common control with such Person.
"Applicable Margin" means, with respect to any LIBOR Loan, the number of Basis
Points set forth below in the first column upon the Borrower obtaining and
maintaining the Ratio of EBITDAR to Interest Plus Rent set forth below in the
second column:
Applicable Margin Ratio of EBITDAR to Interest Plus Rent
125 basis points Equal to or greater than 2.75 to 1.00
150 basis points Equal to or greater than 2.40 to 1.00,
but less than 2.75 to 1.00
175 basis points Equal to or greater than 2.30 to 1.00,
but less than 2.40 to 1.00
Any increase or decrease in the Applicable Margin hereunder shall be effective
two (2) Banking Days after the Borrower has delivered to the Lender all of the
financial information for the prior Fiscal Quarter required hereunder.
Notwithstanding the foregoing, it is hereby acknowledged that the initial
Applicable Margin shall be 125 basis points and at all times during which there
exists a Default or Event of Default hereunder, the Applicable Margin shall be
175 basis points for LIBOR Loans.
"Banking Day" means any day excluding Saturday, Sunday and any day that in the
State of New Jersey is a legal holiday or a day on which banking institutions
are authorized by law to close.
"Basis Point" means one one-hundredth (.01) of a percentage point.
"Borrower" means the "Borrower" named in the caption of this Loan Agreement and
its successors and assigns.
"Capital Expenditure" shall have the meaning attributable to such term under
GAAP.
"Capital Lease" means any lease with respect to which the obligation to pay rent
or other amounts constitutes Capitalized Lease Obligations.
"Capitalized Lease Obligations" means obligation to pay rent or other amounts
under a lease of (or other agreement conveying the right to use) real and/or
personal property which obligations are required to be classified and accounted
for as capital leases on a balance sheet in accordance with GAAP.
"Commitment" means, from and including the Date of Closing to but excluding the
Maturity Date, the $15,000,000.00 as such amount may be adjusted pursuant to
Section 2.3 or otherwise hereunder.
"Company" means any of Borrower and the Subsidiaries. "Companies" means Borrower
and all of the Subsidiaries.
"Date of Closing" means the date on which the conditions precedent set forth in
Section 4.1 have been fulfilled to the satisfaction of the Lender.
"Default" means any condition or event that, with notice or lapse of time, would
give rise to an Event of Default.
"ERISA" means the Employee Retirement Income Security Act of 1974, as amended
from time to time, and the regulations promulgated thereunder.
"Event of Default" means any event of default listed in Section VIII.
"Existing Credit Facility" means the credit facility made available to the
Borrower pursuant to that certain Revolving Credit and Term Loan Agreement dated
as of May 30, 1997 by and between the Borrower, the Lender (then known as
CoreStates Bank, N.A.), as a lender and the agent thereunder, and Summit Bank,
as a lender thereunder.
"Fiscal Year" means the fiscal year for each Company which is the 52 or 53 week
period ending on the last Saturday of the month of July of each calendar year.
"Fiscal Quarter" means the four fiscal quarters in each Fiscal Year of the
Borrower as adopted by the Borrower for reporting purposes with the Securities
and Exchange Commission ("SEC") or (if the Borrower is no longer a reporting
company with the SEC) as otherwise reasonably adopted by the Borrower in good
faith.
"GAAP" means generally accepted accounting principles, consistently applied.
"Garwood Facility" means the proposed supermarket to be constructed in Garwood,
New Jersey (bordering Westfield, New Jersey).
"Hazardous Substance(s)" means any pollutants and dangerous substances including
radon, and any "hazardous wastes" or "hazardous substances" as defined in the
Industrial Site Recovery Act (N.J.S.A. 13: 1 K-6 et seq.), the Spill
Compensation and Control Act (N.J.S.A. 58:10-23.11 et seq.), the Resource
Conservation and Recovery Act (42 U.S.C. 6901 et seq.), the Comprehensive
Environmental Responsibility Compensation and Liability Act (42 U.S.C. 9601 et
seq.) or any other state or federal environmental law or regulation.
"Interest Payment Date" means:
(a) as to any Prime Rate Loan, the first day of each month and
the applicable Maturity Date; or
(b) as to any LIBOR Loan, the last day of each Interest Period; provided
however, that when the applicable Interest Period is more than one month
interest shall also be payable on the same day in each calendar month that the
Interest Period commenced (or the last day of the month if there is no
corresponding date in such month).
"Interest Period" means with respect to any LIBOR Loan:
(a) initially, the period commencing on the borrowing or conversion date, as
the case may be, with respect to such LIBOR Loan and ending one (1), two (2) or
three (3) months thereafter, as selected by the Borrower in its Notice of
Borrowing delivered pursuant to Section 2.7 hereof, or in its notice of
conversion delivered pursuant to Section 2.8 hereof, as the case may be, given
with respect thereto; and
(b) thereafter, each period commencing on the last day of the next preceding
Interest Period applicable to such LIBOR Loan and ending one (1), two (2) or
three (3) months thereafter, as selected by the Borrower in its notice of
continuance delivered pursuant to Section 2.8 hereof, with respect thereto;
provided that, all of the foregoing provisions relating to Interest Period shall
be subject to the following:
(a) if any Interest Period pertaining to a LIBOR Loan would otherwise end on a
day that is not a LIBOR Banking Day, such Interest Period shall be extended to
the next succeeding LIBOR Banking Day unless the result of such extension would
be to carry such Interest Period into another calendar month in which event such
Interest Period shall end on the immediately preceding LIBOR Banking Day; and
(b) any Interest Period pertaining to a LIBOR Loan that begins on the last LIBOR
Banking Day of a 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 LIBOR Banking Day of a calendar month.
"InsuRite" means Insure-Rite Ltd., a captive insurance company owned by
Wakefern, the Borrower and various other entities.
"Lending Office" means the lending office of the Lender designated in the
caption of this Loan Agreement or such other office of the Lender as the
Lender may from time to time specify to the Borrower as the office at which its
Loan is to be maintained.
"Letter of Credit" is defined in Section 2.11(A).
"Liabilities" means, at any date, (i) the amount of all liabilities
and obligations that, in accordance with GAAP, should be classified as
liabilities as shown on the liability side of a consolidated balance sheet of
the Borrower at such date inclusive of all amounts for deferred taxes and (ii)
all guarantees and endorsements (including all indebtedness and liabilities
guaranteed, directly or indirectly in any manner by Borrower, including letters
of credit and standby letters of credit (except for the xxxxxxx'x compensation
letter of credit to the extent accrued as a liability on the Borrower's balance
sheet)).
"LIBOR Banking Day" means any Banking Day on which dealing in the London
interbank market may be carried on by commercial banks in London, England.
"LIBOR Loan" means any Loan that bears interest at a rate of interest based upon
the LIBOR Rate.
"LIBOR Rate" means, with respect to each day during each Interest Period
pertaining to a LIBOR Loan, the per annum rate (rounded to the next higher 1/100
of 1%) for deposits in United States dollars for a period equal to the relevant
Interest Period as reported on the Telerate Page 3750 as of 11:00 a.m. (London
time), on the day that is two (2) LIBOR Banking Days prior to the commencement
of such Interest Period (or if not so reported, then as determined by the Lender
from another recognized source for London interbank market quotations), adjusted
for reserves by dividing that rate by 1.00 minus the LIBOR Reserve.
"LIBOR Reserve" means the maximum percentage reserve requirements (rounded to
the next higher 1/100 of 1% and expressed as a decimal)
of the Lender (including, without limitation, basic, supplemental, marginal and
emergency reserves), in effect on any day during the relevant Interest Period
under Regulation D with respect to eurocurrency funding currently referred to as
"Eurocurrency liabilities" in Regulation D.
"Lien" means any mortgage, pledge, security interest, encumbrance, collateral
assignment, lien or charge of any kind (including any agreement to give any of
the foregoing), any conditional sale or other title retention agreement or any
lease in the nature thereof
"LIFO" means the LIFO provision for any period, computed in
accordance with GAAP.
"Loan" means each and every Revolving Credit Loan made by the Lender hereunder.
For purposes of this Loan Agreement, the continuation or conversion of a LIBOR
Loan or Prime Rate Loan shall not constitute the making of a new Loan.
"Loan Agreement" means this Loan Agreement.
"Loan Document(s)" means this Loan Agreement and all documents, notes,
assignments, certificates and agreements of any kind listed, described or
referenced on the Closing Memorandum annexed to this Loan Agreement as "Exhibit
A" or otherwise executed in connection with this Loan Agreement.
"Maturity Date" means September 16, 2002; subject, however, to extension as
provided in Section 3.6 hereof.
"Net Income" means net income (excluding (i) any extraordinary items, (ii) an
amount not to exceed $2,000,000 related to a one-time charge associated with the
settlement of certain currently pending litigation involving the Garwood
Facility, (iii) other non-cash gains, and (iv) other non-cash losses) for the
Companies calculated on a consolidated basis in accordance with GAAP.
"Note" means the Revolving Loan Note.
"Note Private Placement" means the private placement of the Borrower's notes as
contemplated in Section 4.1(C) hereof.
"Notice of Borrowing" means the notice of borrowing as described in Section
2.7.
"Obligation(s)" means all debts, liabilities, duties and obligations owing by
any Company to the Lender, whether direct or indirect, now existing or in the
future created or acquired, contingent or non-contingent, due or to become due,
liquidated or unliquidated, including those arising under the Revolving Loan,
commitments of any kind by the Lender, or on behalf of any Company, all expenses
of the Lender to protect its interests under any Loan Documents, and all other
debts and obligations relating to, or arising under, this Loan Agreement or any
other Loan Document.
"Opinion Letter" means the opinion letter from the Borrower's counsel to the
Lender and its counsel in the form annexed as "Exhibit C" to this Loan
Agreement.
"Permitted Dispositions" means (a) sales or other forms of dispositions of
Properties of any of the Companies so long as the aggregate book value of such
Properties sold or disposed in any Fiscal Year does not exceed five percent (5%)
of the total assets of the Companies determined on a consolidated basis in
accordance with the definition of Tangible Net Worth for the Fiscal Year then
most recently ended and (b) any sale-leaseback transaction involving any of the
Companies' store facilities which are acquired subsequent to the Date of
Closing, in which such Company sells or transfers said facility to a Person
(other than a Company) and, as part of the same transaction, a Company rents or
leases, or similarly acquires the right to possession or use of, such facility
for essentially the same purpose.
"Permitted Encumbrance(s)" means any of the following: (a) taxes, assessments
and other governmental charges not yet due and payable or that can be paid
without penalty, or that are currently being contested in good faith by
appropriate proceedings; provided, the Companies shall have set aside on their
books adequate reserves for any tax, assessment or other governmental charge so
being contested; (b) workmen's, repairmen's, warehousemen's and carriers' liens
and other similar Liens arising in the ordinary course of business for charges
not delinquent or that are currently being contested in good faith by
appropriate proceedings, provided, the Borrower shall have set aside on its
books adequate reserves for such Liens being contested; (c) easements, rights of
way, exceptions, encroachments, reservations, restrictions, conditions or
limitations that do not in the aggregate materially interfere with or impair the
intended use of any property or render title to any property unmarketable; (d)
rights reserved to, or vested in, any municipality or governmental or other
public authority that do not in the aggregate materially interfere with or
impair the intended operation or use of any property or render title to any
property unmarketable; (e) a purchase money mortgage in favor of Xxxxxx Xxxxxx
on certain land in Westfield, New Jersey, in the outstanding principal amount of
$4,150,000; (f) Liens on or in shares of capital stock of Wakefern owned by
Borrower to secure Borrower's obligations to Wakefern to make capital
contributions to Wakefern and indebtedness owing to Wakefern with respect to the
purchase of inventory; (g) Liens listed on Exhibit 6 to the Principal's
Certificate and consented to by the Lender; (h) purchase money Liens (other than
Liens listed or described above) on Property directly acquired with the proceeds
of the Liabilities secured by said Lien so long as (x) the amount of any such
Liabilities does not exceed 100% of the fair market value of the Property so
encumbered and (y) the aggregate amount of all such Liabilities does not
exceed $2,000,000 at any time outstanding (exclusive of the Liabilities secured
by Liens permitted pursuant to clause (i) below; (i) purchase money Liens for
equipment purchased under any Wakefern sponsored financing program so long as
the Lien only affects and attaches to the equipment so purchased; (j) Liens in
favor of Wakefern on deposits made with Wakefern; (k) Liens in favor of the
Lender; and (l) leases listed on Exhibit 7 to the Principal's Certificate and
consented to by the Lender.
