LOAN AGREEMENT
LOAN AGREEMENT dated November 3, 1999 among UNITED PETROLEUM
CORPORATION, a corporation organized under the laws of the State of Delaware
("UPET"), UNITED PETROLEUM GROUP, INC., a corporation organized under the laws
of the State of Delaware and formerly known as United Petroleum Subsidiary, Inc.
("UPET Group"), F.S. CONVENIENCE STORES, INC., a corporation organized under the
laws of the State of Florida ("F.S. Stores"), F.S. GAS SUBSIDIARY, INC., a
corporation organized under the laws of the State of Florida ("F.S. Gas"), F.S.
NON-GAS SUBSIDIARY, INC., a corporation organized under the laws of the State of
Florida ("F.S. Non-Gas"), REWJB GAS INVESTMENTS, a Florida general partnership
("REWJB Gas"), XXXXXXX-UNITED PETROLEUM CORPORATION, a corporation organized
under the laws of the Commonwealth of Kentucky ("Xxxxxxx"), CALIBUR SYSTEMS,
INC., a corporation organized under the laws of the State of Tennessee
("Calibur"), (UPET, UPET Group, F.S. Stores, F.S. Gas, F.S. Non-Gas, REWJB Gas,
Xxxxxxx and Calibur, collectively, "Borrowers") and XXXXXXXX BANK, N.A., a
national banking association ("Bank").
WHEREAS, Borrowers have requested the Bank to make available to
Borrowers a US$4,233,000 Revolving Credit Facility, a US$8,300,000 Mortgage Loan
Facility and a US$10,467,000 Term Loan Facility, all upon and subject to the
terms and conditions of this Agreement;
ACCORDINGLY, the parties agree as follows:
ARTICLE I: DEFINITIONS
In this Agreement:
1.1 "Banking Day" means any day other than a Saturday, Sunday or legal
holiday on which banks are authorized or required to be closed in Miami,
Florida and New York, New York, and, with respect to LIBOR Loans, a day
on which banks also are open and dealing in Dollars in the London,
England interbank market.
1.2 "Borrowing Base" means the Dollar amount determined in accordance with
Section 2.1(c).
1.3 "Closing Date" means November 3, 1999 or such other date for closing the
Loans as agreed to by the Bank and UPET.
1.4 "Collateral" means the assets of Borrowers described in Article VIII
assigned to the Bank, mortgaged to the Bank or in which a security
interest is granted to the Bank to secure the Loans and other
Liabilities of Borrowers to the Bank.
1.5 "Collateral Agreements" means the Lease Assignments, the Mortgages, the
Security Agreements, the Pledge Agreement and the collateral assignments
of the Purchase Agreement and the Management Agreement.
1.6 "Commitments" means the obligations of the Bank to make the Revolving
Credit Loans, the Mortgage Loan and the Term Loan to Borrowers.
1.7 "Documents" means this Agreement, the Notes and the Collateral
Agreements.
1.8 "Dollars" and "US$" means lawful money of the United States of America.
Any reference in this Agreement to payment in "Dollars" or "US$" means
payment in immediately available Dollar funds.
1.9 "Drawing Date" means any date on which a Revolving Credit Loan is made
by the Bank to a Borrower hereunder.
1.10 "Eurocurrency Reserve Requirements" means, for any day, the aggregate
(without duplication) of the rates (expressed as a decimal fraction) of
any reserve requirements in effect on such day (including, without
limitation, basic, supplemental, marginal and emergency reserves under
any regulations of the Board of Governors of the Federal Reserve System
or other Governmental Authority having jurisdiction with respect
thereto) dealing with reserve requirements prescribed for Eurocurrency
funding (currently referred to as "Eurocurrency Liabilities" in
Regulation D of such Board) maintained by a member bank of such system.
1.11 "Event of Default" means any of the events mentioned in Article X of
this Agreement.
1.12 "GAAP" means generally accepted accounting principles applied on a basis
consistent with those used in Borrowers' financial statements.
1.13 "Governmental Authority" means any nation or government, any state or
other political subdivision thereof and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or
pertaining to government.
1.14 "Indebtedness" means any item which would properly be included as a
liability on the liability side of a balance sheet prepared in
accordance with GAAP as of any date as of which "Indebtedness" is to be
determined.
1.15 "Lease Assignments" means the instruments of assignment of the Leases to
the Bank.
1.16 "Leases" means the lease agreements by which Borrowers hold the
leasehold interests described in Schedule 1.16 attached hereto, and any
lease agreement by which any Borrower hereafter holds a leasehold
interest meeting the requirements of Section 6.10.
1.17 "Liabilities" means all obligations of borrowers under this Agreement
and the Notes and all other obligations of Borrowers to the Bank, its
successors and assigns, of every kind, nature and description, direct or
indirect, secured or unsecured, joint and several, absolute and
contingent, due or to become due, now existing or hereafter arising,
regardless of how they arose or by what instrument or whether evidenced
by any agreement or instrument. "Liabilities" includes obligations to
perform acts and to refrain from taking action as well as obligations to
pay money.
1.18 "LIBOR" means in respect of each LIBOR Interest Period, the rate per
annum (rounded upwards, if necessary, to the nearest 1/16th of 1%)
quoted on Reuters International System's "LIBO" page at approximately
11:00a.m. London time on the day two (2) Banking Days before the
beginning of the LIBOR Interest Period for the offering by leading banks
in the London interbank market of Dollar deposits for the term of such
LIBOR Interest Period and in amounts comparable to the principal amount
of the LIBOR Loan scheduled to be outstanding for the LIBOR Interest
Period.
1.19 "LIBOR Determination Date" means the last Banking Day of each LIBOR
Interest Period.
1.20 "LIBOR Interest Period" means each successive period of time used to
determine the rate of interest applicable to the principal of a LIBOR
Loan. The first LIBOR Interest Period of a LIBOR Loan shall commence on
the date specified by UPET for the commencement of the LIBOR Loan and
end on its first LIBOR Determination Date, and each subsequent LIBOR
Interest Period shall commence on the LIBOR Determination Date for the
preceding LIBOR Interest Period and end on the next succeeding LIBOR
Determination Date. Except as otherwise provided herein, LIBOR Interest
Periods shall be six (6) months for the LIBOR Mortgage Loan and one (1)
month for a LIBOR Revolving Credit Loan. If any LIBOR Determination Date
falls on a day which is not a Banking Day, it shall be adjusted and
determined in accordance with the practices of the offshore Dollar
interbank markets as from time to time in effect, provided, however,
that the last LIBOR Interest Period shall end no later than the date
specified by UPET for conversion of such LIBOR Loan into a Prime Rate
Loan, the fifth (5th) anniversary of the Closing Date or the date all
amounts outstanding hereunder become due whether by acceleration or
otherwise, as the case may be.
1.21 "LIBOR Revolving Credit Loan", "LIBOR Mortgage Loan" and "LIBOR Loans"
means a Revolving Credit Loan or the Mortgage Loan or both,
respectively, at any time during which interest thereon is calculated
with reference to LIBOR.
1.22 "Loans" means the Revolving Credit Loans, the Mortgage Loan and the Term
Loan.
1.23 "Management Agreement" means the Management Agreement to be entered into
between UPET Group and Farm Stores Grocery, Inc.
1.24 "Maturity Date" means the fifth anniversary (5th) of the Closing Date,
but in no event later than October 30, 2004.
1.25 "Merger Plan" means the Agreement and Plan of Merger dated September 29,
1999 among F.S. Stores, UPET and UPET Group and joined for certain
limited purposes by Farm Stores Grocery, Inc., as the same may be
amended from time to time.
1.26 "Mortgage Loan" means the term loan described in Section 2.2.
1.27 "Mortgages" means the first mortgages or deeds of trust in favor of or
for the benefit of the Bank on the Owned Real Properties.
1.28 "Notes" means the joint and several promissory notes of Borrowers
evidencing the Loans in substantially the form of Exhibit A attached
hereto.
1.29 "Owned Real Properties" means the real properties owned by Borrowers.
Owned Real Properties owned by Borrowers on the Closing Date are
described in Schedule 1.29 attached hereto.
1.30 "Person" means an individual, partnership, corporation, business trust,
joint stock company, trust, unincorporated association, joint venture,
Governmental Authority or other entity of whatever nature.
1.31 "Pledge Agreements" means the Pledge Agreements pledging the shares of
Farm Stores Grocery, Inc. owned by one or more Borrowers and described
in Section 8.3 to the Bank in substantially the form of Exhibit B
attached hereto.
1.32 "Prime Rate" means the Dollar prime commercial rate as publicly
announced from time to time by Citibank, N.A. as its "prime rate".
1.33 "Prime Rate Loans" means the Term Loan and a Revolving Credit Loan or
the Mortgage Loan (or any portion thereof) or both, respectively, at any
time during which interest thereon is calculated with reference to Prime
Rate.
1.34 "Purchase Agreement" means the Purchase Agreement to be entered into
between UPET Group and Farm Stores Grocery, Inc. granting UPET Group an
option to purchase shares of Farm Stores Grocery, Inc.
1.35 "Requirement of Law" means, as to any Person, the Certificate of
Incorporation and By-Laws or other organization or governing documents
of such Person and any law, treaty, rule or regulation or determination
of an arbitrator or a court or other Governmental Authority, in each
case applicable to or binding upon such Person or any of its property or
to which such Person or any of its property is subject.