"Person(s)" means an individual, corporation, partnership, limited partnership,
limited liability company, joint venture, trust, joint stock company,
unincorporated organization, association, governmental agency or political
subdivision.
"Plan(s)" means each employee benefit plan maintained for employees of any
Company, as defined in Section 3(2) of the Employee Retirement Income Act of
1974, as amended.
"Prime Rate" means the per annum rate of interest established by Lender as its
reference rate in making loans, and does not reflect the rate of interest
charged to any particular borrower or class of borrowers. The Borrower
acknowledges that the Prime Rate is not tied to any external index or rate of
interest and that the rate of interest charged hereunder shall change
automatically and immediately as of the date of any change in the Prime Rate
without notice to Borrower.
"Prime Rate Loan" means any Loan that bears interest at a rate of interest based
upon the Prime Rate.
"Principal's Certificate" means the principal's certificate of this date given
to the Lender by the president of Borrower.
"Privately Placed Notes" means the $30,000,000 Senior Unsecured Notes of the
Borrower issued in connection with the Note Private Placement.
"Property" means all property, rights and interests presently owned or in the
future created or acquired by any Company, whether tangible or intangible,
including realty, fixtures, goods, inventory, equipment, real property leases,
stock, instruments, chattel paper, bank accounts and equipment leases including
the stock of the Subsidiaries, and the proceeds and products of the foregoing.
"Ratio of EBITDAR to Interest Plus Rent" means, for the four (4) most recently
completed Fiscal Quarters preceding the date of determination, the sum of
earnings before interest, taxes, depreciation, amortization and Rent, excluding
(i) any extraordinary items, (ii) an amount not to exceed $2,000,000 related
a one-time charge associated with the settlement of certain currently pending
litigation involving the Garwood Facility, (iii) other non-cash gains, and (iv)
other non-cash losses, divided by the sum of the aggregate amount of its
interest expense accruing with respect to any and all of its indebtedness plus
the aggregate amount of its Rent.
"Ratio of Funded Debt Plus 8* Rent to EBITDAR" means, as applied to any person
or entity, the sum of all indebtedness for borrowed money, including, without
limitation, Capitalized Lease Obligations, subordinated debt (including debt
subordinated to the Lender), and unreimbursed drawings under letters of credit,
or any other monetary obligation evidenced by a note, bond, debenture or other
agreement of that person or entity and excluding any obligations of the Borrower
to purchase stock of Wakefern, plus the product of eight (8) times the aggregate
amount of its Rent divided by the sum of earnings before interest, taxes,
depreciation, amortization and Rent, excluding (i) any extraordinary items,
(ii) an amount not to exceed $2,000,000 related to a one-time charge associated
with the settlement of certain currently pending litigation involving the
Garwood Facility, (iii) other non-cash gains, and (iv) other non-cash losses.
"Regulation D" means Regulation D of the Board of Governors of the Federal
Reserve System as from time to time in effect and any successor to all or a
portion thereof establishing reserve requirements.
"Rent" means the minimum amount of rental and other obligations, determined on a
consolidated basis in accordance with GAAP, required to be paid during such
period by any of the Companies as lessee under all leases of real or personal
property (other than Capital Leases), excluding any amounts required to be paid
by the lessee (whether or not therein designated as rent or additional rent) (a)
which are on account of maintenance and repairs, insurance, taxes, assessments
and similar charges or (b) which are based on profits, revenues or sales
realized by the lessee from the leased property or otherwise based on the
performance of the lessee.
"Revolving Loan" means the loans described in Section II.
"Revolving Note" means the Revolving Note of this date from Borrower to the
order of the Lender, and any amendments or modifications thereof. A copy of the
Revolving Note is annexed to this Loan Agreement as "Exhibit B."
"Section" means a section of this Loan Agreement.
"Subsidiaries" means any other corporation or similar entity, a majority of the
stock or dispositive voting power of which is owned or possessed directly or
indirectly by the Borrower.
"Sumas Family" means (i) Xxxxx Xxxxx, Xxxxxx Xxxxx, Xxxxx Xxxxx, Xxxxxxx Xxxxx,
and Xxxx Xxxxx, (ii) any spouse, heirs, legatees, or lineal descendants (to the
third degree of consanguinity) of the individuals listed in clause (i) above, or
(ii) trusts established primarily for the benefit of the individuals listed in
clauses (i) and (ii) above, so long as such any such trust has been established
in good-faith for legitimate estate planning purposes.
"Tangible Net Worth" means (x) total "assets" less (y) total "liabilities," in
each case as would be shown on a consolidated balance sheet of the Companies
prepared in accordance with GAAP. For purposes of this definition, there shall
be (a) excluded from the definition of "assets" all assets classified as
intangible in accordance with GAAP, including organizational expenses, patents,
trademarks, service marks, copyrights, goodwill, franchises, brand names,
covenants not to compete, research and development costs, treasury stock, and
monies due from principals and Affiliates and all unamortized debt discounts and
deferred charges, (b) deducted from "assets" reserves for LIFO, depreciation,
depletion, obsolescence and amortization and all other proper reserves that are
required to be maintained pursuant to the Loan Agreement or that, in accordance
with GAAP, should be established in connection with the business conducted by
the Companies and (c) "liabilities" shall include any debt subordinated in
writing to the Obligations on terms and conditions acceptable to the Lender.
"Telerate Page 3750" means the display designated as "Page 3750" on the Dow
Xxxxx Telerate Service (or such other page as may replace that page on that
service for the purpose of displaying London interbank offered rates of major
banks.
"Term" means the duration of this Loan Agreement as set forth in Section 3.6.
"Termination Event" means a "reportable event" as defined in section 4043(b) of
the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), the
filing of a notice to terminate under section 4041 of ERISA or any other event
or condition that might constitute grounds under section 4042 of ERISA for the
termination of, or for the appointment of a trustee to administer, any Plan.
"Traveler's Mortgage Debt" means that certain mortgage indebtedness owing to
Travelers Insurance Company and the Travelers Indemnity Company in an original
principal amount of $4,000,000 secured by a mortgage upon certain of the
Borrower's real property located in Egg Harbor, New Jersey
"Wakefern" means Wakefern Food Corp., a New Jersey corporation.
1.2 Interpretation. Unless otherwise specified, the following rules of
construction shall apply to this Loan Agreement:
(A) The term "any" shall be construed as if followed by the phrase "one or
more"; the term "including" shall be construed as if followed by the phrase
"without limitation"; and the term "days" shall be construed as if preceded by
the word "calendar," unless it is capitalized and is preceded by the word
"Banking".
(B) Singular words include the plural and plural words include the singular.
(C) Title headings and subheadings are for organizational purposes only and
neither add to, nor limit, the meaning of any provision.
(D) All accounting terms not specifically defined herein shall be construed
in accordance with GAAP and all financial data required to be delivered
hereunder shall be prepared in accordance with GAAP.
SECTION II - REVOLVING LOAN
Subject to the terms and conditions set forth in this Loan Agreement and the
full satisfaction of all requirements of the Lender and its counsel, including
delivery of all documents listed on Exhibit A, and the absence of any Default or
Event of Default, the Lender will, from time to time, make loans to the Borrower
in such amounts and under such terms as set forth below:
2.1 Amount of Loans. The aggregate amount of all loans and extensions of
credit at any time outstanding under the Revolving Loan shall not exceed FIFTEEN
MILLION AND 00/100 ($15,000,000) DOLLARS. The Borrower may request that
Revolving Loans be made in the form of a Prime Rate Loan or LIBOR Loan in
accordance with the procedures, and subject to the limitations, set forth in
this Loan Agreement. Until the Maturity Date, in the absence of any Default or
Event of Default, the Borrower may borrow, reborrow and repay the Revolving Loan
so long as the aggregate outstanding balance is never in excess of $15,000,000.
2.2 Loans In Excess of Maximum. If, for any reason, the aggregate outstanding
balance of the Revolving Loan should at any time exceed FIFTEEN MILLION AND
00/100 ($15,000,000) DOLLARS, all sums advanced shall nonetheless constitute
indebtedness under this Loan Agreement and shall be due and payable upon demand.
2.3 Reduction in Commitment. At any time, the Borrower, on ten (10) days'
advance written notice to the Lender, may reduce the Commitment under the
Revolving Loan set forth in Section 2.1 provided that (a) the reduction is in
increments of One Million and 00/100 ($1,000,000) Dollars, and (b) the reduction
does not reduce the Commitment to an amount less than the current principal
balance then outstanding hereunder. Any such notice of reduction shall be
irrevocable and permanent, and the Borrower shall have no right to increase the
Commitment under the Revolving Loan once reduced by the Borrower hereunder.
2.3 Principal Payment. The Borrower shall not be required to make principal
payments prior to the Maturity Date except as required under Section 2.2 or if
there shall be an Event of Default. On the Maturity Date, the Borrower shall
repay the entire principal balance of the Revolving Loan outstanding as of the
Maturity Date together with all accrued interest and other sums then outstanding
under the Revolving Loan, which shall all then be due and payable in full.
2.4 Interest Payment. Accrued interest on the daily principal balance is due
and payable on each Interest Payment Date. Any interest not paid when due, in
the Lender's discretion, and without limitation of any other right or remedy in
any Loan Document (including the right to charge a late fee or to raise the
interest rate after an Event of Default) may be added to the principal amount
outstanding under the Revolving Loan and accrue interest at the Prime Rate and
be payable upon demand.
2.5 Clean-up of Principal Balance. The Borrower shall be required to repay
the aggregate principal balance of the Revolving Loan to a maximum of One
Hundred and 00/100 ($100.00) Dollars for thirty (30) consecutive days during
each period of twelve (12) months in which the Revolving Loan is available
hereunder.
2.7 Method of Borrowing.
(A) Notice of Borrowing. To borrow or to select a type of loan under the
Revolving Loan, the Borrower shall deliver to the Lender (or transmit by
telecopier with the original to be mailed or delivered to the Lender on the same
day) by 11:00 a.m. of any Banking Day an irrevocable Notice of Borrowing signed
by an authorized signer of the Borrower as designated in the borrowing
resolutions substantially in the form of the annexed Exhibit D specifying each
of the following:
(i) the proposed borrowing date for a Revolving Loan which, (a) in the case
of a Prime Rate Loan may be the same Banking Day or, (b) in the case of
a LIBOR Loan shall be a LIBOR Banking Day at least two (2) Banking Days
thereafter;
(ii) the type of loan requested;
(iii) the amount of the proposed borrowing which, in the case of a Prime Rate
Loan shall be at least $500,000 and in multiples of $50,000 and in the case of
a LIBOR Loan shall be in multiples of $1,000,000;
(iv) in the case of a LIBOR Loan, the duration of the Interest Period for each
borrowing (which Interest Period: (a) shall be either one (1) month, two (2)
months, or (3) three months; and (b) shall not extend beyond the Maturity Date)
and;
(v) instructions to the Lender as to the deposit or transmittal of the borrowed
funds.
Amounts drawn on the Revolving Loan on the effective date of the Loan Agreement
shall be deemed to be LIBOR Loans.
(B) Determination of Rate. For any LIBOR Loan, two (2) LIBOR Banking Days
before the first day of the applicable Interest Period, the Lender shall
determine the applicable LIBOR Rate and advise Borrower of that rate by
telephone or telecopier. If by 11:30 a.m. of the day in which the Lender quotes
any rate the Borrower shall not have advised the Lender (by telephone with
immediate telecopier confirmation) whether Borrower wishes to receive the quoted
rate, then the Lender may, in its discretion, conclude that the Borrower has
rejected the quoted rate and chosen instead to receive a Prime Rate Loan in an
amount equal to the Loan requested in the applicable Notice of Borrowing. The
Lender's determination of any rate shall be conclusive, absent manifest error.
(C) Deduction for Amounts Due. If any Revolving Loan is to be made on a day on
which Borrower is to repay any outstanding Loan, the Lender is authorized to
apply proceeds from the new Loan to make that payment and advance to Borrower
only the net amount of the new Loan after deducting the amount of the existing
Loan payment including principal and accrued interest that had been due.
2.8 Loan Selection.
(A) Revolving Loan. During the term of the Revolving Loan prior to 12:00 noon of
the Banking Day prior to the Maturity Date, by delivering a Notice of Borrowing
pursuant to Section 2.7, the Borrower may: (1) convert any Prime Rate Loan to a
LIBOR Loan by giving the Lender the Notice of Borrowing two (2) LIBOR Banking
Days before the first day of the applicable Interest Period; (2) at the end of
any Interest Period, convert any LIBOR Loan to a Prime Rate Loan; and (3) at the
end of any Interest Period, convert any LIBOR Loan to a LIBOR Loan with a
different Interest Period. The Borrower must select either a LIBOR Rate or the
Prime Rate for the entire amount of any advance, but may simultaneously have
outstanding various types of Revolving Loans. The Borrower shall have no right
to select an Interest Period for a LIBOR Loan that would go beyond the Maturity
Date.
(B) Lender's Election of Rate. If the Lender does not receive a timely Notice
of Borrowing prior to the expiration of any Interest Period for a LIBOR Loan,
the Borrower shall be deemed to have elected to pay in full that LIBOR Loan at
the end of the Interest Period out of the proceeds of a new Prime Rate Loan.
That new Prime Rate Loan will be in a principal amount equal to the principal
amount and, if the Lender determines in its absolute discretion, accrued
interest of the LIBOR Loan that is being repaid and shall be deemed made
automatically and contemporaneously with the payment of that LIBOR Loan.
2.9 Use of Proceeds. The proceeds of any advances under the Revolving Loan
will be used by the Borrower to fund general working capital and corporate
purposes of the Companies or for any other purpose (but not new store
construction).
2.10 Notes. The Revolving Loan shall be evidenced by the Revolving Note, a
copy of which is annexed as Exhibit B.
2.11 Standby Letters of Credit. The Lender, in its discretion, may issue or
process an application for a letter of credit or any other credit accommodation
on behalf of the Borrower. The letters of credit issued hereunder may be used to
secure obligations to the Borrower's insurers under the Borrower's worker's
compensation program or any other lawful purpose. While there is no commitment
to issue any letters of credit hereunder, the aggregate principal amount of
letters of credit which may be issued by the Lender and outstanding hereunder
shall not exceed Three Million and 00/100 ($3,000,000) Dollars. If any letters
of credit are issued, the following terms shall also apply:
(A) Any letters of credit issued by the Lender will be in the Lender's customary
form (individually a "Letter of Credit" and, collectively, the "Letters of
Credit") for the account of the Borrower. Letters of Credit may be issued at any
time and from time to time on or after the date hereof through the date which is
sixty (60) days before the Maturity Date, provided that the existing letter of
credit no. 516165 issued by New Jersey National Bank (predecessor to CoreStates,
in turn, the predecessor to the Lender) on the account of Borrower an original
face amount of $1,705,000 (with $1,000,000 currently available to be drawn)
shall be deemed to be a Letter of Credit under this Loan Agreement. The
aggregate amount outstanding at any time of all Letters of Credit shall not
exceed $3,000,000. The term of any Letter of Credit shall not exceed one year,
and each such Letter of Credit shall have an expiry which is not later than the
Maturity Date; provided, however, that any outstanding Letter of Credit with
provision for automatic renewal will continue to be renewed up to the Banking
Day prior to the Maturity Date as set forth under the terms of such Letter of
Credit and payment of fees, repayment terms and other provisions of such Letter
of Credit will continue to be governed by this Section 2.12 except the last
sentence of clause (G) below. No outstanding Letter of Credit, and no Letter of
Credit issued hereunder, shall be automatically renewed for any period beyond
five (5) years from the date of initial issuance.
(B) The Borrower shall notify the Lender at least ten (10) Banking Days in
advance by written notice of its request that the Lender issue a Letter of
Credit. Each such notice shall be irrevocable and confirmed immediately by
delivery to the Lender of a Request for Letter of Credit in the Lender's
customary form, but without any accompanying terms and conditions which are
inconsistent with this Loan Agreement or the other Loan Documents.
(C) Each request for a Letter of Credit shall constitute a representation and
warranty by the Borrower that, except as contemplated by the Loan Documents: (i)
the representations and warranties set forth in Section V hereof remain accurate
as of the date of such request, and (ii) no Default or Event of Default exists
under this Loan Agreement or any other Loan Document.
(D) Each Letter of Credit outstanding shall reduce the amount available under
the Lender's Commitment in an amount equal to such Letter of Credit, and for the
purposes of Section 2.1 each such Letter of Credit shall be deemed to be a use
of the Lender's Commitment.
(E) Each payment by the Lender under a Letter of Credit shall be treated as a
loan (a "Letter of Credit Loan") and shall be payable one (1) Banking Day after
notice of such payment is given to Borrower, or, if earlier, on the Maturity
Date. Each Letter of Credit Loan outstanding shall reduce the amount available
under the Lender's Commitment as under paragraph (D) above.
(F) Each Letter of Credit Loan shall bear interest on the outstanding principal
amount thereof, for each day from the date such Letter of Credit Loan is made
until the date payment is made in full, at a rate per annum equal to the Prime
Rate in effect from time to time.
(G) The obligation to repay each Letter of Credit Loan in full, together with
accrued interest thereon in accordance with this Loan Agreement, shall be
absolute, unconditional and irrevocable, under all circumstances whatsoever, and
(without limiting the generality of the foregoing) shall not be affected by:
(i) the use which may be made of the Letter of Credit Loan or any acts or
omissions of the drawer in connection therewith;
(ii) the validity or genuineness of documents presented in connection with a
drawing, or of any endorsement thereon, even if such documents should in fact
prove to be in any or all respects invalid, fraudulent or forged, provided that
such documents appear on their face to comply with the terms of the Letter of
Credit;
(iii) any irregularity in the transaction with respect to which the Letter of
Credit is issued; or
(iv) the existence of any claim, set-off, defense or other right which the
Borrower might have against the Lender, or any other Person, whether in
connection with the Letter of Credit, the transaction contemplated by the Letter
of Credit, or any unrelated transaction.
If all conditions to borrowing Revolving Loans are satisfied, the Borrower shall
have the right to repay any Letter of Credit Loan with the proceeds of Revolving
Loans made on or prior to the maturity of the Letter of Credit Loan.
(H) The Borrower shall pay to the Lender a fee (the "Letter of Credit Fee") on
the undrawn portion of all Letters of Credit at a rate per annum equal to one
and one-quarter percent (1-1/4%) which shall be payable quarterly in advance on
the first Banking Day of each January, April, July and October to occur after
the date hereof. The foregoing shall modify the fees payable in connection with
all outstanding Letters of Credit.
(I) The Borrower shall pay to the Lender with respect to each Letter of Credit
issued, the usual and customary administrative fees and other charges of the
Lender in connection with any Letter of Credit, including without limitation,
all charges for the issuance of Letters of Credit, the negotiation of any draft
paid pursuant to any Letter of Credit and any amendments or supplements thereto.
(J) At Closing, the Borrower shall supply to the Lender a list of all
outstanding Letters of Credit issued by any financial institution.
2.12 Termination. The provisions of this Loan Agreement that provide for the
making of advances under the Revolving Loan shall expire automatically on 12:00
noon on the Banking Day before the Maturity Date and may be terminated by the
Lender at any time after the occurrence of any Default or Event of Default
(unless subsequently cured to the satisfaction of the Lender prior to
termination) and shall be terminated automatically upon the occurrence of any
Event of Default described in Section 8.12.
2.13 Interest Rates For Revolving Loan. The Borrower agrees to pay interest on
the unpaid portion of Revolving Loans as follows:
(A) for Prime Rate Loans at a fluctuating rate equal to the Prime Rate in effect
from time to time; and
(B) for each LIBOR Loan at a fixed rate equal to the sum of the LIBOR Rate for
that Loan plus the Applicable Margin.
2.14 Calculation of Interest. Interest shall be calculated on a 360-day year
based on the number of days elapsed. After the last day of each Interest Period
for any Loan the Lender shall endeavor to mail to the Borrower a statement of
that Loan as of the last day of the Interest Period. That statement will be
deemed to be correct unless the Borrower has delivered to the Lender specific
written objections within thirty (30) days of the Borrower's receipt.
2.15 Increased Cost. If at any time or from time to time any change occurring
after the date hereof in any requirement of law, regulation, order, decree,
treaty or directive or the interpretation or application thereof by governmental
authority or compliance by the Lender with any request or directive (whether or
not having the force of law) occurring after the date hereof from any central
bank or monetary authority or other Governmental authority:
(A) does or shall subject the Lender to any tax of any kind whatsoever with
respect to this Loan Agreement or any LIBOR Loan, or change the basis of
taxation of payments to the Lender of principal, interest or others amount
payable hereunder (except for changes in the rate or method of tax on the
overall net income of the Lender in any jurisdiction); or
(B) does or shall impose, modify or hold applicable any reserve, special
deposit, compulsory loan or similar requirement against assets held by, or
deposits or other liabilities in or for the account of, advances or loans by, or
other credit extended by, or any other acquisition of funds by, any office of
the Lender which are not otherwise included in the determination of the LIBOR
Rate hereunder; or
(C) does or shall impose on the Lender any other condition regarding this Loan
Agreement or the Loans; and the result of any of the foregoing is to increase
the cost to the Lender of making, renewing, converting or maintaining advances
or extensions of credit as LIBOR Loans, or to reduce any amount receivable in
respect of such LIBOR Loans, then, in any such case, the Lender will promptly
notify the Borrower of the change and of the estimated amount of such cost
increase or reduction in amount and Borrower shall promptly pay to the Lender
upon their demand, such additional amount which will compensate the Lender for
such additional cost or reduced amount receivable as the Lender deems to be
material as determined by the Lender. If the Borrower becomes so obligated, at
Borrower's option and upon two (2) LIBOR Banking Days, prior notice by telephone
or telegraph (to be confirmed promptly in writing) given by the Borrower to the
Lender, the Borrower may (in lieu of paying such additional amounts as
aforesaid): (i) terminate the obligation of the Lender to make or maintain LIBOR
Loans and/or (ii) convert all LIBOR Loans then outstanding to any other type of
Revolving Loan, as the case may be, by prepayment and reborrowing in the manner
specified in this Loan Agreement. If any such conversion of a LIBOR Loan is made
on a day which is not the last day of an applicable Interest Period, the
Borrower shall pay to the Lender upon request such amount or amounts as may be
necessary to compensate the Lender for any loss or expense sustained or incurred
by the Lender in respect of the prepayment of such LIBOR Loan as a result of
such conversion. If the Lender becomes entitled to claim any additional amounts
pursuant to this Section, it shall promptly notify Borrower thereof. A
certificate as to any additional amounts payable pursuant to the foregoing
submitted by an officer of the Lender to the Borrower shall be conclusive in the
absence of manifest error.
2.16 [INTENTIONALLY DELETED].
2.16 Basis for Determining InterBank Rate Inadequate or Unfair. If with respect
to any Interest Period:
(A) the Lender determines that deposits in dollars in the applicable amounts are
not being offered to the Lender in the London market for such Interest Period,
or
(B) the Lender determines that the applicable LIBOR Rate will not adequately and
fairly reflect the cost to the Lender of maintaining or funding a LIBOR Loan for
such Interest Period, then, the Lender shall promptly notify Borrower and, until
the Lender determines that the circumstances giving rise to such suspension no
longer exist, the Lender's obligation to make future LIBOR Loans shall be
suspended.
Funding Assumptions. The amounts payable pursuant to Sections 2.15, 2.17 and
3.5 hereof shall be determined based on the assumption that the Lender
funded the entire amount of the relevant LIBOR Loan through matching funding
obtained in the London interbank market; provided, however, that the Lender may
fund each LIBOR Loan in any manner it sees fit, and the foregoing assumption
shall be utilized only for the calculation of amounts payable under the Sections
identified above.
SECTION III - PAYMENTS, PROCEEDS AND TERM
3.1 Manner of Payment. All payments shall be delivered to the Lender in
immediately available funds when due.