1.36 "Revolving Credit Loans" means the revolving loans described in Section
2.1.
1.37 "Security Agreements" means the security agreements executed by each of
the Borrowers granting the Bank a first security interest in all of the
Borrower's personal property, each in substantially the form of Exhibit
C hereto.
1.38 "Term Loan" means the term loan described in Section 2.3.
1.39 "Year 2000 Compliant" means that the relevant party's computers,
computer systems and codes (i) will not fail to accurately and properly
read, process, perform mathematical calculations, store, sort,
distinguish, recognize, accept or interpret any data containing date
information prior to, during and after the year 2000, (ii) will not fail
to accurately and properly read and process the fact that the year 2000
is a leap year, (iii) will accurately and properly read and process
so-called "magic dates" such as the date "9/9/99" or any other date
field data used by the party to signify information other than the date
and (iv) will be compatible with any other party's computer system as to
Year 2000 Compliant matters with respect to circumstances described in
(i) - (iii) above.
ARTICLE II: THE LOANS
2.1 Revolving Credit Loans.
(a) Drawdowns. The Bank agrees, on the terms and conditions set
forth herein and upon at least two (2) Banking Days' prior
notice from UPET, to make Revolving Credit Loans jointly and
severally available to Borrowers in the aggregate principal
amount not at any time exceeding the lesser of the Borrowing
Base, as determined in subsection (c) below, or US$4,233,000.
The notice from UPET shall specify whether the Revolving Credit
Loan is to be a Prime Rate Loan or a LIBOR Loan, the Drawing
Date of the Loan and the account at the Bank of a Borrower to
which the Loan is to be credited and shall include or be
accompanied by a certificate setting forth the current
calculation of the Borrowing Base.
(b) Repayment. Borrowers shall have the right to repay in whole or
in part without penalty or premium Prime Rate Revolving Credit
Loans at any time and LIBOR Revolving Credit Loans on LIBOR
Determination Dates for the LIBOR Revolving Credit Loans being
repaid. Any such repayments of a LIBOR Revolving Credit Loan
also shall be upon at least two (2) Banking Days prior notice to
the Bank. Borrowers shall have the right prior to the Maturity
Date, or one (1) month prior to the Maturity Date in the case of
a LIBOR Revolving Credit Loan, to reborrow as provided in this
Section 2.1, provided, that, all outstanding Revolving Credit
Loans shall be due and payable jointly and severally by the
Borrowers on the Maturity Date. If at any time the aggregate
principal amount of outstanding Revolving Credit Loans shall be
greater than the Borrowing Base, Borrowers immediately shall
repay Revolving Credit Loans in an amount sufficient to reduce
the aggregate principal amount of outstanding Revolving Credit
Loans to less than the Borrowing Base. Repayments shall be
accompanied by payment of accrued interest on the amount repaid
to the date of repayment and, in the case of any repayment of a
LIBOR Revolving Credit Loan on a date other than its LIBOR
Determination Date, any amount required by Section 4.4 hereof.
(c) Borrowing Base. Until the first anniversary of the Closing Date,
the Borrowing Base for Revolving Credit Loans shall be at any
time an amount equal to the sum of eighty percent (80%) of
Borrowers' eligible accounts receivable plus eighty percent
(80%) of Borrowers' eligible inventory. Thereafter the Borrowing
Base for Revolving Credit Loans shall be at any time an amount
equal to the sum of eighty percent (80%) of Borrowers' eligible
accounts receivable plus seventy percent (70%) of Borrowers'
eligible inventory. Eligible accounts receivable are non-related
accounts of any borrower (i.e., accounts due from parties not a
Borrower or affiliated with any Borrower), for which there are
no contra accounts, that are outstanding for up to 60 days from
due date and otherwise complying with the representations and
warranties and other terms and conditions of the Security
Agreements. Any account with more than 50% of its balance past
due more than 60 days will be deemed ineligible in its entirety.
Eligible inventory is inventory of any Borrower complying with
the representations and warranties and other terms and
conditions of the Security Agreements and excludes the amount of
any reserve, for obsolescence or otherwise, placed against such
inventory on the financial statements of Borrowers. The Bank
retains the right from time to time to establish standards of
eligibility and reserves against availability in its sole but
reasonable discretion.
2.2 Mortgage Loan. The Bank agrees, on the terms and conditions set forth
herein, to make the Mortgage Loan to Borrowers in the principal amount
of US$8,300,000 on the Closing Date. The Mortgage Loan shall be
repayable jointly and severally by Borrowers in monthly level principal
and interest payments based upon a fifteen (15) year amortization
schedule (readjusted upon any change in interest rate to reflect such
change in interest rate) and a balloon payment on the Maturity Date of
all amounts then outstanding under the Mortgage Loan. Notwithstanding
the foregoing, in no event shall the principal amount of the Mortgage
Loan exceed eighty percent (80%) of the appraised value of the Owned
Real Properties as set forth in the appraisals described in Article IX.
2.3 Term Loan. The Bank agrees, on the terms and conditions set forth
herein, to make the Term Loan to Borrowers in the principal amount of
US$10,467,000 on the Closing Date. The Term Loan shall be repayable
jointly and severally by Borrowers beginning thirteen (13) months after
the Closing Date in equal monthly principal payments based upon a six
(6) year amortization schedule and a balloon payment on the Maturity
Date of all amounts then outstanding under the Term Loan.
Notwithstanding the foregoing or any other conflicting or inconsistent
provision herein, if the original principal amount of the Mortgage Loan
is less than US$8,300,000, the original principal amount of the Term
Loan, at the option of UPET, may be increased by up to US$750,000 of the
amount of such reduction in the Mortgage Loan, provided, however, that
the aggregate principal amounts of the Mortgage Loan and the Term Loan
shall not exceed US$18,767,000.
2.4 Interest. Borrowers jointly and severally shall pay interest on the
unpaid principal amount of the Loans from the date made available by the
Bank to a Borrower until maturity as follows:
(a) Revolving Credit Loans shall bear interest at the option of UPET
at rates per annum equal to (i) the sum of Prime Rate plus one
percent (1.0%) or (ii) the sum of three and seven-eighths
percent (3.875%) plus LIBOR. Any change in the Prime Rate shall
take effect immediately with respect to interest on Prime Rate
Revolving Credit Loans. Any Prime Rate Revolving Credit Loan may
be converted into a LIBOR Revolving Credit Loan upon two (2)
Banking Days prior notice by UPET to the Bank. Any LIBOR
Revolving Credit Loan may be converted on any LIBOR
Determination Date for such LIBOR Revolving Credit Loan into a
Prime Rate Revolving Credit Loan upon two (2) Banking Days prior
notice by UPET to the Bank.
(b) The Mortgage Loan shall bear interest at the option of UPET at
rates per annum equal to (i) the sum of Prime Rate plus one and
one-eighths percent (1.125%) or (ii) the sum of four percent
(4.0%) plus LIBOR. At least two (2) Banking Days prior to each
six (6) month anniversary of the Closing Date, UPET shall advise
the Bank whether the interest rate on the Mortgage Loan for the
following six (6) month period shall be computed with reference
to the Prime Rate in effect on the first day of such following
six (6) month period or LIBOR for such following six (6) month
period. If the Prime Rate option is selected, the interest rate
for the entire six (6) month period shall be based upon the
Prime Rate in effect on the first day of the six (6) month
period.
(c) The Term Loan shall bear interest at a rate per annum equal to
the sum of Prime Rate plus three percent (3.0%). Any change in
the Prime Rate shall take effect immediately.
(d) All interest shall be computed on the basis of the actual number
of days elapsed in a 360 day year and shall be payable monthly
in arrears and on payment in full of the Loans. Borrowers agree
that any amount of principal of any of the Loans, and to the
extent permitted by law interest, that is not paid on its due
date (whether at stated maturity, by acceleration or otherwise)
shall bear interest from such due date until paid in full at a
rate per annum equal to the rate provided in (a) - (c) above, as
the case may be, plus five percent (5.0%), provided that such
interest rate shall not at any time exceed the maximum rate
allowed by law. Default interest shall be payable on demand.
2.5 Prepayment of the Mortgage Loan and the Term Loan.
(a) Mandatory Prepayments.
(i) The net cash proceeds from the sale of any non-real estate
assets (other than (1) sales of inventory in the ordinary course
of business, (2) sales of assets to the extent the proceeds are
applied to the repair or replacement of Collateral and (3)
immaterial sales not exceeding US$50,000 in any fiscal year of
Borrowers) of any of the Borrowers shall be used to repay the
Term Loan. Any remaining excess proceeds from the sale of any
non-real estate assets after payment in full of the Term Loan,
shall be applied first to the Mortgage Loan and then to the
Revolving Credit Facility. Prepayments under this subsection
shall be due within ten (10) days of receipt of any cash
proceeds.
(ii) The net cash proceeds from the sale of any real estate
assets of any of the Borrowers shall be used to repay the
Mortgage Loan. Any remaining excess proceeds for the sale of any
real estate, after application to the Mortgage Loan, shall be
applied first to the Term Loan and then the Revolving Credit
Facility. Prepayments under this subsection shall be due within
ten (10) days of receipt of any cash proceeds.
(iii) Fifty percent (50%) of the cash proceeds received by any
Borrower from the issuance of debt securities by any Borrower,
net of all costs and expenses associated with the issuance of
such debt securities, shall be used to reduce Borrowers'
obligations first under the Term Loan, second under the Mortgage
Loan and third under the Revolving Credit Facility. Prepayments
under this subsection shall be due within five (5) days of
receipt of any cash proceeds.
(iv) Twenty-five percent (25%) of the cash proceeds received by
any Borrower from the issuance of equity securities by any
Borrower net of all costs and expenses associated with the
issuance of such equity securities, shall be used to reduce
Borrowers' obligations first under the Term Loan, second under
the Mortgage Loan and third under the Revolving Credit Facility.
Prepayments under this subsection shall be due within five (5)
days of receipt of any cash proceeds.
(v) The Term Loan shall be prepaid by an amount equal to
twenty-five percent (25%) of UPET's consolidated net income plus
depreciation and amortization (during the period under review)
minus principal payments made and net cash capital expenditures
(during the period under review), all computed in accordance
with GAAP. The calculations and prepayments shall be effected
for the six months prior to each fiscal year and for each
intervening six month period and for any "short" fiscal year due
to a change in UPET's fiscal year, provided that the first
period to which this subsection is applicable shall be the six
month period ending June 30, 2000 or the end of the "short"
fiscal year if a change in UPET's fiscal year occurs prior to
June 30, 2000. Prepayments under this subsection shall be due
within ninety (90) days of the end of a fiscal year for a period
under review ending on a fiscal year end and within forty-five
(45) days of the end of any intervening period under review.
(vi) Any partial prepayments shall be applied to installments of
principal due in the inverse order of their maturity. Any
mandatory prepayment of a LIBOR Loan on a date other than its
LIBOR Determination Date may, at the Bank's sole option, (A) be
held as cash collateral until such LIBOR Loan's next LIBOR
Determination Date and applied as a prepayment on such LIBOR
Determination Date or (B) be applied immediately by the Bank as
a prepayment, but without Borrowers incurring any liability for
any indemnity payment of any amount otherwise required by
Section 4.4 hereof.
(b) Voluntary Prepayments. Borrowers shall have the right, on any
Banking Day, to prepay the Mortgage Loan or the Term Loan or
both in whole or in part, provided that any prepayment of a
LIBOR Loan on a day other than a LIBOR Determination Date with
respect thereto shall be subject to payment of any amount
required by Section 4.4 hereof. Any partial prepayments shall be
in the amount of US$100,000 or an integral multiple thereof and
shall be applied to installments of principal due in the inverse
order of their maturity.
(c) Exit Fee. Any prepayment shall be accompanied by prepayment of
accrued interest on the amount prepaid. Subsequent to 18 months
from the Closing Date, an Exit Fee shall be payable for
prepayments of the Mortgage Loan or the Term Loan or both, other
than pursuant to Subsection 2.5(a) (v), in amounts equal to
(i) the amount prepaid divided by (A) the total principal
amounts of the Mortgage Loan and the Term Loan outstanding 18
months after the Closing Date less (B) the principal
amortization amounts scheduled to be paid from 18 months after
the Closing Date to the Maturity Date
multiplied by
(ii) US$350,000,
provided, however, that if prepayments of the Mortgage Loan or
the Term Loan or both have occurred within 18 months from the
Closing Date, the US$350,000 amount set forth above shall be
reduced by the percentage that such prepayments within 18 months
of the Closing Date bear to the total original principal amounts
of the Mortgage Loan and the Term Loan.
2.6 Payments. All payments hereunder shall be made without setoff or
counterclaim and shall be made through demand deposit accounts
maintained by each Borrower at the Bank's Main Office, 3750 N.W. 87th
Avenue, Miami, Florida 33178, U.S.A., (or at such other branch or office
of the Bank as the Bank may from time to time specify by notice to
UPET).
2.7 Withholding and Taxes.
(a) All amounts payable under this Agreement or under any of the
other Documents shall be made without set-off or counterclaim
and clear of and without deduction for any and all present and
future taxes, levies, imposts, deductions, charges,
withholdings, contributions, services, surcharges, exchange
commissions, penalties and all liabilities with respect thereto
imposed by any governmental or taxing authority (other than
income or franchise taxes based on or measured by the overall
net income or capital of the Bank imposed by the United States
of America or the State of Florida), including any stamp or
other taxes, registration fees or other duties, levies, imposts,
notarial fees or other charges of any nature whatsoever by
whomsoever imposed with respect to the preparation, execution,
delivery, registration, performance and enforcement of this
Agreement and any of the other Documents (collectively,
"Taxes"). Borrowers agree to cause all Taxes to be paid on
behalf of the Bank directly to the appropriate Governmental
Authority. If for any reason Borrowers are prohibited from
paying any Taxes on behalf of the Bank, then all payments made
on or in respect of this Agreement including payments made
pursuant to this Section, shall be increased so that, after
provisions for such Taxes, including Taxes on such increase, the
amounts received by the Bank will equal the amounts the Bank
would have received if no Taxes were due on such payments. If
any of the amounts referred to in this Section are paid by or on
behalf of the Bank, the Bank shall promptly so notify Borrowers
and Borrowers shall, upon demand, promptly indemnify the Bank
for such payments, together with any interest, penalties and
expenses in connection therewith, plus interest thereon at the
rate specified in Section 2.4(c) hereof.
(b) If, at any time and for any reason there is a change in the
basis of taxation of payments in respect of this Agreement or a
Loan (except for changes in taxes based upon or measured by
income or capital of the Bank or the Bank's franchise taxes) and
the result thereof is to increase the cost to the Bank of
maintaining the Loans of to reduce any amount receivable under
this Agreement, then Borrowers shall promptly pay the Bank, upon
its demand, any additional amount necessary to compensate the
Bank for such increased cost or reduced amount receivable.
(c) Borrower shall provide the Bank with original tax receipts,
notarized copies of tax receipts, or such other documentation as
will prove payment of tax in a court of law applying the U.S.
Federal Rules of Evidence, for all Taxes paid by Borrowers
pursuant to this Section. Borrower shall deliver such receipts
or other documentation to the Bank within 30 days after the due
date for the related Tax.
(d) The Bank shall upon request provide reasonable assistance to
Borrowers for the purpose of establishing any reduction in or
exemption from deduction or withholding or any liability for any
Taxes or avoiding or mitigating such increased costs or reduced
amounts receivable, such assistance in the case of Taxes to be
limited to the timely provision of properly completed and
executed documentation sufficient to establish to the relevant
taxing authorities the entitlement to such reduction or
exemption.
(e) The obligations of Borrowers under this Section shall survive
the payment in full or principal and interest on the Loans and
the cancellation of the Notes and any of the other Documents.
ARTICLE III: EXPENSES AND FEES
3.1 Structuring Fees. Borrower shall pay to the Bank on the Closing Date
Structuring Fees equal to (a) 1.5% flat, or US$63,495, on the Revolving
Credit Loan Commitment, (b) 1.5% flat, or US$124,500, on the Mortgage
Loan Commitment and (c) 7.7577625% flat, or US$812,005, on the Term Loan
Commitment. The nonrefundable US$500,000 fee paid upon delivery of the
September 27, 1999 commitment letter for this Loan Agreement and the
US$50,000 paid upon acceptance of such commitment letter shall be
applied to the total amount of the Structuring Fees. The Bank shall
deduct such balance of the Structuring Fees from the proceeds of the
Revolving Credit Loans.
3.2 Expenses. Borrowers shall pay to the Bank all documentation costs,
filing and search fees, title insurance premiums and other expenses,
including reasonable legal fees of counsel to the Bank, incurred in
connection with the preparation of the Documents. The Bank shall deduct
such amounts from the proceeds of the Revolving Credit Loans.
3.3 Future Expenses. Borrowers shall pay on demand, whether any Event of
Default hereunder shall have occurred and regardless of whether any
proceeding to enforce the same shall have been commenced, the Bank's
standard loan fees as set from time to time by notice to the Bank's
customers generally, all costs and expenses of the Bank, including,
without limitation, all fees and disbursements of counsel to the Bank,
incurred in connection with the enforcement of the Documents, including
any appeals, any waivers or consents in connection herewith or the
preparation of any amendment to or modification of the Documents.
ARTICLE IV: YIELD PROTECTION AND ILLEGALITY
4.1 Inability to Determine Interest Rate. In the event that prior to the
first day of any LIBOR Interest Period:
(a) the Bank shall have determined (which determination shall be
conclusive and binding upon Borrowers) that, by reason of
circumstances affecting the relevant market, adequate and
reasonable means do not exist for ascertaining LIBOR for such
LIBOR Interest Period, or
(b) the Bank determines that the LIBOR rate for such LIBOR Interest
Period will not adequately and fairly reflect the cost to the
Bank (as conclusively certified by the Bank) of maintaining the
relevant LIBOR Loan during such LIBOR Interest Period,
the Bank shall give notice thereof to UPET as soon as practicable. If
such notice is given, the Loans shall remain or shall be converted to on
the first day of such LIBOR Interest Period, as the case may be, Prime
Rate Loans.
4.2 Illegality. Notwithstanding any other provision herein, if any change
after the date hereof in any Requirement of Law or in the interpretation
or application thereof shall make it unlawful for the Bank to make or
maintain the LIBOR Loans as contemplated by this Agreement, the LIBOR
Loans shall be converted automatically to Prime Rate Loans on the last
day of the then current LIBOR Interest Period or within such earlier
period as required by law. If any such conversion of the LIBOR Loans
occurs on a day which is not a LIBOR Determination Date with respect
thereto, Borrowers shall pay to the Bank such amounts, if any, as may be
required pursuant to Section 4.4 unless such illegality was due to the
fault of the Bank.