3.2 Payment on Non-Banking Days. Any payment that is due on a day other than a
Banking Day may be made on the next succeeding Banking Day together with
interest for each such additional day after the original due date.
3.3 Late Payments. If any payment of principal, interest or fees payable
hereunder or under the Note is not received within fifteen (15) days from the
date that payment is due, the Lender may charge a "late charge" equal to five
cents ($.05) of each dollar of such delinquent payment for the purpose of
defraying the expense incident to handling that delinquent payment. This late
charge can be imposed on each late payment. This late charge shall be in
addition to, and not in lieu of, any other right or remedy the Lender may have
as a result of a late payment.
3.4 Prepayments. At any time after receipt of the prior written notice to the
Lender specified below, any Loan being made pursuant to this Loan Agreement may
be prepaid, in whole, or in part without penalty in multiples of ONE HUNDRED
THOUSAND and 00/100 DOLLARS ($100,000), provided, however, that no LIBOR Loan
may be prepaid except at the end of the applicable Interest Period and accrued
interest on the amount being prepaid plus any applicable fees as set forth in
Section 3.5 below shall simultaneously be paid. The notice required pursuant to
the immediately preceding sentence must be received by the Lender no later than
(i) 11:30 a.m. on the proposed prepayment date in that case of a prepayment of
the Prime Rate Loan and (ii) 11:30 a.m. on the LIBOR Banking Day that is at
least two (2) LIBOR Banking Days prior to the proposed prepayment date.
Prepayments shall be applied first to any expenses outstanding under any Loan
Document, then to any fees due hereunder, then to interest and then to
principal.
3.5 Funding Losses. The Borrower shall compensate the Lender, upon its written
request (which request shall set forth the basis for requesting such
compensation), for all reasonable losses, expenses and liabilities, including,
without limitation, any loss, expense or liability incurred by reason of the
liquidation or reemployment of deposits or other funds required to fund any
LIBOR Loan (all such losses "Funding Losses") which the Lender may sustain: (i)
if for any reason an advance of, or conversion from or into, a LIBOR Loan does
not occur on a date specified therefor in a Notice of Borrowing or notice of
conversion given pursuant to Sections 2.7 or 2.8; (ii) if any repayment
(including any prepayment made pursuant to Section 3.4) or conversion of any of
its LIBOR Loans occurs on a date which is not the last day of an Interest Period
with respect thereto; or (iii) as a consequence of any other default by the
Borrower to repay its Loans when required by the terms of this Loan Agreement or
any Note held by the Lender.
3.6 Term. The Term of this Loan Agreement shall commence as of the Date of
Closing and, subject to the provisions hereof, shall expire at midnight on the
Maturity Date. The Maturity Date, and therefore the Term of this Agreement, may
be extended for additional one (1) year periods as of the first and second
anniversaries of the Date of Closing upon the written request of the Borrower to
the Lender made at least two (2) months prior (but not more than three (3)
months prior to said anniversary date). Such notice shall be accompanied (i) by
a certificate from the Chief Financial Officer of the Borrower stating that no
Default or Event of Default has occurred and is then continuing and the
representations and warranties contained herein and in the other Loan Documents
are true and correct in all material respects on such date and (ii) three year
financial projections in GAAP format. The Lender shall not be obligated to
grant any such extension, it being acknowledged that the Lender may or may not
grant any such extension in its sole and absolute discretion, however, the
Lender agrees to reply to any such request within thirty days after receipt of
a request therefor in accordance with this Section 3.6.
3.7 Interest Limits. If the fulfillment of any provision in any Loan Document
relating to the rate of interest is prohibited by, or in violation of, any
applicable law in effect at the time payment is due, the interest rate shall be
automatically reduced to the maximum rate then permitted by law. If for any
reason the Lender should receive as interest an amount that would exceed the
highest applicable lawful rate of interest, that amount in excess of the lawful
rate will be deemed to have been credited against principal and not against
interest. This provision shall control every other provision in any Loan
Document that is applicable to the calculation of interest.
3.8 Borrowings. The Borrower shall give the Lender notice of each borrowing to
be made hereunder after the Date of Closing by (i) 11:00 am. of the date of such
borrowing, if a Prime Rate Loan, or (ii) by 11:00 am. two (2) LIBOR Banking Days
before the date of such borrowing, if a LIBOR Loan, all as further provided in
Section 2.7.
3.9 Certain Notices. Notices by the Borrower to the Lender of each borrowing
and each prepayment shall be irrevocable and shall be effective only if received
by the Lender not later than 11:00 a.m. New York City time.
3.10 Facility Fees. A commitment fee shall accrue on the daily average amount
of the Commitment for the period from and including the Date of Closing to the
earliest of the date the Commitment is terminated by the Borrower or the Lender,
as the case may be, in accordance with the terms hereof or the Maturity Date at
a rate per annum equal to twenty-five (25) Basis Points calculated on the basis
of a 360 day year for the actual number of days elapsed. The accrued commitment
fee shall be due and payable in arrears on the first day of each calendar
quarter, commencing on the first day of the first calendar quarter after the
Date of Closing and on the Maturity Date.
3.11 Fees. In consideration of credit underwriting services rendered by the
Lender and the negotiation and preparation of the Commitment and the Loan
Documents evidencing said Commitment, on or before the Date of Closing, the
Borrower shall pay to the Lender, a credit underwriting fee in the amount of
$25,000. On or before the Date of Closing and from time to time thereafter, the
Borrower shall also pay or reimburse the Lender for all of its counsel fees and
other reasonable out-of-pocket expenses related to this transaction and any
subsequent waivers, modifications or amendments.
3.12 Payment Generally. All payments under this Loan Agreement or the Note or
fees shall be made by the Borrower in United States Dollars in immediately
available funds not later than 2:00 p.m. New York City time on the date on which
such payment shall become due (each such payment made after such time on such
due date to be deemed to have been made on the next succeeding Banking Day) at
the Lending Office provided, that, when a new Loan is to be made by the Lender
on a date the Borrower is to repay any principal of an outstanding Loan, the
Lender shall apply the proceeds thereof to the payment of the principal to be
repaid and only an amount equal to the difference between the principal to be
borrowed and the principal to be repaid shall be made available by the Lender to
the Borrower as provided in Section 2.7. The Borrower shall, at the time of
making each payment under this Loan Agreement or any Note, specify to the Lender
the principal or other amount payable by the Borrower under this Loan Agreement
or the Note to which such payment is to be applied, and in the event that it
fails to so specify, or if a Default or Event of Default has occurred and is
continuing, the Lender may apply such payment as it may elect in its sole
discretion. If the due date of any payment under this Loan Agreement or the Note
would otherwise fall on a day which is not a Banking Day, such date shall be
extended to the next succeeding Banking Day and interest shall by payable for
any principal so extended for the period of such extension.
3.13 Debiting of Account. If so requested by the Lender, the Borrower shall
maintain a demand deposit account (a DDA Account) with the Lender, and the
Lender may, and the Borrower hereby authorizes the Lender to, debit any such DDA
Account or such other account maintained by the Borrower with the Lender for the
amount of any payment, as and when such payment becomes due hereunder, whether
such payment is for accrued interest, principal or expense, even if debiting any
such account results in a loss or reduction of interest to the Borrower or the
imposition of a penalty applicable to the early withdrawal of time deposits.
Such authorization shall not affect the Borrower's obligation to pay when due
all amounts payable hereunder, whether or not there are sufficient funds in any
accounts of the Borrower. The foregoing rights of the Lender to debit the
Borrower's accounts shall be in addition to, and not in limitation of, any
rights of set-off which the Lender may have hereunder or under any other Loan
Document.
SECTION IV - CONDITIONS PRECEDENT
4.1 Requirements for Initial Advance. The obligation of the Lender to make the
initial advances under this Loan Agreement requested on the Date of Closing is
subject to the satisfaction of all of the following conditions precedent:
(A) Loan Documents. The following Loan Documents, each duly executed and
delivered by the parties thereto:
(i) this Loan Agreement;
(ii) the Note;
(iii) an incumbency certificate executed by an appropriate officer of the
Borrower certifying, as of the Date of Closing, the names, titles and true
signatures of the officers certified to execute the Loan Documents, and the
names, titles and true signatures of such officers of the Borrower authorized to
deliver Notices of Borrowing and letter of credit requests on behalf of the
Borrower;
(iv) a favorable New Jersey law opinion of counsel to the Borrower (which may
be rendered by Xxxxx Xxxxx, Esq. Borrower's in-house general counsel) ,
addressed to the Lender, to the effect that the Loan Documents have been duly
authorized and executed and are enforceable against the Borrower in accordance
with their respective terms, and as to such other matters reasonably requested
by the Lender;
(v) a secretary's certificate for the Borrower, to which are attached certified
copies of: (a) the articles of incorporation of the Borrower and all amendments
thereto, certified by an appropriate corporate officer, (b) the By-Laws of the
Borrower and all amendments thereto, and (c) appropriate resolutions and
shareholder consents authorizing the transactions herein contemplated;
(v) a certificate from the chief financial officer of the Borrower dated the
Date of Closing to the effect that as of such date: (a) no Default or Event of
Default has occurred or is continuing, (b) since April 29, 1999, there has been
no material adverse change in the business, financial condition or operations of
the Borrower, and (c) each of the representations and warranties of the Borrower
contained in this Loan Agreement are true in all material respects;
(vi) good standing certificate issued by the appropriate official of the state
in which the Borrower is incorporated; and such good standing certificates
issued by the appropriate official of each of the states in which the Borrower
is qualified as a foreign corporation as the Lender shall require;
(vii) certificates of insurance evidencing the existence and full force and
effect of the insurance described in Section 6.2 hereof;
(viii) the certificate of merger, agreement of merger, and such other
documentation as the Lender may reasonably request pertaining to the merger of
Village Liquor Shop with and into the Borrower, with the Borrower as the
surviving entity; and
(ix) such other documents as the Lender may reasonably require, including
without limitation, other agreements, instruments, or indentures to which any
obligor is a party, including, without limitation, financing statements, proofs,
opinions, guaranties and other written assurances.
(B) Fees and Expenses. The Borrower shall have paid (or otherwise satisfied to
the satisfaction of the Lender) all fees hereunder that are expenses due and
payable on or prior to the Date of Closing, including, without limitation, the
fees specified in Section 3.11 and fees and expenses incurred by the Lender's
counsel related to the preparation, negotiation, and closing of the transaction
contemplated herein that have been requested pursuant to invoices submitted to
the Borrower on or prior to the Date of Closing.
(C) Private Placement Transaction. On or before the Date of Closing, the
Borrower shall have consummated the private placement transaction described in a
Confidential Private Offering Memorandum dated July, 1999 (the "Note Private
Placement") and, in connection therewith, the Borrower shall have furnished to
the Lender evidence of the application of the proceeds of the sale of the
Privately Placed Notes so issued to the satisfaction of the following
Liabilities and the release of any Liens securing the same: (i) all of
Borrower's indebtedness and liabilities arising under the Existing Credit
Facility pursuant to a certain pay-off letter issued by the Lender in its
capacity as agent thereunder and acknowledged by the Borrower and Summit Bank;
and (ii) all of Borrower indebtedness and liabilities arising under or in
connection with the Traveler's Mortgage Debt in accordance with a certain pay-
off letter obtained by the Borrower on or prior to the Date of Closing.
4.2 Requirements for Any Advance and Issuance of Letter of Credit. The
obligation of the Lender to make any Revolving Credit Loan and the obligation of
the Lender to issue any Letter of Credit, in each case subsequent to the Date of
Closing, is subject to satisfaction of the following conditions:
(A) the representations and warranties contained in Section V hereof are true
and correct on and as of the date of funding of each such Loan or date of
issuance of such Letter of Credit, as the case may be;
(B) no Default or Event of Default has occurred and is continuing;
(C) there has been no material adverse change in the Borrower's condition,
financial or otherwise, since the date of this Loan Agreement; and
(D) all of the Loan Documents remain in full force and effect.