4.3 Requirements of Law.
(a) In the event that any change after the date hereof in any
Requirement of Law or in the interpretation or application
thereof or compliance by the Bank with any request or directive
(whether or not having the force of law) from any central bank
or other Governmental Authority made subsequent to the date
hereof:
(i) shall impose, modify or hold applicable any reserve,
special deposit, compulsory loans or similar requirement
against assets held by, deposits or other liabilities in
or for the account of LIBOR Loans, or any other
acquisition of funds by, any office of the Bank which is
not otherwise included in the determination of the LIBOR
hereunder; or
(ii) shall impose on the Bank any other condition;
and the result of any of the foregoing is to increase the cost
to the Bank, by an amount which the Bank deems in its reasonable
judgment to be material, of maintaining the LIBOR Loans or to
reduce any amount receivable hereunder in respect thereof then,
in any case, Borrowers shall promptly pay the Bank, upon its
demand, any additional amounts necessary to compensate the Bank
for such increased cost or reduced amount receivable. If the
Bank becomes entitled to claim any additional amounts pursuant
to this subsection, it shall promptly notify UPET of the event
by reason of which it has become so entitled. A certificate as
to any additional amounts payable pursuant to this subsection
setting forth the calculation thereof in reasonable detail (as
determined by the Bank in its reasonable discretion) submitted
by the Bank to UPET shall be conclusive in the absence of
manifest error. This covenant shall survive the termination of
the Loans and the payment of the Notes and all other amounts
payable hereunder.
(b) In the event that the Bank shall have determined that any change
in any Requirement of Law regarding capital adequacy or in the
interpretation or application thereof or compliance by the Bank
or any corporation controlling the Bank with any request or
directive regarding capital adequacy (whether or not having the
force of law) from any Governmental Authority made subsequent to
the date hereof does or shall have the effect of reducing the
rate of return on the Bank's capital as a consequence of its
LIBOR obligations hereunder to a level below that which the Bank
or such corporation could have achieved but for such change or
compliance (taking into consideration the Bank's or such
corporation's policies with respect to capital adequacy) by an
amount deemed by the Bank, in its reasonable judgment, to be
material, then from time to time, after submission by the bank
to UPET of a written request therefor, Borrowers shall pay to
the Bank such additional amount or amounts as will compensate
the Bank for such reduction. A certificate as to any additional
amount payable pursuant to this subsection setting forth the
calculation thereof in reasonable detail (as determined by the
Bank in its reasonable discretion) to UPET shall be conclusive
in the absence of manifest error.
(c) Upon request by the Bank, from time to time, Borrowers shall pay
the cost of all Eurocurrency Reserve Requirements applicable to
the LIBOR Loans. If the Bank is or becomes entitled to receive
payments in respect of Eurocurrency Reserve Requirements
pursuant to this subsection, it shall promptly notify UPET
thereof. A certificate as to the amount of such Eurocurrency
Reserve Requirements setting forth the calculation thereof in
reasonable detail (as determined by the Bank in its reasonable
discretion) submitted by the Bank to UPET shall be conclusive in
the absence of manifest error. This covenant shall survive the
termination of this Agreement and the payment of the Loans and
all other amounts payable hereunder.
(d) If requested by UPET, payments required under this Section 4.3
may be made in equal monthly installments over the twelve months
following notice by the Bank to UPET pursuant to this Section
4.3.
(e) If payments are required under this Section 4.3, Borrowers may
convert the LIBOR Loans so affected into Prime Rate Loans
subject to Section 4.4.
4.4 Indemnity. Borrowers agree to indemnify the Bank and to hold the Bank
harmless from any loss or expense which the Bank may sustain or incur as
a consequence of (a) default by any Borrower in payment when due of the
principal amount of or interest on a LIBOR Loan, (b) default by
Borrowers in making any prepayment on a LIBOR Loan after Borrowers or
UPET have given a notice thereof in accordance with the provisions of
this Agreement or (c) the making of a payment, conversion to a Prime
Rate Loan or prepayment of a LIBOR Loan on a day which is not a LIBOR
Determination Date with respect thereto, including, without limitation,
in each case, any such loss or expense arising from the reemployment of
funds obtained by the Bank or from fees payable to terminate the
deposits from which such funds were obtained. Payments required under
this Section 4.4 shall be made within ten (10) days after notice thereof
by the Bank. A certificate as to any additional amount payable pursuant
to this Section 4.4 setting forth the calculation thereof in reasonable
detail (as determined by the Bank in its reasonable discretion) to UPET
shall be conclusive in the absence of manifest error. This covenant
shall survive the payment of the Loans or the Notes, and all other
amounts payable hereunder.
ARTICLE V: REPRESENTATIONS AND WARRANTIES
Borrowers represent and warrant to the Bank that:
5.1 Binding Obligations. Each Borrower is a corporation duly organized,
validly existing and in good standing under the laws of the jurisdiction
of its incorporation, has the corporate power to own its property and to
carry on its business as now being conducted, is duly qualified to
engage in business and is in good standing as a foreign corporation in
each jurisdiction in which the character of the properties owned by it
or the transaction of its business makes such qualification necessary
(except where the failure to obtain such qualification does not have any
material adverse effect on the Borrowers) and has full power, authority
and legal right to incur the Indebtedness and other obligations provided
for in the Documents to which it is a party, to execute and deliver the
Documents to which it is a party and to perform and observe the terms
and provisions hereof and thereof. This Agreement constitutes, and the
Notes when executed and delivered for value will constitute, legal,
valid and binding obligations of Borrowers, enforceable against
Borrowers in accordance with their respective terms, except as the
foregoing may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting enforceability of
creditors' rights generally at the time in effect (regardless of whether
enforcement is sought in equity or law).
5.2 Corporate Authorizations. The execution, delivery and performance of the
Documents and the borrowing hereunder have been duly authorized by all
necessary action on the part of Borrowers including, without limitation,
the authorization of all partners or Boards of Directors of Borrowers,
and all necessary approvals of Governmental Authorities in connection
therewith have been received.
5.3 Absence of Restrictions. The execution, delivery and performance by
Borrowers of the Documents and the borrowings hereunder will not (i)
violate any provision of law or the charters or by-laws of Borrowers,
(ii) violate, be in conflict with, result in a breach of or constitute a
default under any order of any court, arbitrational tribunal or
Governmental Authority or under any material mortgage, indenture,
contract, undertaking or other agreement to which any Borrower is a
party or by which any Borrower or any of its properties, assets or
revenues is bound, (iii) violate any governmental or agency rule or
regulation (including, without limitation, Regulations U and X of the
Board of Governors of the Federal Reserve System of the United States of
America) or (iv) result in the creation or imposition of any security
interest, lien, charge or other encumbrance of any nature whatsoever
upon any of its properties, assets or revenues, other than as
contemplated herein.
5.4 Financial Position and Statements. The financial statements listed in
Schedule 5.4, together with supporting schedules and notes, of Borrowers
delivered to the Bank have been prepared in accordance with GAAP and
correctly set forth in all material respects Borrower's financial
position as at or for the periods shown therein and show all known
material liabilities, direct or contingent, as of such dates. Except for
the payment of the expenses of the transactions contemplated hereby and
by the Merger Plan, there have been no material adverse changes in
Borrowers' financial position since the date of the latest of such
financial statements.
5.5 Litigation. Except as provided in Schedule 5.5, there are no material
actions, suits, proceedings or claims pending against or materially
affecting any Borrower which, if adversely determined, would have a
material adverse effect on the financial condition or business of such
Borrower.
5.6 Bankruptcy Plan.
(a) Bankruptcy Approvals. Each of the Borrowers, to the extent
applicable, has obtained all necessary and requisite authority,
consents and approvals of the United States Bankruptcy Court for
the District of Delaware (the "Bankruptcy Court") in the Chapter
11 bankruptcy proceedings styled United Petroleum Corporation,
Case No. 99-88(PJW) (the "Bankruptcy Proceedings") to enter into
and consummate the transactions contemplated in this Loan
Agreement and in the Merger Plan, including, without limitation,
incurring of the indebtedness and granting of the liens provided
for herein.
(b) Effectiveness of Plan. The Second Amended Plan of Reorganization
for UPET (the "Plan") and the Order Confirming the Amended Plan
by the Bankruptcy Court (the "Confirmation Order") in the
Bankruptcy Proceedings (1) are in full force and effect, have
not been withdrawn, modified or amended as of the date hereof,
and are enforceable in accordance with their respective terms,
(2) are not the subject of any motion for reconsideration or
rehearing, whether under Rules 59 or 60 of the Federal Rules of
Civil Procedure or otherwise, and (3) are not the subject of any
appeal, extension of time for appeal, stay pending appeal or
similar pleading.
(c) Effective Date. All of the conditions precedent to the
occurrence of the Effective Date, as defined in the Plan,
including as set forth in Section 13.1 and 13.2 thereof or
otherwise, have been satisfied as of the date hereof. The
Effective Date, as defined in the Plan, and all of the
transactions or events described in Section 8.17 of the Plan,
including substantial consummation of the Plan, have occurred as
of the date hereof or will occur simultaneously with the
consummation of the transactions contemplated under this Loan
Agreement.