SECTION V - REPRESENTATIONS AND WARRANTIES
As of the Date of Closing, as of the time of each advance under the Revolving
Loan, and as of the date of issuance of any Letter of Credit hereunder, the
Borrower represents, and warrants to the Lender and agrees as follows:
5.1 Organization and Authority. Each Company is a duly organized and validly
existing corporation that is in good standing under the laws of the State of New
Jersey and is duly qualified and in good standing in each state in which its
property or business subjects it to qualification requirements as a foreign
corporation. Each Company (A) is duly qualified and registered to transact
business in each jurisdiction in which its properties or business make
qualification or registration necessary, and (B) has full power, authority,
franchises, licenses and right to enter into and perform each of the Loan
Documents to which it is a party and to carry on its business as now being
conducted.
5.2 Binding Effect. Each Loan Document constitutes a legal, valid and binding
obligation of the Companies which are parties thereto, enforceable in accordance
with their terms.
5.3 No Conflicting Agreements or Laws. Neither the execution nor the delivery
of any Loan Document, nor the consummation of the transactions contemplated
thereby, nor the fulfillment of, compliance with or performance of the terms and
conditions therein, is prevented or limited by, conflicts with or will result in
the breach or violation of, or a default under the terms or conditions of (A)
any certificate of incorporation, charter or other agreement to which the
Borrower is bound, or (B) any law, order of any court or administrative agency
or any rule or regulation applicable to the Borrower. The Borrower is not, or by
Borrower's execution, delivery or performance of any Loan Document will not be,
in default under, or in violation of, any of its obligations under any agreement
or undertaking to which the Borrower is a party or by which the Borrower is
bound.
5.4 No Conflicting Litigation. There is no action or proceeding pending or
threatened against the Borrower or involving any assets of, or ownership in, the
Borrower before any court, administrative agency or governmental authority that
might (A) adversely affect the Borrower's ability to authorize or perform any
Obligations, (B) involve the possibility of any judgment or liability that would
result in any material adverse change in the Borrower's business, properties or
assets, (C) adversely affect the enforceability of any Loan Document, or (D)
involve possible or threatened claims totaling in excess of $500,000, except for
any litigation that has been accurately and completely described on Exhibit 2
annexed to the Principal's Certificate.
5.5 Ownership of Subsidiaries. Village Liquor Shop has been merged into the
Borrower, with the Borrower as the surviving entity, therefore, the Borrower
does not directly or indirectly own or control any Subsidiaries, other than such
subsidiaries which may be created or acquired subsequent to the Date of Closing
in accordance with Section 7.4(f) hereof.
5.6 Liens Against Property. The Borrower has good and marketable title to all
of the Property. All Property is now free and clear of Liens, except for any
Permitted Encumbrances, and there are no judgments of record in any other state
where any Property may be located against any name used within the past twenty
(20) years by any Company or by any Company's predecessor in interest.
5.7 Location of Property and Offices. The chief executive offices and primary
business records of the Borrower are at all times maintained, and for the past
four (4) months have at all times been maintained, at the principal place of
business of the Borrower set forth in the caption of this Loan Agreement. All
Property and other business records of the Companies are, and will be, at the
locations set forth on Exhibit 1 annexed to the Principal's Certificate, except
for new stores and offices that may be opened only after notice to the Lender of
each such location.
5.8 Financial Information and Condition. The consolidated audited financial
statement of the Borrower dated July 25, 1998 and delivered to the Lender truly
sets forth its financial condition and the results of operations as of that date
and there has been no material adverse change since then. All other statements,
representations and warranties made by the Borrower to the Lender have been, and
as of the Date of Closing are, accurate and complete and no information has been
omitted that would make any of them misleading or incomplete. Immediately prior
to, and after the making of each loan described in this Loan Agreement, the
Lender was not and will not be, (A) "insolvent" as that term is defined in
N.J.S.A. 25:2-23 (or any successor statute governing fraudulent transfers) or in
11 U.S.C.A. 101(3 1) or (B) left with "unreasonably small capital" or "debts
beyond the debtor's ability to pay as such debts become due", as those phrases
are construed under 11 U.S.C.A. 548 (a)(2)(B) or any other applicable statute
governing "fraudulent transfers".
5.9 Environmental Matters. Except as set forth in Exhibit 3 to the
Principal's Certificate, no Company has generated, stored, treated, discharged,
handled, refined, spilled, released or disposed of any Hazardous Substances in
violation of any applicable law or regulation. No Company has received any
notice, or is on notice of, any claim, investigation, litigation or
administrative proceeding, actual or threatened, or any order, writ or judgment
that relates to any discharge, spill, handling, refining, release, emission,
leaching or disposal of pollutants of any kind including any Hazardous
Substances by, or on property owned or leased by, any Company. The Standard
Industrial Classification code numbers relating to any activities any Company,
are also set forth on that Exhibit 3. In connection with any acquisition, sale,
closing, transfer, change in control or merger of Borrower or any Company since
December 31, 1983 or any Property now or previously owned or leased by them that
was subject to New Jersey law, the New Jersey Industrial Site Recovery Act
(N.J.S.A. 13: 1 K-6 et seq.) ("ISRA"), including any predecessor statute (such
as the Environmental Clean-Up Responsibility Act) was complied with by
submitting a "Negative Declaration" as that term is defined in N.J.A.C. 7:1-3.3
or by completing a "Clean-up Plan" as that term is defined in N.J.A.C. 7:1-3.3,
which Negative Declaration or Clean-up Plan has been approved, without condition
or reservation, by the New Jersey Department of Environmental Protection and
Energy.
5.10 Taxes. Each Company has filed all tax returns and reports required to be
filed and has paid all taxes that are due and owing (including penalties,
deficiency assessments and interest) other than those that are being diligently
and in good faith disputed and the asserted liability for which is shown as a
reserve on the financial statements delivered to the Lender in accordance with
GAAP. All such returns and reports are accurate and complete in all respects.
5.11 Name and History. During the past twenty (20) years, no Company has (A)
had, used or operated under any other name or trade name, (B) acquired any other
organization or entity or a substantial portion of the assets of any other
organization or entity, (C) merged, or been merged into, any other organization
or entity or (D) controlled, directly or indirectly, any non-individual Person,
except as set forth on Exhibit 4 annexed to the Principal's Certificate.
5.12 Controlling Interests. The names and respective interests and offices of
all Persons who directly or indirectly own or control Ten Percent (10%) or more
of any class of stock of the Borrower are set forth on Exhibit 5 annexed to the
Principal's Certificate. The Sumas Family holds a sufficient number of shares of
all classes of stock of Borrower to cast at least 51% of the votes that may be
cast in any election.
5.13 ERISA. There has not occurred, and there are no circumstances that, with
the lapse of time or giving of notice, may lead to the occurrence of, a
Termination Event under any Plan. No Company, nor any Plan maintained by any
Company (nor any related trust) has incurred any accumulated funding deficiency.
Except as disclosed on Exhibit 2 to the Principal's Certificate, no event or set
of circumstances has occurred under which any Company could be subject to any
liability (including but not limited to liability under Sections 4201 and 4242
of ERISA) with respect to a "multi-employer plan" (as defined in Section 3(37)
of ERISA) to which it contributes other than for contributions made in the
ordinary course of business, none of which are overdue. No representation or
warranty is made by Borrower with respect to payments or contributions due after
the date hereof by participants in any "Multi-employer plan" other than Borrower
and its affiliates.
5.14 Margin Stock. No Company is involved, as one of its important
activities, in the business of extending credit for the acquisition of any
"margin stock" (within the meaning of Regulation U issued by the Board of
Governors of the Federal Reserve System of the United States) and no proceeds of
any Loans under this Loan Agreement will be used to purchase, or to extend
credit to others so that they may purchase, any such margin stock.
5.15 Compliance with Loan Documents. Each Company is in full compliance with
all terms and conditions of all Loan Documents.
5.16 No Claims or Offsets. The aggregate principal amount of indebtedness due
to the Lender as of the date hereof is as stated in the Note. The Borrower
acknowledges and agrees that such indebtedness is unconditionally due to the
Lender, and that as of the date hereof has no claims against the Lender nor any
counterclaims, defenses or offsets to the Borrower's obligations under the Note
or the other Loan Documents of any nature whatsoever.
5.17 Compliance with Laws. To the best of its knowledge, each Company, in the
conduct of its business, is in compliance with all laws, regulations and orders,
the failure to comply with which would have a material adverse effect on the
business of such Company.
5.18 Wakefern. The Borrower is a member in good standing of the Wakefern
cooperative. The Borrower has duly performed all of its duties and obligations
as a member of the Wakefem cooperative and has the right to use the "Shop-Rite"
name and trademark. No claim is pending or, to the best of the Borrower's
knowledge, threatened asserting any breach of any such duties or obligations or
seeking to limit or curtail the Borrower's right to use such name or trademark.
5.19 Accuracy of Statements. All statements, representations and warranties
made by the Borrower in this Loan Agreement and in the Loan Documents are
correct and complete and no information has been omitted therefrom which would
make any of them misleading or incomplete.
5.20 Survival. All representations and warranties in any Loan Document shall
survive both the closing of any Loans and any independent investigation by the
Lender.
SECTION VI - AFFIRMATIVE COVENANTS
The Borrower agrees to observe and perform its duties and covenants under each
Loan Document and Obligation and, in addition, to do all of the following, and
to cause the Subsidiaries to remain in compliance with the following:
6.1 Protection of Property. Protect the value of, and any Company's interest
in, the Property including (A) maintaining the Property in good condition and
repair and preserving it against loss, damage, contamination, pollution and
depreciation in value, other than by normal wear and tear; and (B) defending
against all claims and demands of any Person claiming title to or a Lien against
or security interest or any interest adverse to the Lender in, any Property,
except for Liens that are Permitted Encumbrances.
6.2 Insurance. Maintain insurance as follows:
(A) property insurance written in the broadest "all risk" form
available on a replacement cost basis and covering all tangible Property. That
insurance shall be in amounts at all times at least equal to the full insurable
value of such Property, but in no event shall the insurance be less than the sum
of the Obligations nor shall it be less than $15,000,000 per location and
$75,000,000 in the aggregate; and
(B) public liability insurance in the name of Borrower, with comprehensive
general liability coverage of not less than $175,000,000, and including a
contractual liability endorsement, in the amounts of $2,000,000 for the death or
bodily injury to one person, $5,000,000 for the death or bodily injury in any
one accident or occurrence and $500,000 for loss or damage to the property of
any person or persons; and
(C) if the Borrower shall be operating or using a boiler, boiler explosion and
casualty insurance reasonably satisfactory to the Lender; and
(D) business interruption insurance in amounts no less than the amounts
maintained as of the Date of Closing; and
(E) worker's compensation insurance, as may be required by law; and
(F) all such insurance coverage may be effected under overall blanket or excess
(G) coverage policies provided, however, that all insurance shall be in amounts
sufficient to prevent the insured from being a co-insurer within the terms of
any insurance policy; and
(H) all policies of insurance shall be in a form reasonably acceptable to the
Lender and shall be issued by insurers duly licensed and authorized to conduct
that type of insurance business in New Jersey or Pennsylvania as the case may
be. The Lender shall have the right, at any time, to reject insurance provided
by an insurance company other than InsuRite that does not at all times have a
policy-holders rating of "A", or better, and financial rating of "V", or better,
in the then current edition of Best's Insurance Guide; and
(I) all policies of insurance or satisfactory endorsements thereof, together
with a paid receipt, shall be deposited with the Lender prior to the Date of
Closing and, at least thirty (30) days prior to the expiration of any such
policies, the Borrower shall furnish paid receipts and other evidence,
satisfactory to the Lender, that all such policies have been renewed or
replaced; and
(J) comply with all provisions of any other Loan Document relating to insurance.