(d) Compliance With Plan. Each of the Borrowers, to the extent
applicable, has fully complied with all of the provisions of the
Plan, and the Order and the United States Bankruptcy Code in
connection with the transactions contemplated herein, including
the incurrence of the indebtedness herein or the granting of the
liens provided for herein. To the extent applicable, no Borrower
is in default of the Plan, the Order or the provisions of the
United States Bankruptcy Code or will be in default thereof as a
result of the transactions contemplated herein, including the
incurrence of the indebtedness herein or the granting of the
liens provided for herein.
(e) Reasonably Equivalent Value. Each of the Borrowers has received
reasonably equivalent value in exchange for the indebtedness
incurred under this Loan Agreement and in exchange for the liens
granted pursuant hereto. Each of the Borrowers is solvent as of
the date hereof and will not be made insolvent as a result of
the transactions contemplated hereunder, the term solvent
meaning that each Borrower's property, at a fair valuation, is
greater than the sum of its debts, including the indebtedness
being incurred hereunder. Each of the Borrowers does not and
will not, as a result of the transactions hereunder, have or be
left with an unreasonably small capital with which to conduct
its business. Each of the Borrowers do not intend to incur and
will not incur, including as a result of the transactions
contemplated hereunder, debts that would be beyond such
Borrower's ability to pay as they matured.
(f) Notice. Each of the Borrowers, to the extent applicable, has
provided, or caused to be provided, proper notice of the
Bankruptcy Proceedings and the related claims bar date therein
to all known and suspected creditors, whether secured or
unsecured, liquidated or unliquidated, contingent or fixed,
priority or non-priority or disputed or undisputed, and that
each Borrower, to the extent applicable, has fully complied with
the provisions of that certain Order of the Bankruptcy Court
Fixing Bar date for Filing Proofs of Claim and Approving Form
and Manner of Notice of Bar Date, dated February 17, 1999 (the
"Bar Date Order"). No Borrower is aware of, or has reason or
basis to be aware of, any claimant or creditor or UPET that has
not received proper notice of the Bar Date Order, or the claims
bar date contained therein.
5.7 Title to Properties; No Liens. Except as provided in Schedule 5.7(a),
Borrowers have good and marketable title to all of their respective
properties and assets and, except as provided in Schedule 5.7(b) or as
permitted or required by the provisions hereof, none of the properties,
assets and revenues of Borrowers are subject to any mortgage, lien,
security interest, pledge or other charge or encumbrance or any similar
arrangement of any kind.
5.8 Payment of Taxes. Except as provided in Schedule 5.8, Borrowers have
filed, or caused to be filed, all tax returns which are required to be
filed by any of them, and have paid or caused to be paid all taxes as
shown on such returns or on any assessment received by any of them, to
the extent that such taxes have become due.
5.9 Agreements. Except as provided in Schedule 5.9, none of Borrowers is in
default, in any manner which would materially and adversely affect any
of its business, properties, assets, operations or condition (financial
or otherwise), in the performance, observance or fulfillment of any of
the obligations, covenants or conditions contained in any agreement or
instrument to which it is a party or by which it or any of its
properties, assets or revenues is bound.
5.10 Correct Information. The information, exhibits and reports furnished by
Borrowers in connection with the negotiation and preparation of this
Agreement are correct and taken as a whole do not contain any omissions
or misstatements of fact which would make the statements contained
therein misleading or incomplete in any material respect.
5.11 Year 2000 Compliant. Each Borrower is in all material respects Year 2000
Compliant with respect to its computers, computer systems and codes.
5.12 Year 2000 Indemnity. Borrowers hereby indemnify the Bank and hold the
Bank harmless from any loss or expense which the Bank may sustain or
incur as a consequence of all or any part of the Year 2000 Compliant
representations and warranties made herein or otherwise in writing by
Borrowers in connection herewith being incorrect, false or misleading.
This covenant shall survive the payment of the Loans and cancellation of
the Notes, and all other amounts payable hereunder.
ARTICLE VI: AFFIRMATIVE COVENANTS
From the date hereof and until payment in full of all amount due
hereunder and the performance of all other obligations of Borrowers to
the Bank, Borrowers agree with the Bank that, unless the Bank shall
otherwise consent in writing, Borrowers shall:
6.1 Corporate Existence, Properties, Insurance. Except as provided in the
Merger Plan, do or cause to be done all things necessary to preserve and
keep in full force and effect each Borrower's corporate existence,
rights and franchises and comply with all laws applicable to it; at all
times maintain, preserve and protect all trade names and preserve all
the remainder of each Borrower's property used or useful in the conduct
of its business and keep the same in good repair, working order and
condition and from time to time make, or cause to be made, all needful
and proper repairs, renewals, replacements, betterments and improvements
thereto so that the business carried on in connection therewith may be
properly and advantageously conducted at all times; and maintain
insurance to such extent and against such risks as is customary and with
companies similarly situated and as specifically set forth in Schedule
6.1.
6.2 Payment of Indebtedness, Taxes. (a) Pay or cause to be paid all of each
Borrower's Indebtedness and obligations promptly and in accordance with
normal terms and trade practices and (b) pay and discharge or cause to
be paid and discharged promptly all taxes, assessments and governmental
charges or levies imposed upon any Borrower or upon its income and
profits, or upon any of its property, real, personal or mixed or upon
any part thereof, before the same shall become in default, as well as
all lawful claims for labor materials and supplies or otherwise which,
if unpaid, might become a lien or charge upon its properties or any part
thereof; provided, however, that Borrowers shall not be required to pay
and discharge or cause to be paid and discharged any such Indebtedness,
tax, assessment, charge, levy or claim so long as the amount,
applicability or validity thereof shall be contested in good faith by
appropriate proceedings and the relevant Borrower shall have set aside
on its books adequate reserves with respect to any such Indebtedness,
tax, assessment, charge, levy or claim, so contested.
6.3 Financial Statements, Reports. Furnish to the Bank:
(a) at each time UPET files its Form 10-K, but in no event later than
within one hundred twenty (120) days after the end of each of its fiscal
years, an audited consolidated and consolidating balance sheet and
statement of income and surplus of each of Borrowers and Farm Stores
Grocery, Inc., together with supporting schedules, all certified by an
independent certified public accountant of recognized standing selected
by Borrowers or Farm Stores Grocery, Inc., as the case may be, and with
regard to Borrowers only approved in writing by the Bank (the form of
such certification to include statements that the audit of the financial
statements has been conducted in accordance with generally accepted
accounting standards and that the financial statements present the
financial condition of Borrowers and Farm Stores Grocery, Inc., as the
case may be, in accordance with generally accepted accounting principles
consistently applied, all as existing at the end of the appropriate
period);
(b) within sixty (60) days after the end of each intervening fiscal
quarterly period, similar financial statements to those referred to in
subsection (a) above, unaudited but similarly certified to by the chief
financial officer of Borrowers or Farm Stores Grocery, Inc., as the case
may be;
(c) with each of the financial statements submitted under subsections
(a) or (b) above, a certificate executed by the chief financial officer
of UPET to the effect that to his knowledge no Event of Default or event
which, upon notice or lapse of time or both, would constitute an Event
of Default has occurred and is continuing;
(d) within fifteen (15) days after the end of each fiscal quarterly
period, accounts receivable and inventory reports of Borrowers setting
forth in detail acceptable to the Bank the determination of the
Borrowing Base at the end of such fiscal quarterly period; and
(e) promptly, from time to time, such other information regarding the
operations, business, affairs and financial condition of Borrowers,
including the Borrowing Base, as the Bank may reasonably request.
6.4 Branding Agreements. (a) Within 180 days from the Closing Date enter
into agreements with major oil companies acceptable to the Bank to have
not less than 40% of its stores' gasoline sales branded one (1) year
from the Closing Date and (b) within one (1) year from the Closing Date
enter into agreements with major oil companies acceptable to the Bank to
have an additional 40% of its stores' gasoline sales branded within
eighteen (18) months from the Closing Date.
6.5 Management Agreement. Cause UPET Group to enter into the Management
Agreement for the management by UPET Group of Farm Stores Grocery, Inc.
and providing for a management fee payable to UPET Group of not less
than US$2,500,000 annually so long as the Loans remain unpaid and cause
UPET Group to fulfill all of its obligations under the Management
Agreement.
6.6 Maintenance of Collateral. Ensure that all Collateral shall be and
remain free and clear of any liens, claims or encumbrances in favor of
any Person other than to the Bank, as provided in Schedule 5.7(b) or as
permitted by the provisions hereof.
6.7 Tangible Net Worth. Maintain a consolidated ratio, tested quarterly, of
debt to "Tangible Net Worth" not exceeding 3.5 x 1, adjusted to 3.0 x 1
at the conclusion of UPET's fiscal year 2000 and to 2.0 x 1 at the
conclusion of UPET's fiscal year 2001. As used herein, "Tangible Net
Worth" means net worth as defined in GAAP less goodwill and related
party receivables.
6.8 EBITDA. Maintain a consolidated ratio, tested quarterly and computed in
accordance with GAAP, of (a) earning before interest, taxes,
depreciation and amortization to (b) current maturities of long term
debt plus interest expense not less than 1.4 x 1 during UPET's fiscal
year 2000 and 1.2 x 1 thereafter, to be tested at the time of UPET's
filing of its Forms 10-Q and 10-K.