6.3 Financial Information. Deliver financial information and documents directly
to the Lender as follows:
(A) within forty-five (45) days after the end of each of the first three (3)
Fiscal Quarters of each Fiscal Year, the 10-Q reports for such Fiscal Quarter
submitted to the Securities and Exchange Commission by any Company (or
equivalent financial statements if the Company is no longer a reporting Company
with the SEC); and
(B) within ninety (90) days after the close of each Fiscal Year, (i) the 10-K
report most recently submitted to the Securities and Exchange Commission by any
Company and (ii) to the extent not included in the 10-K, an audited consolidated
balance sheet of the Companies as of the close of each such Fiscal Year together
with the related consolidated statements of operations, retained earnings and
statements of cash flows for such Fiscal Year, certified without qualification
by independent certified public accountants that are reasonably satisfactory to
the Lender including their certificate and accompanying comment and a
certificate stating that they have no knowledge of the existence of any
condition or event that constitutes a Default or Event of Default under any Loan
Document or any other Obligation; and
(C) simultaneously with the submission of each financial report as stated above,
a certificate of the president or chief financial officer of each Company that
the signers (i) believe that the financial report is true and complete, (ii)
have no knowledge of the existence of any condition or event that constitutes a
Default or Event of Default under any Loan Document or other Obligation, (iii)
if any Default or Event of Default existed or exists, specifying the nature and
period of existence and what, if any, remedial action is being taken, and (iv)
calculating and demonstrating compliance with all financial covenants herein;
and
(D) within five (5) days of filing or public release, true copies of all (i)
filings that are made with the Securities and Exchange Commission or other
regulatory authorities, and (ii) reports, statements, communications and
announcements that are sent by the Borrower to its shareholders;
(E) within forty-five (45) days after the end of each six-month semi-annual
fiscal period, a profit and loss report for such fiscal period prepared on a
store by store basis; and
(F) simultaneously with delivery of the same to the holders of the Privately
Placed Notes, the Borrower shall furnish to the Lender any notice, report,
financial statement, certificates, projections or other forms of information
(financial or otherwise) required to be delivered by or on behalf of the
Borrower to such holders pursuant to the documents evidencing or governing such
notes; provided, however, that the Borrower shall have no such obligation to
furnish information pursuant to this clause (F) to the extent that such
information (or substantially the same information) has been furnished to the
Lender pursuant to any other clause of this Section 6.3; and
(G) such other information including tax filings and reports respecting the
business and properties or the condition or operations, financial or otherwise,
of any Company as the Lender may, from time to time, reasonably request.
6.4 Notices to Lender. Notify the Lender immediately in writing (A) of any
default, or asserted default by any Company, under any real property lease, or
under any agreement involving actual or threatened claims or liability in excess
of Five Hundred Thousand Dollars ($500,000); (B) if any Company becomes involved
in any litigation involving actual or threatened claims or liability in excess
of Five Hundred Thousand Dollars ($500,000) that is not fully covered by
insurance; (C) the occurrence of any theft, fire or other casualty, or any
governmental taking, involving any Property having a value in excess of Five
Hundred Thousand Dollars ($500,000); and (D) on receipt of any information,
notice, claim or investigation as to any alleged use, storage, treatment or
handling, except as expressly permitted in this Loan Agreement or any discharge,
spill, emission or disposal, of any Hazardous Substance by, or on any property
owned or leased by, any Company that may involve more than Five Hundred Thousand
Dollars ($500,000) in testing and cleanup costs.
6.5 Further Assurances. Furnish further assurances that the Lender in its
discretion determines to be reasonably necessary or desirable to confirm and
assure that all Property remains free of Liens other than Permitted
Encumbrances, the reasonable cost of so doing to be paid by the Borrower. The
Borrower shall also, within five (5) days of request, deliver to the Lender a
notarized statement of the indebtedness owing under each Obligation.
6.6 Complete Records. Maintain accurate, current and complete records of each
Company's financial affairs and transactions and of all Property reasonably
satisfactory to the Lender.
6.7 Location of Offices. Maintain the chief executive offices and company-wide
business records of the Companies at the address for the Borrower set forth in
the caption of this Loan Agreement and maintain the other records and Property
at the locations set forth on Exhibit 1 annexed to the Principal's Certificate
provided, however, that any such address may be changed after prior written
notice to the Lender.
6.8 Inspection of Property and Records. Arrange, within one (1) Banking Day of
request, for the Lender's agents, employees or representatives to inspect any
Property and any books and records and commercial premises of any Company.
6.9 Bank Accounts. Except for local short-term cash deposit and payroll
accounts for any stores of any Company, all Companies shall keep and maintain
all existing and future demand deposit, operating, tax reserve and other deposit
accounts in Borrower's name with the Lender and its Affiliates, except as
expressly permitted in advance, in writing, by the Lender, in its discretion.
Permission to open any such accounts with any other bank or financial
institution shall be requested of the Lender, in writing, at least fifteen (15)
days in advance of the date when any such proposed account is to be opened. All
funds deposited in any accounts of institutions other than the Lender as
permitted above shall be regularly transferred into, and maintained at all times
in, the Borrower's operating accounts at the Lender.
6.10 Minimum Tangible Net Worth. For each Fiscal Quarter occurring after the
close of the Fiscal Year ended July 31, 1999, not cause or permit Tangible Net
Worth of the Companies, on a consolidated basis, to be less than the sum of (x)
$50,000,000 and (y) fifty percent (50%) of accumulated quarterly positive Net
Income for each such Fiscal Quarter then ending. Notwithstanding the foregoing,
if there are any charges with respect to the Xxxxxxx Facility in Fiscal Year
ended July 31, 1999, such charges (net of any tax benefit inuring to the
Borrower as a result thereof) shall be excluded for purposes of the base
calculation of Minimum Tangible Net Worth in clause (x) above.
6.11 Ratio of Funded Debt Plus 8* Rent to EBITDAR. As to the Companies, on a
consolidated basis, maintain a Ratio of Funded Debt Plus 8* Rent to EBITDAR of
not more than 4.00 to 1.00 measured as of the end of each Fiscal Year and Fiscal
Quarter on a rolling four quarters basis.
6.12 Ratio of EBITDAR to Interest Plus Rent. As to the Companies, on a
consolidated basis, maintain a Ratio of EBITDAR to Interest Plus Rent of not
less than 2.30 to 1.00 measured as of the end of each Fiscal Year and Fiscal
Quarter on a rolling four quarters basis.
6.13 Capital Expenditures. Not cause or permit the aggregate sum of all of the
consolidated Capital Expenditures of the Companies (excluding the Xxxxxxx
Facility) made at any time during the period commencing at the beginning Fiscal
Year 2000 through and including the end of Fiscal Year 2002 to exceed
$38,000,000.
In addition to the Capital Expenditures permitted above in this Section 6.13,
Borrower may expend additional amounts in the form of Capital Expenditures in an
aggregate amount not to exceed $12,000,000 in connection with the construction
and fit-up of the Xxxxxxx Facility; provided, that prior to any such expenditure
the Lender shall have received and approved (i) a final budget itemizing such
expenditures, (ii) documentary evidence that the litigation regarding the
Xxxxxxx Facility has been settled, and (iii) documentary evidence that all
zoning, land use and construction permits, approvals, authorizations and
certificates necessary to commence and proceed with the development and
construction of the Xxxxxxx Facility have been obtained.
6.14 Taxes and Laws. Pay all taxes, assessments, government charges and levies
when due and comply with all federal, state and local laws and regulations that
are applicable to any Company or the business of any Company and provide proof
of such payment and compliance as Lender may request, provided however that any
Company may diligently and in good faith dispute an asserted tax liability by an
appeal in a forum of appropriate jurisdiction so long as the asserted liability
is shown as a reserve on all financial statements and reports delivered to the
Lender in accordance with GAAP.
6.15 Lender's Expenses. Pay all reasonable fees, costs and expenses incurred by
the Lender and its counsel in connection with the preparation or later
modification of any Loan Document (whether or not any loan is actually
consummated or modification is made) and the making, closing and administering
of the loans contemplated thereby, including lien and title searches, copying
costs, delivery and postage charges and all filing and recording costs.
6.16 Indemnification. Assume all liability for, and agree to indemnify, protect
and save harmless the Lender, its agents and employees from and against all
liability (including liability in tort, whether absolute or otherwise),
obligations, losses, penalties, claims, suits, costs and disbursements,
including reasonable legal fees and disbursements, in any way relating to, or
arising out of, any relationship with any Company or any Obligation except
liabilities arising from the willful misconduct of the Lender. This provision
shall survive the termination or expiration of this Loan Agreement
6.17 Cooperative Obligations. Perform all its duties and obligations, and
maintain its existence, as a member of the Wakefern cooperative and maintain its
right to use the "Shop-Rite" name and trademark.
6.18 Simultaneous Liens. If any Lien arises in violation of Section 7.1,
Borrower shall immediately cause all Obligations to be secured equally and
ratably with the indebtedness secured by any such Lien, and, in any case, the
Obligations shall have the benefit of an equitable Lien equally and ratably
securing the Obligations, provided, however, that this provision shall not in
any way limit Borrower's duty to remain in compliance with all other provisions
of this Loan Agreement and the Lender's acceptance of any Lien in its favor
shall not constitute a waiver of any Default including any violation of Section
7.1.
6.19 Corporate Existence. Maintain each Company as a corporation in good
standing in its state of incorporation.
6.20 Payment of Obligations. Pay all of its obligations and liabilities as
they become due.
6.21 Year 2000 Compatibility. Take all actions necessary to assure the
Borrower's computer based systems are able to operate and effectively process
data on and after January 1, 2000. At the request of the Lender, the Borrower
shall provide the Lender with assurance acceptable to the Lender that Borrower's
computer systems have Year 2000 compatibility.
SECTION VII - NEGATIVE COVENANTS
The Borrower agrees not to do, or permit any other Company to do, any of the
following without the express prior written consent of the Lender, which consent
may be granted or withheld by the Lender in its reasonable discretion:
7.1 No Liens. Suffer any Lien against any Property (including any real property
leases and subleases), except for any Permitted Encumbrances.
7.2 Hazardous Substances. Generate, store, treat, discharge, refine, handle,
release or dispose of any Hazardous Substances except (A) for consumer products
sold in the ordinary course of business in accordance with all applicable laws
and regulations and (B) standard maintenance uses of common cleaning and
maintenance products.
7.3 Other Liabilities. Incur, or permit any Subsidiary to incur, Liabilities
or contingent obligations, except (A) indebtedness to the Lender; (B) trade
payables in the ordinary course of business; (C) pursuant to real property
leases and equipment leases; (D) the indebtedness contemplated in the definition
of Permitted Encumbrances; (E) the unsecured indebtedness evidenced by the
Privately Placed Notes; and (F) unsecured indebtedness (in addition to the
unsecured indebtedness permitted pursuant to clauses (A), (B) and (E) above) in
an aggregate outstanding principal amount not to exceed at any time $2,000,000.
7.4 Ownership And Organizational Changes. Permit or effect any of the
following:
(A) Any shares of stock of any Subsidiaries to be sold, transferred, conveyed,
assigned, pledged, hypothecated, or otherwise encumbered, except for transfers
to another Subsidiary;
(B) Any change in the ownership of any stock of Borrower that is owned by any
member of the Sumas Family if, as a result of that transfer, the Sumas Family
will no longer hold a sufficient number of shares of all classes of stock of
Borrower to cast at least 51% of the votes that may be cast in any election;
(C) Any change in the capitalization or capital structure of any Company
(including the issuance of any new, additional or different type or class of
stock, the modification, reduction or retirement of any existing class or type
of stock or the changing or modifying of the voting power of any stock) if, as a
result of that change, there would be a violation of any provision of this Loan
Agreement, including subsections (A) or (B) of this Section 7.4;
(D) The Borrower or any Company to enter into any merger or consolidation or
participate in a joint venture with any other company, except that any such
transaction may take place between Subsidiaries or as permitted pursuant to
Section 7.8(G);
(E) Any Company to acquire all, or a substantial portion of, the assets of any
commercial Person, or acquire any assets or interest therein of any firm for an
aggregate purchase price of $500,000 or more except (i) those acquisitions made
by the Borrower in the ordinary course of business (such as acquisitions of
inventory; acquisitions of stores or selling space are not acquisitions in the
ordinary course) or as permitted pursuant to Section 7.8(G) or (ii) until such
time as the Revolving Loan is repaid in full, acquisitions of up to an
additional 100,000 square feet of selling space; or
(F) Any subsidiary to be created or acquired, except that a new Subsidiary may
be formed if it is wholly-owned by the Borrower and guarantees payment of the
Obligations in form acceptable to the Lender.