6.9 Additional Owned Real Properties. (a) Not later than thirty (30) days
prior to closing, (i) notify the Bank of any proposed acquisition of a
direct or indirect ownership interest in any additional Owned Real
Properties, and (ii) provide the Bank with a title commitment, hard
copies of all title exceptions, current survey, current environmental
audit and any other information reasonably requested by the Bank to
evaluate such property; and (b) if requested by the Bank, grant a
first-priority mortgage, deed of trust or security deed (as appropriate)
in favor of the bank encumbering such additional Owned Real Properties,
or spread the lien of the Mortgages (for any additional real property
located in a jurisdiction in which a Mortgage has been recorded or filed
and remains in effect) to such property, in each case pursuant to a form
of mortgage, deed of trust, security deed or spreader agreement approved
by the Bank. The mortgage instrument shall be in recordable form and
shall be recorded in the appropriate public or land records
simultaneously with the recording of the instrument of conveyance of
such Owned Real Properties.
6.10 Additional Leases. (a) Grant a first-priority collateral assignment in
favor of the Bank encumbering any additional Lease hereafter entered
into by any Borrower or spread the lien of the Lease Assignments (for
any additional Leases leasing property located in a jurisdiction in
which a Lease Assignment has been recorded or filed and remains in
effect) to such Lease, in each case pursuant to a form of Lease
Assignment or spreader agreement approved by the Bank. The Lease
Assignment or spreader shall be in recordable form and shall be recorded
in the appropriate public or land records simultaneously with the
recording of a short form or memorandum of such additional Lease; and
(b) either cause any such additional Lease to include the following
provisions or obtain the landlord's specific consent to the Bank
containing the following provisions:
(i) that the tenant's interest in the Lease is freely assignable and
that the landlord's consent is not required for the collateral
assignment or other pledge of the tenant's interest in the lease to
tenant's lender (the "Leasehold Mortgagee");
(ii) that the landlord agrees that any and all liens of the landlord
against the Collateral for the payment of rent, whether statutory or
otherwise, are automatically subject and subordinate to the security
interest in the Collateral granted by the tenant in favor of the
Leasehold Mortgagee;
(iii) that a short form or memorandum of the Lease in recordable form
shall be executed by the parties and promptly recorded in the
appropriate public or land records;
(iv) that the Lease shall not be subordinate to any mortgage placed on
the landlord's interest in the lease premises unless the landlord's
lender enters into a non-disturbance agreement with the tenant in form
satisfactory to the tenant;
(v) that the landlord agrees (A) not to amend or modify the Lease or
accept a surrender of the Lease without the Leasehold Mortgagee's
written consent, which shall not be unreasonably withheld; (B) to notify
the Leasehold Mortgagee in writing if the tenant fails to pay the
required rent when due or otherwise commits a default under the Lease
that would entitle the landlord to terminate the Lease; (C) to accept a
cure of the tenant's default of offered by the Leasehold Mortgage within
30 days after the landlord's written notice to the Leasehold Mortgagee;
and (D) to accept the Leasehold Mortgagee or its designee as the
landlord's new tenant under the Lease if the Leasehold Mortgagee
exercises its rights against the tenant under its collateral assignment
of the Lease, provided that the tenant's defaults under the Lease are
cured and the new tenant assumes the Lease; and
(vi) that the landlord consents and agrees that the Leasehold Mortgagee
shall have the right to enter the lease premises where the Collateral is
located for the purpose of removing, selling or otherwise dealing with
the Collateral; provided that the Leasehold Mortgagee shall be
responsible for any cost of repair of physical injury (but not
diminution of value) caused by any such removal. Even if the Leasehold
Mortgagee or its designee does not elect to cure the tenant's default
and assume the Lease as landlord's new tenant as described above, then
the Leasehold Mortgagee shall nevertheless have up to 30 days after the
landlord's notice of default in which to remove the Collateral from the
lease premises, provided that the Leasehold Mortgagee pays to the
landlord on demand all rent accruing under the Lease from the date such
notice is received until the Collateral is removed.
6.11 Inspection. Permit authorized representatives of the Bank to visit and
inspect the offices and properties of Borrowers from time to time upon
reasonable notice during normal business hours, to examine the books and
records of Borrowers and make copies or extracts therefrom and to
discuss the affairs and accounts of Borrowers with their officers.
6.12 Observance of Legal Requirements. Observe and comply in all material
respects with all statutes, rules, regulations, guidelines or other
requirements having the force of law which now or at any time hereafter
may be applicable to any of Borrowers, provided that a Borrower may
defer observation and compliance with requirements as to which it
contests the validity or application thereof in good faith and by
appropriate proceedings if such deferral does not materially hinder
Borrowers operations.
6.13 Obtain Approvals. Promptly obtain each consent, license, authorization
or approval and make each filing or registration which hereafter shall
be either necessary or desirable to enable each Borrower to comply with
its obligations hereunder, and promptly furnish evidence thereof to the
Bank.
6.14 Furnish Notice. Furnish to the Bank, as soon as possible and in any
event within fifteen (15) days after becoming aware of the occurrence of
any Event of Default, or any event which with the lapse of time or
notice or both would constitute an Event of Default, a statement of a
senior executive officer of UPET setting out the details of such Event
of Default or event and the action which Borrowers propose to take in
order to cure the effect thereof.
ARTICLE VII: NEGATIVE COVENANTS
From the date hereof and until payment in full of all amounts
due hereunder and the performance of all other obligations of Borrowers
to the Bank, Borrowers agree with the Bank that, unless the Bank shall
otherwise consent in writing, Borrowers shall not:
7.1 Indebtedness. Incur any Indebtedness other than (a) accrued expenses,
trade debt, wage obligations and similar Indebtedness in the ordinary
course of business, (b) the issuance of debt securities the principal of
which is repayable only after payment in full of the Loans, (c)
Indebtedness to fund capital expenditures of up to US$1,821,000 to be
incurred in 2000, US$1,121,000 to be incurred in 2001 and US$1,121,000
to be incurred in 2002 and each year thereafter which Indebtedness for
equipment purchases may be secured by a purchase money security interest
and (d) immaterial Indebtedness not exceeding US$50,000 in any fiscal
year of Borrowers. Any such Indebtedness for capital expenditures must
be at prevailing market rates and on terms acceptable to the Bank in its
reasonable discretion.
7.2 Dividends. Pay any dividend on any class of stock of any Borrower,
except for dividends paid exclusively in shares of stock of one or more
Borrowers or dividends paid exclusively to one or more Borrowers.
7.3 Nature of Business. Permit any material changes to be made in the
character of the business of Borrowers from that conducted by them on
the date hereof except as provided in the Merger Plan.
7.4 Mergers, Consolidations and Sale of Assets. (a) Enter into any merger,
amalgamation or consolidation, (b) except in the ordinary course of its
business, sell, lease or otherwise transfer or dispose of a substantial
part of its assets except as provided in the Merger Plan or otherwise
exclusively among Borrowers other than transfers to or from Calibur or
Xxxxxxx or (c) sell or dispose of any material assets for deferred
payment of all or part of the sales price unless (1) the Bank approves
the creditworthiness of the purchaser and any other obligor or (2) a
Borrower shall hold a first security interest in such sold assets to
secure the deferred portion of the sales price.
ARTICLE VIII: COLLATERAL
The loans and all other Liabilities of Borrowers to the Bank
shall be secured by the following Collateral:
8.1 Mortgages. The Bank shall be granted a first mortgage on the interests
of the Borrowers in the Owned Real Estate.
8.2 Leases. Borrowers shall collaterally assign to the Bank the Borrowers'
rights under the Leases.
8.3 Pledge. F.S. Non-Gas shall pledge to the Bank its ten percent (10%)
common stock interest in Farm Stores Grocery, Inc. together with any
additional purchase or acquisitions of Farm Stores Grocery, Inc. stock
by any of Borrowers.
8.4 Life Insurance. F.S. Stores shall assign to the Bank the Key Man Life
Insurance policy in the amount of US$5,000,000 on the life of Mr. Xxxx
Bared issued by an insurance company acceptable to the Bank.
8.5 Management Agreement. The rights of UPET Group under the Management
Agreement shall be collaterally assigned to the Bank.
8.6 Purchase Agreement. The rights of UPET Group under the Purchase
Agreement shall be collaterally assigned to the Bank.
8.7 Other Corporate Assets. The Bank shall be granted a first security
interest in all other corporate assets of the Borrowers.
8.8 Trademark. Borrowers shall cause Farm Stores Grocery, Inc. to agree for
the benefit of the Bank not to encumber the Farm Stores trademark
(except on terms that provide that default under any such encumbrance
shall not affect Borrowers' rights under the License Agreement relating
to the trademark and the usage thereof by Borrowers) and to allow use of
the xxxx by Borrowers at no cost to Borrowers at least so long as the
Loans are outstanding.
ARTICLE IX: CONDITIONS
9.1 Conditions Precedent. The obligation of the Bank to extend any credit
hereunder is subject to Borrowers taking the following action and the
Bank having received the following documents in form and substance
satisfactory to it and its counsel.