7.5 Dividend Limitations and Stock Repurchases. As to the Borrower, pay or incur
any liability to pay any cash dividends or distribution of any kind to any of
Borrower's shareholders or repurchase any of the outstanding shares of the
capital stock of the Borrower if the aggregate amount of any such dividends,
distributions, or repurchases would (A) in any Fiscal Year exceed, in the
aggregate, twenty percent (20%) of the excess of Borrower's Net Income for the
prior Fiscal Year in excess of One Million and 00/100 ($1,000,000) Dollars, or
(C) would result in a violation of any provision of this Loan Agreement,
including, but not limited to, Sections 6.10, 6.11, 6.12 and 6.13. Prior to
payment of any dividend or any intended stock repurchase the Borrower shall
provide the Lender with proof satisfactory to the Lender that, on a pro forma
basis, the Borrower will be in full compliance with all covenants set forth in
the Loan Agreement, including, but not limited to, the financial covenants set
forth in Sections 6.10, 6.11, 6.12, and 6.13, after such dividend or stock
repurchase is completed. Notwithstanding the foregoing, if the Borrower is
entitled to pay dividends or repurchase stock in a given year or years but does
not pay such dividends or repurchase such stock, these unpaid dividends or
stock repurchases shall accumulate and may be paid in the future provided that
after giving effect to such payment, no Default or Event of Default would then
exist. Prior to payment of any accumulated dividend or any intended stock
repurchase the Borrower shall provide the Lender with written evidence
satisfactory to the Lender (in its sole judgment) of the amount of accumulated
unpaid dividends or stock repurchases eligible for payment and that, on a pro
forma basis, the Borrower will be in full compliance with all covenants set
forth in this Loan Agreement, including, but not limited to, Sections 6.10,
6.11, 6.12 and 6.13, after giving effect to any such dividend or stock
repurchase.
7.6 Other Names. Use or adopt any name other than (i) its formal corporate name
set forth in this Loan Agreement, (ii) "The Shop-Rite Annex" (for the Borrower's
Bernardsville facility only), (iii) the name "Shop-Rite" or (iv) "Village
Market" (for the Borrower's South Orange facility only) unless, at least fifteen
(15) days in advance of using any other name, the Lender has been provided with
appropriate trade name certificates and current judgment, tax, UCC- 11 and other
search reports for that new name, to the reasonable satisfaction of the Lender.
7.7 Change in Fiscal Year. Change the Fiscal Year of any Company without the
consent of the Lender.
7.8 Restricted Investments. Directly or indirectly purchase or acquire any
obligations, securities, stock or other assets to be held for investment (as
distinguished from assets held for direct and immediate use or consumption by
any Company), or to make any loans, advances or extensions of credit, except for
any of the following:
(A) readily marketable direct obligations of the United States of America;
(B) commercial paper maturing within 180 days from the date of issuance that has
been issued by a corporation conducting the majority of its business in the
United States and has a rating of "A-1" or better from Xxxxx'x Investor Services
or "P-1" or better from Standard & Poors;
(C) readily marketable direct obligations of any state, county or municipality
in the United States that has a rating of at least "A-l" from Xxxxx'x Investor
Service or "P-1" from Standard & Poors;
(D) notes, checks and chattel paper from customers that are accepted by any
Company as payment for the sale of inventory in the ordinary course of business;
(E) certificates of deposit and "repo" obligations of (i) the Lender and its
Affiliates or (ii) any other United States domiciled bank or trust company that
has unrestricted capital funds of at least $500,000,000 and whose long term
certificates of deposit have a rating of at least "A- I" from Xxxxx'x Investor
Service or "P- I " from Standard & Poors;
(F) investments in Wakefern stock and/or InsuRite stock in aggregate amounts of
not more than One Million Five Hundred Thousand and 00/100 ($1,500,000) Dollars
in any Fiscal Year;
(G) equity contributions or investments of less than Seven Hundred Fifty
Thousand and 00/100 ($750,000) Dollars in the aggregate during the Term hereof;
(H) repurchases of common stock of the Borrower to the extent permitted by
Section 7.5 above; or
(I) investments in Wakefern in an aggregate amount not to exceed the lesser of
(i) Fifteen Million Dollars ($15,000,000.00) or (ii) the amount of the maximum
accounts payable owing to Wakefern by the Borrower for inventory purchases. Of
the maximum permitted amount, the Borrower shall be permitted to invest a
maximum of Five Million Dollars ($5,000,000.00) in obligations of Wakefern
having a maturity of greater than 30 days but not more than one year. All other
investments of Wakefern shall have a maturity of 30 days or less;
provided, however, that no more than Fifty (50%) Percent of the aggregate
principal amount of the above-mentioned debt instruments (including bonds,
obligations, commercial paper, bills or notes) shall have maturity dates in
excess of one year from the date of original issuance.
7.9 Different Business. Engage in any business other than the operation of
supermarkets and related retail activities as conducted in the normal course of
business.
7.10 Prohibited Dispositions. Sell or otherwise dispose of (A) all, or a
substantial portion of the Property of any Company, or (B) any Property, other
than in arm's length transactions that are made in the ordinary course of
business, provided, however, that the Companies may engage in any Permitted
Dispositions so long as no Default has occurred and is continuing.
Notwithstanding the prior sentence, this provision shall not be deemed to have
authorized any sale or disposition that will result in a violation of any other
provision of this Loan Agreement or any other Loan Document.
7.11 Management Changes. Permit or suffer a change in management that would
result in less than three of the following individuals being in active, full
time and direct control of the business of each of the Companies: Xxxxx Xxxxx,
Xxxxx Xxxxx, Xxxxxx Xxxxx, Xxxxxxx Xxxxx, Xxxx Xxxxx and Xxxxx Xxxxxx.
7.12 Assignment of Leases. Sell, assign, convey any interest in, or permit any
Lien against, any leases, subleases, licenses or rights of use or occupancy of
any kind with respect to any real property whatsoever, except for (a) the
assignment of any lease for an existing store where a new store in the same
locality is being opened and (b) assignments of leases for the existing South
Orange, Bernardsville Annex and Watchung locations, and certain property leased
by the Borrower located in Kingston, Pennsylvania (which has been assigned to a
non-ShopRite supermarket operator).
7.13 Repayments. Prepay any indebtedness for borrowed money or Capitalized
Lease Obligations; provided, however that the foregoing shall not restrict the
ability of the Borrower to cause the mandatory prepayment of the Privately
Placed Notes to the extent that such prepayment is pursuant to the express terms
of Sections 8.1 and 8.3 of that certain Note Purchase Agreement dated as of
September 1, 1999 among the Borrower and the note purchasers listed therein as
is effect as of the date hereof; provided, further that the foregoing proviso
shall not in any event be construed by the Borrower or any other Person as a
consent, waiver or other form of forbearance of any right or remedy that the
Lender may have hereunder, by law or otherwise arising out of the facts or
circumstances related to the prepayment of the Privately Placed Notes described
above.
SECTION VIII - EVENTS OF DEFAULT
Any of the following events or conditions shall, at the option of the Lender,
constitute an "Event of Default" under this Loan Agreement and any other Loan
Documents or obligations (except that the event or conditions described in
Section 8.12 automatically shall be an Event of Default, shall terminate the
Commitment hereunder and shall cause all amounts hereunder to be immediately due
and payable, without any action by the Lender):
8.1 Payments. Any failure to pay any principal or interest under the Revolving
Loan when due, or any failure to pay all other monies within five (5) days after
each due date under the Revolving Loan or any other Obligation; or
8.2 Other Obligations. Any failure to perform or observe any term or condition
under this Loan Agreement, any other Loan Document or any Obligation in a timely
fashion, other than any payments referred to in Section 8.1; provided, however,
that the Borrower may effect a complete cure of any Default of any non-monetary
covenant in this Loan Agreement, except for any Event of Default under any other
subsection of this Section VIII, within fifteen (15) days of the occurrence of
the Event of Default so long as (A) in the reasonable judgment of the Lender the
Default is curable in its entirety during that fifteen (15) day cure period and
(C) this right to cure is not exercised more than one (1) time in any
consecutive six (6) month period; or
8.3 Representations. Any representation, statement, information or warranty
that is at any time made or delivered to the Lender by or on behalf of any
Company shall be materially incorrect, incomplete or misleading when made; or
8.4 Consents. Any Company shall do, or permit to be done, any act for which the
Lender's written consent is required under any Loan Document, without first
obtaining such written consent; or
8.5 Financial Information and Inspections. Any Company shall fail, promptly
after demand, to furnish financial information or to permit inspection of any
books, records or Property as required under any Loan Document; or
8.6 Insurance. Any failure to maintain, or provide evidence to any insurance
coverage required under any Loan Document; or
8.7 Organizational Status. Any Company shall dissolve or fail to remain in good
standing in its state of incorporation or duly qualified in each state where its
properties or business make qualification necessary (except with respect to any
Subsidiary that is merged into another Company); or
8.8 Warrants and Tax Liens. Any warrant of attachment or for distraint, or
notice of tax lien with respect to an amount of Five Hundred Thousand and 00/100
Dollars ($500,000) or more shall be issued relating to, or encumbering, any
Property, or any that is not, within thirty (30) days of entry, discharged, or
stayed and bonded, to the satisfaction of the Lender; or
8.9 Judgments. Any judgment shall be entered against any Company in excess of
Five Hundred Thousand Dollars ($500,000), that is not, within thirty (30) days
of entry, discharged, or stayed and bonded, to the satisfaction of the Lender or
fully covered by insurance and the insurance company has, in writing,
unconditionally accepted liability for that judgment; or
8.10 Lien on Property. Any Lien shall encumber any Property other than (i) a
Permitted Encumbrance or (ii) an involuntary Lien that is specially covered
under Sections 8.8 or 8.9.
8.11 Loss or Destruction. Any loss or destruction of any Property that, in the
Lender's reasonable judgment, has a market value of Five Hundred Thousand and
00/100 ($500,000) Dollars, or more, unless, that loss or destruction is
adequately covered by insurance and, within ninety (90) days of that loss or
destruction, either an insurance company has admitted its liability for such
loss or destruction, or such loss or destruction is fully compensated by
insurance to the satisfaction of the Lender; or
8.12 Insolvency. Any filing of a petition by or against any Company under any
bankruptcy or insolvency law or an assignment by any Company of any property or
assets for the benefit of creditors, or the failure of any Company to pay its
debts in the ordinary course as those debts become due, or the calling of a
meeting of creditors of any Company to obtain any general financial
accommodation; provided, however, that as to any such action that is
involuntarily commenced against and is being contested by the subject Company,
that Company shall have until the earlier of thirty (30) days or an adjudication
of insolvency to contest and obtain a dismissal of that action; or
8.13 Seizure of Property. Any seizure by governmental authorities of, or the
imposition of legal restraints against, any property of any Company that has an
aggregate value in excess of Five Hundred Thousand Dollars and 00/100
($500,000), which is not, within fifteen (15) days of that seizure or
imposition, fully bonded to the reasonable satisfaction of the Lender; or
8.14 Leases. Any Company shall be in default under any term or condition under
any Capital Lease Obligation or under any material operating leases (other than
those which are being contested in good faith and have not resulted in the loss
of any Property by any Company); or
8.15 Enforceability. Any action or proceeding is instituted to obtain a ruling
or judgment that any term or condition of any Loan Document, or any restriction
against, or interest in, any Property that any Loan Document purports to give to
the Lender, is unenforceable in any respect; or
8.16 Termination of Plan. Any Termination Event occurs under any Plan, a
trustee shall be appointed by a court of appropriate authority to administer any
Plan, the Pension Benefit Guaranty Corporation shall institute proceedings to
terminate any Plan or to appoint a trustee or administer any Plan or any Plan
shall be formally terminated; or
8.17 Other Liabilities. Any Company shall fail to make any payment when due or
fail to perform any obligation under its Liabilities in excess of Five Hundred
Thousand and 00/100 ($500,000) Dollars (including, without limitation,
Liabilities evidenced by the Privately Placed Notes)(other than as referred to
in any other subsection of this Section VIII) when due (whether by scheduled
maturity, required prepayment, acceleration, demand or otherwise) and such
failure shall continue after the applicable grace period, if any, specified in
the agreement relating to any such Liabilities; or
8.18 Other Loan Documents. An Event of Default shall occur under any of the
Loan Documents.