(a) This Agreement, the Notes and the Collateral Agreements duly
executed by Borrowers party to each such Document;
(b) The shares of Farm Stores Grocery, Inc. pledged under the Pledge
Agreement, duly endorsed in blank, or by separate stock power
executed in blank, to the order of the Bank;
(c) Evidence of the application for the Key Man Life Insurance
policy in the amount of US$5,000,000 on the life of Mr. Xxxx
Bared;
(d) Evidence of the agreement for the benefit of the Bank of Farm
Stores Grocery, Inc. not to encumber the Farm Stores trademark
and to allow use of the xxxx by Borrowers at no cost to
Borrowers at least so long as the Loans are outstanding;
(e) The assignment to the Bank of the rights of UPET Group under the
Management Agreement including specifically a collateral
assignment of the management fee payable to UPET Group
thereunder;
(f) The assignment to the Bank of the rights of UPET Group under the
Purchase Agreement including specifically a collateral
assignment of the option to UPET Group thereunder;
(g) Evidence of the filing of UCC-1 Financing Statements for the
security interests granted to the Bank;
(h) Appraisals of the Owned Real Estate by an appraiser acceptable
to and in form and substance acceptable to the Bank;
(i) Mortgagee Title Insurance for the Mortgages [and other real
estate documents including independent environmental assessment
for compliance with Federal and State regulations] in form
acceptable to and containing only such exceptions as are
acceptable to the Bank and its counsel, including specifically
Messrs. Paul, Hastings, Xxxxxxxx & Xxxxxx, special real estate
counsels to the Bank;
(j) The following documents related to the Chapter 11 bankruptcy
proceedings styled United Petroleum Corporation, Case No.
99-88(PJW), all in form acceptable to the Bank and its counsel,
including specifically Messrs. Xxxxxxxx Xxxxxxxx Joblove &
Xxxxxxxx, special bankruptcy counsel to the Bank:
(i) Certified copy of the Motion for Entry of Order Establishing
Bar Date for Filing Proofs of Claims and Approving Form and
Manner of Notice Thereof.
(ii) Certified copy of the Order Fixing Bar Date For Filing
Proofs of Claim and Approving Form and Manner of Notice of Bar
Date.
(iii) Certified copy of the Second Amended Disclosure Statement.
(iv) Certified copy of the Order Approving Second Amended
Disclosure Statement.
(v) Certified copy of the Second Amended Plan of Reorganization.
(vi) Certified copy of the Findings of Fact, Conclusions of Law
and Order Confirming Amended Plan;
(k) Evidence of environmental, casualty, liability and business
interruption insurance acceptable to the Bank;
(l) Certificate of Mr. Xxxx Bared of the shares of UPET to be owned
by him at the completion of the Closing and as to any agreements
with respect to such shares;
(m) Copies of resolutions of the Boards of Directors of Borrowers,
certified as of a current date by the Secretary or an Assistant
Secretary of each Borrower, authorizing the execution and
delivery of the Documents to which it is a party and the
borrowings hereunder;
(n) Incumbency Certificates of the officers of each Borrower,
including specimen signatures of such officers empowered to
execute the Documents to which it is a party and any documents
other relating hereto, certified as of a current date by the
Secretary or an Assistant Secretary of each Borrower; and
(o) Copies of the Certificate or Articles of Incorporation or other
charter documents and all amendments thereto of each Borrower,
currently certified by the relevant Governmental Authority (such
certified charter documents shall include evidence of good
standing from the appropriate Governmental Authority).
9.2 Conditions Subsequent. Borrowers covenant to provide, and the obligation
of the Bank to continue extending any credit hereunder is subject to
Borrowers taking the following action and the Bank having received the
following documents in form and substance satisfactory to it and its
counsel:
(a) Within sixty (60) days of the Closing Date, evidence of the
assignment to the Bank of the Key Man Life Insurance policy in
the amount of US$5,000,000 on the life of Mr. Xxxx Bared; and
(b) Within sixty (60) days of the Closing Date, evidence of the
release or subordination of the mortgages and security interests
of Pennzoil Products Company in assets of Calibur and evidence
of the correction of the legal description of the Dekalb County,
Georgia Owned Real Property.
ARTICLE X: EVENTS OF DEFAULT
10.1 Events of Default. If any of the following events shall have occurred
and shall be continuing:
(a) Failure of Payment. Borrowers fail to pay any principal,
interest or other amounts due under this Agreement or with
respect to the Documents on the due date and in the manner
provided hereunder or therein and, in the case of interest, such
default shall continue for more than five (5) days; or
(b) Misstatements. Any material representation, warranty or other
statement made herein or otherwise in writing by or on behalf of
a Borrower in connection herewith proves to be or have been
incorrect or misleading in any material respect as of the date
at which it is made or deemed to be made; or
(c) Other Obligations. A Borrower defaults in any payment of
principal of or interest on any other obligation for the payment
of borrowed money or under a financing lease, in excess of
US$100,000 in the aggregate, when such obligation becomes due
and payable, or is required to be prepaid prior to the stated
maturity thereof, and, in the case of interest, such default
shall continue for more than five (5) days; or a Borrower
defaults in the performance of any other agreement, term or
condition contained in any agreement or instrument pursuant to
which such Borrower has borrowed money or under a financing
lease, or by which any obligation for the payment of borrowed
money is created, if the effect of such default is to cause such
obligation in excess of US$100,000 in the aggregate to become
due and payable prior to its stated maturity; or
(d) Performance of Covenants. Borrowers default in the due
performance or observance of any covenant, condition or
provision on the part of Borrowers to be performed or observed
pursuant to the documents and such default, if capable of cure,
is not cured (i) within fifteen (15) days after Borrowers
becomes aware of such default or (ii) in the event the default
is incapable of cure within such fifteen (15) days, within sixty
(60) days if Borrowers provide the Bank with reasonable
assurance that such default is capable of cure within such 60
day period, promptly commence to cure the default and thereafter
continue diligently to cure the default; or
(e) Judgments. A Borrower shall permit any judgment for more than
US$100,000 against it to remain undischarged for a period of
more than thirty (30) days unless during such period such
judgment shall be effectively stayed, on appeal or otherwise; or
(f) Business Operations; Bankruptcy. A Borrower suspends the
operations (other than in the ordinary course of business and
not for reasons of insolvency and similar acts) of any of its
businesses (other than in connection with the sales or closures
of stores in the ordinary course of business), becomes
insolvent, is unable to pay its debts as they mature or admits
such inability in writing, calls a meeting of its creditors,
files for or suffers to be filed against it any petition under
any provision of any bankruptcy, insolvency, reorganization,
rearrangement, readjustment of debt or similar law or statute or
any application for the process of controlled administration, or
a Borrower applies for or permits to be appointed any receiver,
trustee or custodian for it or any substantial portion of its
property or any order for relief is entered with respect to a
Borrower under any bankruptcy code or any similar law of any
jurisdiction and the same shall remain undischarged for a period
of sixty (60) days; or
(g) Condemnation. All or a substantial part of a Borrower's property
is condemned, seized or otherwise appropriated, or custody of
such property is assumed by any Governmental Authority or court
or other Person purporting to act under the authority of
government of any jurisdiction, or a Borrower is prevented from
exercising normal control over all or a substantial part of its
property and such default is not remedied within 30 days after
it occurs; or
(h) Change of Control. Mr. Xxxx Bared disposes of shares of UPET
which the Bank, after consultation with UPET, determines to be
adverse to the best interest of Borrowers or Mr. Xxxx Bared
ceases to be the Chief Executive Officer of UPET and UPET Group,
and the Bank after consultation with UPET determines such action
to be adverse to the best interest of Borrowers; or
(i) Enforceability. This Agreement, or any provision hereof, at any
time after its execution and delivery and for any reason
whatsoever ceases to be in full force and effect, valid and
enforceable both in the jurisdictions in which the Borrowers
operate and in the State of Florida, or Borrowers at any time
fail to agree that this Agreement and all provisions hereof are
in full force and effect, valid, and enforceable both in the
jurisdictions in which the Borrowers operate and in the State of
Florida;
then the Bank by notice to UPET may declare the entire unpaid principal
amount of the Loans to be immediately due and payable without presentment,
demand, protest or other notice of any kind, all of which are hereby expressly
waived.
10.2 Exercise of Rights. Upon the occurrence of an Event of Default and at
any time thereafter, the Bank shall have the right in its sole
discretion to determine which rights, security, liens, guarantees,
security interests or remedies it shall retain, pursue, release,
subordinate, modify or take any other action with respect to, without in
any way modifying or affecting any of the other of them or any of its
rights hereunder. Notwithstanding any other rights which the Bank may
have under applicable law and hereunder, Borrowers agree that, should at
any time an Event of Default occur or be continuing, the Bank shall have
the right to apply (including, without limitation, by way of setoff) any
of Borrowers' property held by, or thereafter coming into possession of,
the Bank (including, without limitation, deposit account balances) to a
reduction of Indebtedness of Borrowers to the Bank.
ARTICLE XI: MISCELLANEOUS
11.1 Notices. Except as otherwise specified herein, all notices, requests,
demands or other communications to or upon the parties hereto under the
Documents shall be deemed to have been duly given or made when delivered
in writing (including telecommunications) to the party to which such
notice, request, demand or other communication is required or permitted
to be given or made under this Agreement, at the address or facsimile
number set forth opposite the name of such party on the signature lines
set forth below, or at such other address or facsimile number as the
parties hereto may hereafter specify to the other in writing. Written
notices shall be deemed delivered upon receipt if delivered by hand or
five Business Days after mailing. Notices provided by any of the other
means referred to above shall be deemed delivered upon receipt.
11.2 Waiver of Rights. No failure to exercise and no delay in exercising, on
the part of the Bank, any right, power or privilege under the Documents
shall operate as a waiver thereof, nor shall any single or partial
exercise thereof preclude any other or further exercise thereof or the
exercise of any other right, power or privilege.
11.3 Cumulative Remedies, Conflicts. Each of the Documents and the
obligations of Borrowers hereunder and thereunder are in addition to and
not in substitution for any other obligations or security interests now
or hereafter held by the Bank and shall not operate as a merger of any
contract or debt or suspend the fulfillment of or affect the rights,
remedies or powers of the Bank in respect of any obligation or other
security interest held by it for the fulfillment thereof. The rights and
remedies provided in the Documents are cumulative and not exclusive of
any other rights or remedies provided by law. If any conflict exists
between the terms of this Agreement and the terms of any of the other
Documents to which UPET, UPET Group, F.S. Stores, F.S. Gas, F.S. Non-Gas
or REWJB Gas are parties, the terms of this Agreement shall control.
11.4 Successors; Governing Law. This Agreement shall be binding upon and
inure to the benefit of Borrowers and the Bank, and their respective
successors and assigns, except that none of Borrowers may assign or
transfer its rights hereunder without the prior written consent of the
Bank. This Agreement shall be governed by and construed in accordance
with the laws of the State of Florida.
11.5 Consent to Jurisdiction; Process Agent.
(a) Borrowers hereby irrevocably submit to the nonexclusive jurisdiction
of any Florida State or Federal court sitting in Miami-Dade County,
Florida in any action or proceeding arising out of or relating to this
Agreement and the other Documents, and Borrowers hereby irrevocably
agrees that all claims in respect of such action or proceeding may be
heard and determined in such Florida State or Federal court. Each
Borrower hereby irrevocably appoints CT Corporation, 0000 Xxxxx Xxxx
Xxxxxx Xxxx, Xxxxxxxxxx, Xxxxxxx 00000, its successors or any other
person acting on behalf of such person ("Process Agent"), as its agent
and attorney-in-fact to receive on its behalf of its property, service
of copies of the summons and complaint and any other process which may
be served in any such action or proceeding. Such service may be made by
mailing or delivering a copy of such process to a Borrower in care of
the Process Agent at the Process Agent's address set forth above or such
other address as the Process Agent shall designate in writing to the
Bank, and each Borrower hereby irrevocably authorizes and directs the
Process Agent to accept such service on its behalf.
(b) Borrowers hereby irrevocably waive any objection which any of them
may now or hereafter have to the laying of venue of any suit, action or
proceeding arising out of or relating to this Agreement brought in any
Florida State or Federal court sitting in Miami-Dade County, Florida,
and hereby further irrevocably waives any claim that any such suit,
action or proceeding brought in any such court has been brought in an
inconvenient forum.
(c) Nothing in this Section 11.5 shall affect the right of the Bank to
serve legal process in any other manner permitted by law or affect the
right of the Bank to bring any action or proceeding against Borrowers or
their property in the courts of other jurisdictions.
11.6 Currency Conversion. This is a credit transaction in which the
specification of Dollars is of the essence, and Dollars shall be the
currency of account in all events. The payment obligations of the
Borrowers under this Agreement and the other Documents shall not be
discharged by an amount paid in another currency or in another place,
whether pursuant to a judgment or otherwise, to the extent that the
amount so paid on conversion to Dollars in accordance with normal
banking procedures does not yield the amount of Dollars due hereunder.
Notwithstanding the foregoing, if for the purpose of obtaining or
enforcing judgment in any court it is necessary to convert a sum due
hereunder in Dollars into another currency (the "Second Currency"), the
rate of exchange which shall be applied shall be that at which in
accordance with normal banking procedures the Bank could purchase
Dollars with the Second currency on the Business Day preceding that on
which final judgment is given. If payment of any sum due hereunder is
made to or received by the Bank, whether by judicial judgment (and
notwithstanding the rate of exchange actually applied in giving such
judgment), or otherwise, in a Second Currency, the obligations hereunder
of Borrowers shall be discharged only in the net amount of Dollars that
on the Business Day following receipt by the Bank of any sum adjudicated
to be due in a Second Currency, the recipient in accordance with its
normal bank procedures is able to lawfully purchase with such amount of
Second Currency. To the extent that the Bank is not able to purchase
sufficient Dollars with such amount of Second Currency to discharge the
Dollar obligations to the Bank, the obligations of Borrowers to the Bank
shall not be discharged with respect to such difference, and Borrowers
agrees that any such undischarged amount will be due as a separate debt
and shall not be affected by payment of or judgment being obtained for
any other sums due under or in respect of this Agreement. To the extent
that the Bank is able to purchase an amount in Dollars in excess of the
amount necessary to discharge such Dollar obligations, the Bank shall
promptly remit such excess to Borrowers.
11.7 Amendments. The terms of this Agreement may not be amended, modified or
waived except by written agreement between Borrowers and the Bank.
11.8 Usury. Anything herein to the contrary notwithstanding, the obligations
of Borrowers to pay interest shall be subject to the limitation that
payment of interest shall not be required to the extent that receipt of
such payment by the Bank would be contrary to the provisions of any law
applicable to the Bank limiting the maximum rate of interest which may
be charged or collected by the Bank.
11.9 Survival of Agreements. All covenants, agreements, representations and
warranties made herein and in the certificates delivered pursuant hereto
shall survive the making by the Bank of the credit herein contemplated
and shall continue in full force and effect so long as such credit is
outstanding and unpaid.
11.10 Severability. Any provision hereof which is prohibited or unenforceable
shall be ineffective only to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof.
11.11 Descriptive Headings. The captions in this Agreement are for convenience
of reference only and shall not define or limit the provisions hereof.
11.12 Waiver of Trial by Jury. BORROWERS AND BANK EACH HEREBY WAIVES ITS RIGHT
TO TRIAL BY JURY IN ANY LITIGATION BASED HEREON OR ARISING OUT OF OR IN
CONNECTION WITH ANY AGREEMENT, DOCUMENT OR INSTRUMENT OR ANY TRANSACTION
CONTEMPLATED HEREBY.
11.13 Confidentiality. The Bank agrees (on behalf of itself and each of its
Affiliates, directors, officers, employees, and representatives) to keep
confidential, in accordance with its customary procedures of handling
confidential information of the same nature and in accordance with safe
and sound banking practices, any non-public information supplied to it
by Borrowers or any of their Subsidiaries pursuant to this Agreement;
provided, however, that nothing herein shall limit the disclosure of any
such information (i) to the extent required by statute, rule, regulation
or judicial process, (ii) to counsel for the Bank so long as such
counsel confirms it shall keep the non-public information confidential
in accordance with these provisions, (iii) to bank examiners, auditors
or accountants or to any other regulatory agency or body with proper
authority (including non-governmental regulatory agencies or bodies),
(iv) in connection with any litigation to which the Bank is a party
where disclosure of such information is, in the opinion of counsel for
the Bank, necessary or advisable in connection with any action, claim,
suit or proceeding, directly or indirectly, involving or potentially
involving the Bank and arising out of, based upon, relating to or
involving this Agreement or any Note, or any transactions contemplated
hereby or arising hereunder, (v) to any assignee or participant of the
Bank's rights hereunder, so long as such assignee or participant first
acknowledges that it is bound by the provisions of this Section 10.13,
or (vi) to any credit agency that rates the financial condition of the
Bank or the claims paying ability of the Bank or the financial condition
of any Borrower. To the extent disclosure is required under clauses (i),
(iii) and (iv) above, the Bank agrees to use its best efforts to give
the Borrower prompt prior notice thereof if allowed by law.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized officers as of the date first written above.
Address for Bank: XXXXXXXX BANK, N.A.
0000 X.X. 00xx Xxxxxx
Xxxxx, Xxxxxxx 00000 By:
Attn: Xxxxx Xxxxxx -------------------------------------
Name: Xxxxx Xxxxxx
Telephone: (000) 000-0000 Title: Vice President
Facsimile: (000) 000-0000
By:
-------------------------------------
Name: J. Xxxx Xxxxxxx
Title: General Counsel
Address for all Borrowers: UNITED PETROLEUM CORPORATION
0000 X.X. 00xx Xxxxxx
Xxxxx, Xxxxxxx 00000 By:
Attn: Mr. Xxxx Bared -------------------------------------
Name: Xxxxxx Bared
Telephone: (305) Title: Vice President
Facsimile: (305)
UNITED PETROLEUM GROUP, INC.
By:
-------------------------------------
Name: Xxxxxx Bared
Title: President
F.S. CONVENIENCE STORES, INC.
By:
-------------------------------------
Name: Xxxxxx Bared
Title: Vice President
F.S. GAS SUBSIDIARY, INC.
By:
-------------------------------------
Name: Xxxxxx Bared
Title: Vice President
F.S. NON-GAS SUBSIDIARY, INC.
By:
-------------------------------------
Name: Xxxxxx Bared
Title: Vice President
REWJB GAS INVESTMENTS
By:
-------------------------------------
Name: Xxxxxx Bared
Title: Vice President
XXXXXXX-UNITED PETROLEUM CORPORATION
By:
-------------------------------------
Name: Xxxxxx Bared
Title: Vice President
CALIBUR SYSTEMS, INC.
By:
-------------------------------------
Name: Xxxxxx Bared
Title: Vice President