SECTION IX - REMEDIES
Whenever an Event of Default occurs (and any applicable cure period has
expired), the Lender may, in addition to any right or remedy the Lender may have
at law or in equity, at its option, do any one or more of the following in any
order, in any combination and at any time:
9.1 Acceleration. Declare any Obligations, including the Revolving Loan to be
immediately due and payable; or
9.2 Other Remedies. Exercise any other rights or remedies it may have under any
Loan Document or Obligation; or
9.3 Terminate Financing. Immediately terminate or reduce the lending Commitment
under the Revolving Loan; or
9.4 Direct Recourse. Institute suit directly against the Borrower; or
9.5 Other Creditor Remedies. Exercise any right or remedy available to the
Lender under any applicable law of any jurisdiction; or
9.6 Collection Expenses. Collect from the Borrower: (A) all reasonable fees
and disbursements of the Lender's attorneys incurred in obtaining advice or
representation relating to the collection or enforcement of any Obligation; and
(B) all expenses of, or in anticipation of, litigation including fees and
(C) expenses of witnesses, experts and stenographers and the cost to obtain or
produce appraisals. All such collection fees and expenses shall be due and
payable upon demand, and shall accrue interest at the highest rate in effect
from time to time under any Obligation; or
9.7 Other Expenses. At any time and from time to time, perform any duty or
obligation of any Company under any Loan Document or Obligation and to take any
other actions deemed by the Lender to be reasonably necessary to protect the
Lender's interest in any Property or to avoid any risk of damage or loss to the
Lender including steps to comply with applicable environmental laws. All
expenses of any nature incurred by the Lender under this Section shall be due
and payable upon demand, and shall accrue interest at the highest rate in effect
from time to time under any Obligation. The exercise by the Lender of its rights
under this Section shall not constitute a waiver of any Event of Default or of
any right or remedy under this any Loan Document; or
9.8 Increase in Interest. Increase the rate of interest under any Obligations
to a floating interest rate determined by the Lender equal to three hundred
(300) basis points (3.00%) above the rate of interest otherwise applicable of
the Loans. This increase in interest rate shall be computed on the basis of a
360-day year and shall survive the entry of any judgment relating to any
Obligation.
9.9 Cessation of LIBOR Borrowing Rights. Prohibit any further borrowing at the
LIBOR Rate. If a Default occurs and is waived by the Lender, the Borrower will
have no further right to borrow at the LIBOR Rate notwithstanding any waiver or
forbearance by the Lender with respect to such Default, and all borrowings and
loans thereafter shall be Prime Rate Loans. No obligation to waive or forbear
from exercising any remedies upon a Default shall be inferred from this Section
9.9.
9.10 Right of Set-off. Without limiting any general right of set-off the Lender
may possess by operation of law and regardless of the adequacy of any collateral
for the Obligations or other means of obtaining repayment of the Obligations,
set-off against and apply to the then unpaid balance of the Obligations any
items or funds of the Borrower held by the Lender, any and all deposits (whether
general or special, time or demand, matured or unmatured) or any other property
of the Borrower, including, without limitation, securities and/or certificates
of deposit, now or hereafter maintained by the Borrower for its or their own
account with the Lender, and any other indebtedness at any time held or owing by
the Lender to or for the credit or the account of the Borrower, even if
effecting such set-off results in a loss or reduction of interest or the
imposition of a penalty applicable to the early withdrawal of time deposits.
For such purpose, the Lender shall have, and the Borrower hereby grants to the
Lender, a lien on and security interest in such deposits, property, funds and
accounts and the proceeds thereof.
9.11 Additional Rights of Lender. The Lender may exercise any of the rights and
remedies in Sections 9.6 or 9.7 upon the occurrence of any Default whether or
not the Lender has formally declared an Event of Default or accelerated any
Obligations, provided, however, that the Lender shall not exercise any rights or
remedies pursuant to this Section 9.11 until after the Borrower is on notice of
the circumstance or condition that would give rise to the Default.
SECTION X - MISCELLANEOUS PROVISIONS
10.1 Waiver. The Lender shall not be deemed to have waived any rights or
remedies under any Loan Document or Obligation by:
(A) forbearing or failing to exercise, or delaying in exercising, any rights and
remedies; or
(B) forbearing or failing to insist upon, or any delay in insisting upon, the
strict performance of any term or condition of any Loan Document or other
Obligation; or
(C) granting any extension, modification or waiver of any term or condition of
any Loan Document or other Obligation, except, and only to the extent, that the
extension, modification, or waiver shall expressly provide; or
(D) any other act, omission, forbearance or delay by the Lender, its officers,
agents, servants or employees; or
(E) any waiver of any rights or remedies on any one occasion.
10.2 Written Modifications. No extension, modification, amendment or waiver of
any term or condition of any Loan Document shall be valid or binding upon the
Lender, unless it is in writing and signed by a duly authorized officer of the
Lender.
10.3 Demands and Notices. All demands and notices under any Loan Document shall
be in writing and shall be served either personally or by certified mail, return
receipt requested, on the party to whom that notice or demand is to be given or
made at the address first set forth in the caption to this Loan Agreement. All
notices and demands directed to Lender shall be sent to Portfolio Management
(Mail Code NJ 3161), with a copy of any such notice or demand to be sent to
Lender's counsel, Windels, Marx, Davies & Ives, 000 Xxxxxx Xxxxxx, Xxx
Xxxxxxxxx, Xxx Xxxxxx 00000 (Attn: Xxxxxxx X. Xxxxx). All notices to the
Borrower shall be sent to the Borrower (Attn: Xxxxxx Xxxxx and Xxxxx Xxxxxx).
(The Lender shall endeavor, but shall have no obligation whatsoever and no
responsibility whatsoever for any failure, to send copies of notices of
conditions of default to the attention of the in-house counsel). Any party
desiring to change the address to which notices or demands shall be sent shall
notify the other parties of the new address by certified mail, return receipt
requested. Any notice or demand properly sent by Lender via certified mail,
return receipt requested, shall be deemed to have been served on the third
business day after mailing, regardless of when it is actually received.
10.4 Governing Law. All terms of each Loan Document and the duties, rights and
remedies of the parties thereunder shall be governed by,
and construed according to, the laws of the State of New Jersey.
10.5 Jurisdiction. In any litigation relating to any Loan Document, Borrower
hereby consents to the exclusive personal jurisdiction of the state and federal
courts of the State of New Jersey.
10.6 Partial Invalidity. If any term or provision of any Loan Document is held
to be invalid by any court of competent jurisdiction, such invalidity shall not
affect the remaining terms and provisions, which shall continue in full force
and effect
10.7 Successors and Assigns. Each Loan Document shall be binding upon, and
inure to the benefit of, the parties thereto and their respective successors or
heirs, and assigns, provided, however, that the Borrower shall not be permitted
to assign or transfer any rights or duties under any Loan Document without the
express prior consent of the Lender, which consent the Lender may grant or
withhold in its sole discretion. The Lender shall have the absolute right to
assign, or sell a participation interest in any or all of Lender's interest in,
any Loan Document or any Loans made pursuant to any Loan Document.
10.8 Additional Rights and Remedies. All rights and remedies given to the
Lender under any Loan Document shall be in addition to, and not in limitation
of, any right or remedy that the Lender may have, whether under any other
provisions of any Loan Document or other agreement, or at law or in equity.
10.9 Further Assurances. The Borrower agrees to execute and deliver all
documents and instruments reasonably requested by the Lender to further the
purposes of this Loan Agreement or any other Loan Document.
10.10 Indemnification. The Borrower shall indemnify, defend and hold harmless
the Lender against any and all losses, liabilities, claims or causes of action
(including but not limited to reasonable attorneys' fees and settlement costs)
arising from or related to (or alleged to arise from or be related to)
Borrower's use of the proceeds of the Loan or the Commitment.
10.11 No Jury Trial. The Borrower and the Lender hereby irrevocably and
unconditionally waive trial by jury in any legal action or proceeding relating
to this Loan Agreement or the Note or any other Loan Document and for any
counterclaim therein.
10.12 Arbitration.
(A) Arbitration Generally. Upon demand of any party hereto, whether made before
or after institution of any judicial proceeding, any claim or controversy
arising out of, or relating to the Loan Documents between the parties hereto (a
"Dispute") shall be resolved by binding arbitration conducted under and governed
by the Commercial Financial Disputes Arbitration Rules (the "Arbitration Rules")
of the American Arbitration Association (the "AAA") and the Federal Arbitration
Act. Disputes may include, without limitation, tort claims, counterclaims,
disputes as to whether a matter is subject to arbitration, claims brought as
class actions, or claims arising from documents executed in the future. A
judgment upon the award may be entered in any court having jurisdiction.
Notwithstanding the foregoing, this arbitration provision does not apply to
disputes under or related to swap agreements.
(B) Special Rules. all arbitration hearings shall be conducted in the city in
which the office of the Lender first stated herein is located. A hearing shall
begin within ninety (90) days of demand for arbitration and all hearings shall
be concluded within one hundred twenty (120) days of demand for arbitration.
These time limitations may not be extended unless a party shows cause for
extension and then for no more than a total of sixty (60) days. The expedited
procedures set forth in rule 51, et seq., of the Arbitration Rules shall be
applicable to claims of less than One Million and 00/100 ($1,000,000) Dollars.
Arbitrators shall be licensed attorneys selected from the commercial financial
Dispute Arbitration Panel of the AAA. The parties do not waive applicable
federal or state substantive law except as provided herein.
(C) Preservation and Limitation of Remedies. Notwithstanding the preceding
binding arbitration provisions, the parties agree to preserve, without
diminution, certain remedies that any party may exercise before or after an
arbitration proceeding is brought. The parties shall have the right to proceed
in any court of proper jurisdiction or by self-help to exercise or prosecute the
following remedies, as applicable: (i) all rights to foreclose against any real
or personal property or other security by exercising a power of sale or under
applicable law by judicial foreclosure including a proceeding to confirm the
sale; (ii) all rights to self-help including peaceful occupation of real
property and collection of rents, set-off, and peaceful possession of personal
property; (iii) obtaining provisional or ancillary remedies including injunctive
relief, sequestration, garnishment, attachment, appointment of receiver and
filing an involuntary bankruptcy proceeding; and (iv) when applicable, a
judgment by confession of judgment. Any claim or controversy with regard to any
party's entitlement to such remedies is a Dispute.
(D) Special Damages. Each party agrees that it shall not have a remedy of
punitive or exemplary damages against the other in any Dispute and hereby waives
any right or claim to punitive or exemplary each now has or which may arise in
the future in connection with any Dispute, whether the Dispute is resolved by
arbitration or judicially.
10.13 Most-Favored Status. In the event that the definitive
documentation executed and delivered in connection with the issuance and sale of
the Privately Placed Notes or the incurrence of any other Liabilities in the
form of funded indebtedness for borrowed money permitted to be incurred pursuant
to Section 7.3 (such indebtedness, the "Specified Indebtedness") (i) contain
covenants or events of default that are more restrictive or onerous on the
Borrower than those covenants or events of default contained in this Agreement;
(ii) provide for, or permits the exercise of, remedies upon the occurrence of an
event of default thereunder (including, without limitation, any direct or
indirect acceleration of the obligations of the Borrower thereunder) which are
not provided for in, or permitted to be exercised under of in respect of, this
Agreement; or (iii) provide guarantees or other sources of payment for
obligations of the Borrower under the Specified Indebtedness which have not been
provided hereunder or in connection herewith (each such covenant, event of
default and provision described in the preceding clauses (i) through (iii) being
herein called a "More Favorable Provision"), then prior to or simultaneously
with the Borrower entering into or becoming bound by any of the documentation
pertaining to the Specified Indebtedness or any amendment, modification or
supplement thereto containing a More Favorable Provision, the Borrower shall
executed and deliver to the Lender an amendment to this Agreement and such other
documents and instruments as the Lender shall reasonably request, in each case
satisfactory in form and substance to the Lender, which modify the provisions of
this Agreement so as to give the Lender the benefit of each More Favorable
Provision.
The Lender and the Borrower have caused this Loan Agreement to be executed as of
the day and year first above written.
"Lender"
FIRST UNION NATIONAL BANK,
a National Banking Association
By:
Name:
Title:
"Borrower"
VILLAGE SUPER MARKET, INC.,
ATTEST: a New Jersey Corporation
By: By:
Name: Name:
Title: Title:
