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EXHIBIT 10.11
CREDIT AGREEMENT
BETWEEN
MIKE'S ORIGINAL, INC.
AND
THE PENN TRAFFIC COMPANY
Dated: April 10, 1996
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T A B L E 0 F C 0 N T E N T S
Page
Preliminary Statement. . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE I - DEFINITIONS. . . . . . . . . . . . . . . . . . . . . 1
Section 1.01 Certain Defined Terms. . . . . . . . . . . . . 1
Section 1.02 Accounting Terms . . . . . . . . . . . . . . . 5
ARTICLE II - RESTRUCTURING OF PT DEBT. . . . . . . . . . . . . 5
Section 2.01 Terms of Repayment . . . . . . . . . . . . . . 5
Section 2.02 Collateral . . . . . . . . . . . . . . . . . . 7
Section 2.03 Prepayments. . . . . . . . . . . . . . . . . . 7
Section 2.04 Interest Computation . . . . . . . . . . . . . 8
ARTICLE III - FUTURE SHIPMENTS . . . . . . . . . . . . . . . . 8
Section 3.01 Additional Product . . . . . . . . . . . . . . 8
ARTICLE IV - REPRESENTATIONS AND WARRANTIES. . . . . . . . . . 8
Section 4.01 Representations and Warranties . . . . . . . . 8
(a) Organization. . . . . . . . . . . . . . . . . . . . 8
(b) Execution . . . . . . . . . . . . . . . . . . . . . 9
(c) Validity. . . . . . . . . . . . . . . . . . . . . . 9
(d) Violation . . . . . . . . . . . . . . . . . . . . . 9
(e) Title . . . . . . . . . . . . . . . . . . . . . . . 10
(f) All Necessary Assets. . . . . . . . . . . . . . . . 10
(g) Notice. . . . . . . . . . . . . . . . . . . . . . . 10
(h) Taxes.. . . . . . . . . . . . . . . . . . . . . . . 11
(i) Litigation. . . . . . . . . . . . . . . . . . . . . 11
(j) Perfected First Security Interest . . . . . . . . . 11
ARTICLE V - COVENANTS OF MOI . . . . . . . . . . . . . . . . . . 12
Section 5.01 Affirmative Covenants of MOI
Other Than Reporting Requirements. . . . . . . . . 12
(a) Preservation of Corporate
Existence Qualification. . . . . . . . . . . . . . . 12
(b) Compliance with Laws . . . . . . . . . . . . . . . . 12
(c) Keeping of Records and Books of Account. . . . . . . 12
(d) Maintenance of Properties. . . . . . . . . . . . . . 12
(e) Replacement Confessions. . . . . . . . . . . . . . . 12
(f) Cause Direct Payments. . . . . . . . . . . . . . . . 13
(g) Filings with Patent or
Trademark Office. . . . . . . . . . . . . . . . . . . 13
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Section 5.02 Negative Covenants of MOI. . . . . . . . . . 14
(a) Capital Expenditures . . . . . . . . . . . . . . . 14
(b) Indebtedness . . . . . . . . . . . . . . . . . . . . 14
(c) Liens. . . . . . . . . . . . . . . . . . . . . . . . 14
(d) Mergers, Etc . . . . . . . . . . . . . . . . . . . . 14
(e) Sale and Leaseback . . . . . . . . . . . . . . . . . 14
(f) Dividends. . . . . . . . . . . . . . . . . . . . . . 15
(g) Sale of Assets . . . . . . . . . . . . . . . . . . . 15
(h) Guaranties, Etc. . . . . . . . . . . . . . . . . . . 15
(i) Loans. . . . . . . . . . . . . . . . . . . . . . . . 15
(j) Management Fees. . . . . . . . . . . . . . . . . . . 15
(k) Subsidiaries . . . . . . . . . . . . . . . . . . . . 15
(1) Other Obligations. . . . . . . . . . . . . . . . . . 16
Section 5.03 Reporting Requirements . . . . . . . . . . . 16
(a) Quarterly Report . . . . . . . . . . . . . . . . . . 16
(b) Annual Report. . . . . . . . . . . . . . . . . . . . 16
ARTICLE VI - EVENTS OF DEFAULT . . . . . . . . . . . . . . . . . . 17
Section 6.01 Events of Default. . . . . . . . . . . . . . 17
ARTICLE VII - (INTENTIONALLY OMITTED). . . . . . . . . . . . . . . 20
ARTICLE VIII - MISCELLANEOUS . . . . . . . . . . . . . . . . . . 20
Section 8.01 Cumulative Remedies . . . . . . . . . . . 20
Section 8.02 Addresses for Notices, Etc. . . . . . . . 20
Section 8.33 Execution in Counterparts . . . . . . . . 21
Section 8.04 Governing Law . . . . . . . . . . . . . . 21
Section 8.05 Integration; Entire Agreement . . . . . . 22
Section 8.06 Jurisdiction, Etc. . . . . . . . . . . . . 22
Exhibit A - Form of Note
Exhibit B - Form of Settlement Agreement
Exhibit C - Form of Security Agreement
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CREDIT AGREEMENT, dated April 10, 1996, between MIKE'S ORIGINAL,
INC. ("MOI") and THE PENN TRAFFIC COMPANY ("PT").
Preliminary Statement
A. Under arrangements heretofore contracted, MOI is indebted to PT in
the amounts (which, together with interest hereafter accruing thereon, will be
called collectively the "PT Debt") set forth in a Settlement Agreement dated of
even date (the "Settlement Agreement") , a true copy of the form of which is
annexed as Exhibit 1 to this Agreement.
B. MOI has requested PT to restructure and reschedule the PT Debt and
provide for the repayment of the PT Debt on the terms and conditions hereinafter
set forth and PT is willing to do so.
C. MOI and PT desire to provide for the future shipment by PT to MOI
customers of additional packaged ice cream product ("Product") and for the
payment to PT therefor.
NOW, THEREFORE, for valuable consideration (the receipt and sufficiency
of which are hereby acknowledged), PT and MOI hereby agree as follows:
ARTICLE I
DEFINITIONS
Section 1.01. Certain Defined Terms. As used in the Loan Documents or
in any other documents made or delivered pursuant thereto, unless the context
shall otherwise require, the following terms shall have the following meanings
(such meanings to be equally applicable to both the singular and plural forms of
the terms defined):
"Affiliate" means any Person directly or indirectly owning or
controlling more than 5% of the voting stock of MOI or any of its
Subsidiaries and any Person who is an officer, director or
employee of MOI or any of its Subsidiaries and any spouse, child
or trust created by or for the benefit of any such Person.
"Agreement" means this Agreement, as the same may hereafter
be amended or restated from time to time.
"Closing" means the date on which the Loan Documents are
executed and delivered by PT and moi.
"Confessions" is defined in Section 2.03 of this
Agreement.
"Event of Default" is defined in Section 6.01 of
this Agreement.
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"Indebtedness" means, for any Person, (i) all indebtedness or
other obligations of such Person for borrowed money or for the
deferred purchase price of property or services, (ii) all
indebtedness or other obligations of any other Person for borrowed
money or for the deferred purchase price of property or services
the payment or collection of which such Person has guaranteed
(except by reason of endorsement for collection in the ordinary
course of business) or in respect of which such Person is liable,
contingently or otherwise, including, without limitation,
liability by way of agreement to purchase, to provide funds for
payment, to supply funds to or otherwise to invest in such other
Person, or otherwise to assure a creditor against loss, (iii) all
indebtedness or other obligations of any other Person for borrowed
money or for the deferred purchase price of property or services
secured by any mortgage, deed of trust, pledge, lien, security
interest or other charge or encumbrance upon or in property owned
by such Person, whether or not such Person has assumed or become
liable for the payment of such indebtedness or obligations, and
(iv) capitalized lease obligations of such Person.
"GAAP" means generally accepted accounting principles as from
time to time in effect, including the official interpretations
thereof by the Financial Accounting Standards Board, consistently
applied.
"Loan Documents" means this Agreement, the
Settlement Agreement, the Note and the Security
Agreement.
"MOI" is defined in the first paragraph of this
Agreement.
"PT" is defined in the first paragraph of this
Agreement.
"PT Debt" is defined in the Preliminary Statement
of this Agreement.
"Person" means an individual, corporation, partnership,
limited partnership, joint venture, trust or unincorporated
organization, or a government or any agency or political
subdivision thereof.
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"Product" shall mean ice-cream and related dairy products,
packaged or unpackaged, ordered by MOI from PT for production and
sale in the course of MOI's business.
"Reconfession Date" is defined in Section 5. 01
(e) .
"Replacement Confession" is defined in Section
5.01(e).
"Settlement Agreement" is defined in the Preliminary
Statement of this Agreement. "Subsidiary" means a corporate or
other entity the management of which is controlled, directly or
indirectly or both, by MOI and in which MOI owns equity directly
or indirectly or both.
Section 1.02. Accounting Terms. All accounting terms, unless
otherwise specifically defined herein, shall be construed in
accordance with GAAP.
ARTICLE II
RESTRUCTURING OF PT DEBT
Section 2.01. Terms of Repayment. (a) Prior to the occurrence of an
Event of Default, the principal amount of the PT Debt as stipulated in paragraph
2 of the Settlement Agreement, outstanding from time to time shall bear interest
at one (1%) percent in excess of the rate reported by The Chase Manhattan Bank,
N.A. as its "prime rate" and while an Event of Default shall continue the PT
Debt shall bear interest at a rate 2% over said prime rate but in no event
higher than the maximum amount permitted by law.
(b) MOI will make payments upon the PT Debt in monthly
installments, such payments to be made not later than the first (lst) day of
every calendar month, commencing with May, 1996, consisting of (i) accrued
interest, calculated in accordance with the terms hereof, and (ii) principal, to
be applied in reduction of the PT Debt (as defined in paragraph 2 of the
Settlement Agreement), of $12,000. Each installment shall be applied, together
with any amount required by subsection (c) below of this Section to be paid by
MOI to PT, first to accrued interest on the PT Debt and then to outstanding
principal.
(c) In addition to the regular monthly installments provided for
in subsection (b) of this Section, MOI shall pay to PT in respect of the PT
Debt, immediately upon receipt, (i) upon the closing of each "bridge" financing
obtained by MOI the sum of $75,000, payable directly from the proceeds of such
financing; and (ii) upon the consummation of MOI's initial public offering, the
sum of $150,000, payable directly from the proceeds of such offering. In
addition, on the first day of the first January, April, July or October
immediately succeeding the Closing of such initial public offering, and on each
three-month anniversary of such first day until the PT Debt has been paid in
full, MOI shall pay to PT the sum of $200,000 in respect of the PT Debt.
(d) On December 31, 1996, unless the initial public offering of
MOI shall have closed, MOI shall make a mandatory prepayment of principal and
interest so as to reduce the outstanding PT Debt to zero.
Section 2.02. Collateral. The PT Debt shall be secured by a security
interest in certain assets of MOI pursuant to a security agreement in the form
of Exhibit C hereto (the "Security Agreement"), together with appropriate UCC-1
financing statements previously executed and delivered to PT by the Borrower.
Herewith MOI is delivering to PT the Affidavit of Confession of Judgment
referred to in paragraph 4 of the Settlement Agreement ("Confession") . In the
event the Confession or a Replacement Confession is in fact entered as a
judgment by PT, PT agrees to credit MOI with actual amounts theretofore paid.
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Section 2.03. Prepayments. MOI may prepay the PT Debt at any time in
whole or in part, without penalty or premium, but such prepayment, unless of all
indebtedness (including accrued interest) outstanding hereunder, shall be
credited to last (i.e., rear end) payments and shall not relieve MOI from the
required payments provided for in Section 2.01(b) and (c) hereof.
Section 2.04. Interest Computation. Interest shall be computed
on the basis of the actual number of days elapsed, over a year of 360
days.
ARTICLE III
FUTURE SHIPMENTS
Section 3.01. Additional Product. So long as MOI shall comply with the
terms and provisions of this Agreement and no Event of Default shall have
occurred, PT agrees to entertain orders for shipment of additional Product in
the ordinary course of business to customers of MOI (including, without
limitation, Kraft and its subsidiary and affiliated companies) provided that (i)
the credit standing of such customer is satisfactory to PT and (ii) each such
customer shall agree to make payment for such product directly to a lock-box for
the benefit of PT in accordance with the provisions hereof.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
Section 4.01. Representations and Warranties. MOI represents,
warrants and covenants that:
(a) Organization. It is a corporation formed and operating under
the laws of the State of Delaware, is qualified to do business in the State of
New York and in such other jurisdictions as is required by the nature and
operation of its business and has all requisite power and authority to enter
into and perform this Agreement and to perform the transactions contemplated
hereby.
(b) Execution. The execution, delivery and performance
by MOI of this Agreement and the transactions contemplated hereby have been
duly authorized by all necessary or corporate action and do not violate or
contravene any law, rule, regulation, order, decree, loan agreement, lease
mortgage, contract or other restriction binding on or affecting MOI or its
assets and do not result in or require the creation of any lien, security
interest, charge or encumbrance upon or with respect to any of such assets,
except where otherwise set forth herein.
(c) Validity. This Agreement has been duly and validly executed
and delivered by MOI and (assuming the due authorization, execution and delivery
hereof by PT), subject to laws affecting creditors' rights generally,
constitutes the legal, valid and binding obligation of MOI, enforceable against
it in accordance with its terms.
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(d) Violation. MOI is not a party to, subject to or bound by any
agreement, judgment, order, writ, injunction or decree of any court or
governmental body which could prevent or impair the effectiveness of this
Agreement or any of the transactions contemplated hereby or the use of the
assets for the purposes intended.
(e) Title. MOI has good and marketable title to all of the assets
that are the subject of the security agreement executed simultaneously herewith
("Assets"), and, except for a lien in favor of Wasco Funding Corp. with respect
to MOI's computer system, free and clear of any lien, security interest, charge,
restriction or encumbrance of any kind.
(f) All Necessary Assets. The Assets constitute all of the fixed
assets presently used in, and necessary for the conduct of, the operation of
MOI's business in the same manner and to the same extent conducted by it
immediately prior to the date hereof. MOI has not sold, transferred or otherwise
disposed of any Assets from June 1, 1995 to present (other than the sale of
obsolete items), and during that period it has operated only in the ordinary
course of business.
(g) Notice. MOI has not received any notice, nor is it subject to
any claim or proceeding, pending or threatened which asserts that it is in
violation of any applicable laws, rules and regulations.
(h) Taxes. All sales tax returns and reports required to be filed
by or on behalf of MOI have been prepared and filed in accordance with
applicable law, and all sales and use taxes, interest, penalties, assessments or
deficiencies that had become due pursuant to such returns have been paid in
full.
(i) Litigation. There is no action, litigation, suit, proceeding,
inquiry or investigation, at law or in equity, before or by any court, public
board or body, pending or, to the best of MOI's knowledge, threatened against or
affecting either MOI or the Assets, nor is there any basis therefor, wherein an
unfavorable decision, ruling or finding would adversely affect the validity or
enforceability of this Agreement or the consummation of the transactions
contemplated hereby.
(j) Perfected First Security Interest. Except as otherwise set
forth in this Agreement, upon the filing of the Security Agreement, PT will have
a valid and perfected first security interest in the property described therein,
and upon the execution and delivery of the Note there shall have been
subordinated thereto all Indebtedness (including, without limitation, any
Indebtedness to officers, directors, shareholders or other Affiliates of MOI)
other than indebtedness to trade creditors.
ARTICLE V
COVENANTS OF MOI
Section 5.01. Affirmative Covenants of MOI other Than Reporting
Requirements. So long as the PT Debt or any portion thereof remains outstanding,
MOI shall:
(a) Preservation of Corporate Existence Qualification.
Preserve and maintain its corporate existence and franchise in its
jurisdiction of incorporation.
(b) Compliance with Laws. Comply with the requirements of all
applicable laws, non-compliance with which would have a material adverse affect
on its business taken as a whole.
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(c) Keeping of Records and Books of Account. Keep adequate
records and books of account reflecting all its financial
transactions.
(d) Maintenance of Properties. Maintain and preserve all of its
properties, necessary or useful in the proper conduct of its business, in good
working order and condition, ordinary wear and tear excepted.
(e) Replacement Confessions. If any portion of the PT Debt remains
outstanding two (2) years and nine (9) months after the date hereof
("Reconfession Date"), MOI shall execute an Affidavit of Confession of Judgment
in replacement of, and in the same form and substance as, the Affidavit of
Confession of Judgment executed and delivered to the PT contemporaneously
herewith and deliver same to PT ("Replacement Confession"), within ten (10) days
after demand. Similarly, if any portion of the PT Debt remains outstanding on
the third (and each succeeding three-year) anniversary of the Reconfession Date,
substitute Affidavits of Confession of Judgment will be executed and delivered
on demand of PT. Each Replacement Confession will be in the principal amount
then due and the judgment rate will be reset to equal a rate 3% over prime on
the date of execution.
(f) Cause Direct Payments. Cause each of its account debtors
(including, without limitation, Sam's Club and Kraft), to make direct payment to
a lock-box for the benefit of PT until receipt of written notice from PT to the
contrary.
(g) Filings with Patent or Trademark Office. Cooperate with PT,
promptly following the Closing, in executing and filing with the Federal Patent
and Trademark Office and such other offices as required such instruments and
documents with respect to PT's security interest in MOI's intellectual property
as PT, in its discretion, shall deem necessary or advisable.
Section 5.02 Negative Covenants of MOI. So long as the Note or any
portion thereof remains outstanding, MOI shall not:
(a) Capital Expenditures. Make any capital expenditures in
excess of $25,000.
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(b) Indebtedness. Create, incur, assume or suffer to exist any
Indebtedness, except for (i) trade payables incurred in the ordinary course of
business to entities other than Affiliates of MOI, or (ii) pursuant to the
contemplated "bridge" financing.
(c) Liens. Create, assume or suffer to exist any mortgages, liens
or security interests, except for the lien of taxes not yet due and payable and
mortgages, liens and security interests that are of record as at this date and
any refinancings thereof.
(d) Mergers, Etc. Merge or consolidate with or into any
Person, or assign, transfer or sell all or substantially all of its
properties or assets (now owned or hereafter acquired).
(e) Sale and Leaseback. Sell, transfer or otherwise dispose of any
real or personal property to any Person and thereafter directly or indirectly
lease back the same.
(f) Dividends. Declare or pay dividends or purchase or redeem,
retire or otherwise acquire for value any of its capital stock now or hereafter
outstanding or set aside any sum for such payment.
(g) Sale of Assets. Sell, lease, assign, transfer or otherwise
dispose of any of its now owned or hereafter acquired assets except (i)
inventory disposed of in the ordinary course of business, and (ii) assets no
longer used or useful in the conduct of its business, unless if such assets are
sold at fair market value to Persons other than any Affiliate of MOI.
(h) Guaranties, Etc. Assume, guarantee, endorse or
otherwise be or become directly or contingently responsible or liable
on any obligation of any person except endorsement of negotiable
instruments for deposit or collection.
(i) Loans. Make any loans or advances to any Person.
(j) Management Fees. Incur or pay to any Affiliate of MOI
management fees, advisory fees, service fees or any other compensation
for services rendered. Except as to the payments required to be made upon
the closing of the Company's Initial Public Offering under the Consulting
Agreement dated as of March 1, 1994 between MOI and Xxxxxx Xxxxxx.
(k) Subsidiaries. Not to create or invest in any
Subsidiaries or make any investment in any Affiliate.
(1) Other Obligations. Permit any obligation of MOI
to any officer, director, shareholder or other Affiliate of MOI to be
senior to or pari passu with the obligations of MOI to PT hereunder.
Section 5.03. Reporting Requirements. So long as the Note or any
portion thereof remains outstanding, MOI shall furnish to PT:
(a) Quarterly Report. As soon as available and in any event within
60 days after the end of each of the first three quarters of each fiscal year of
MOI, the consolidated balance sheet of MOI and its Subsidiaries, if any, as of
the end of such quarter and the consolidated statements of operations, cash
flows and changes in shareholders' equity of MOI and its Subsidiaries, if any,
for the period commencing at the end of the previous fiscal year and ending with
the end of such quarter, duly certified (subject to year-end audit adjustments)
by the chief financial officer of MOI as having been prepared in accordance with
sound accounting practice by certified public accountants.
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(b) Annual Report. As soon as available and in any event within
120 days after the end of each fiscal year of MOI, an annual report for such
year for MOI, including therein the consolidated balance sheet of MOI and its
Subsidiaries, if any, as of the end of such fiscal year and the consolidated
statements of operations, cash flows and changes in stockholders' equity of MOI
and its Subsidiaries, if any, for such fiscal year, prepared in accordance with
GAAP by certified public accountants and certified by the Chief Financial
Officer of MOI.
ARTICLE VI
EVENTS OF DEFAULT
Section 6.01. Events of Default. If any of the following events
(each an "Event of Default") shall occur, that is to say:
(i) If MOI shall default in the payment when due of any principal or
interest on the PT Debt, and such default continues for fifteen (15) business
days after the holder notifies MOI in writing of such default; or
(ii) If any material representations or warranty made by MOI in any of
the Loan Documents shall prove to have been materially inaccurate when made, and
such inaccuracy is not cured within 30 days after PT notifies MOI thereof in
writing; or
(iii) If MOI shall materially fail to perform or observe any material
term, covenant or agreement contained in this Agreement, or MOI shall materially
fail to observe or perform any other material term, covenant or agreement
contained in any of the Loan Documents on its part to be performed or observed
and any such failure is not cured within 30 days after PT notifies Mikes thereof
in writing; or
(iv) If a decree or order for relief shall be entered by a court having
jurisdiction in the premises in respect of MOI in any involuntary case under the
federal bankruptcy code, as now or hereafter constituted, or any other
applicable federal, state or foreign bankruptcy or insolvency law, or a
receiver, liquidator, assignee, custodian, trustee, sequestrator or similar
official shall be appointed for MOI or for all or substantially all of its
properties, or the winding-up or liquidation of its affairs shall be ordered,
and any such decree, order or appointment shall continue unstayed and in effect
for a period of 120 consecutive days; or
(v) If MOI shall commence a voluntary case under the federal bankruptcy
doe, as now or hereafter constituted, or any other applicable federal, state or
foreign bankruptcy or insolvency law, or it shall consent to the appointment of
or taking possession by a receiver, liquidator, assignee, trustee, custodian,
sequestrator or other similar official of MOI, or for all or substantially all
of its properties, or it shall make any assignment for the benefit of creditors;
(vi) If MOI fails to execute and deliver Replacement Confessions within
ten (10) days of demand for such Replacement Confessions by PT as required by
Section 5.01(e) hereof. then, and in any such event, PT may do any or all of the
following: (x) declare the entire unpaid principal amount of the PT Debt, and
all interest accrued and unpaid thereon, to be immediately due and payable,
whereupon the same shall become and be immediately due and payable; and (y)
exercise any and all remedies allowed to it by any document executed in
connection with this Agreement or otherwise available at law or in equity,
including filing and realizing upon the Confessions and on the Replacement
Confessions, provided, however, that if an event of the type described in
paragraphs (d) or (e) of this Section 6.01 shall occur, then the entire
principal amount of the PT Debt and all interest thereon shall forthwith
automatically become due and payable without the need for such a declaration.
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ARTICLE VII
(INTENTIONALLY OMITTED)
ARTICLE VIII
MISCELLANEOUS
Section 8.01. Cumulative Remedies. The remedies herein and in
the other Loan Documents provided are cumulative and not exclusive of
each other or of any other remedies allowed by law or equity.
Section 8.02. Addresses for Notices, Etc. All notices, requires,
demands, directions and other communications provided for hereunder or under any
Loan Document and shall be sufficient if delivered personally (including by
Federal Express or other recognized courier for which receipt is given) or if
mailed by certified mail, return receipt requested, to the applicable party at
the addresses indicated below:
If to MOI or any Guarantor:
Mike's Original, Inc.
000 Xxxxxxx Xxxxxxxx
Xxxxxxx, Xxx Xxxx 00000
with a copy to:
Xxxxxxx X. Satin, Esq.
000 Xxxxx Xxxxxxx
Xxxxx 000
Xxxxxxxxx, Xxx Xxxx 00000
If to PT:
Xxxxxxx X. Xxxxx, Xx., Esq.
The Penn Traffic Company
X.X. Xxx 0000
Xxxxxxxx, Xxx Xxxx 00000
with a copy to:
Xxxxxx X. Poster, Esq.
Xxxxxxxxx, Poster & Xxxxxx
Xxx Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
or, as to any party, at such other address as shall be designated by
such party in a written notice to each other party complying as to
deliver with the terms of this Section. All notices, requests, demands,
directions and other communications shall (if delivered personally) be
effective when delivered or (if mailed) two days after having been
deposited in the mail, addressed as aforesaid.
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Section 8.03. Execution in Counterparts. This Agreement may be executed in
any number of counterparts and by different parties hereto in separate
counterparts, each of which shall be deemed to be an original and all of which
(taken together) shall constitute one and the same agreement.
Section 8.04. Governing Law. This Agreement and the other Loan Documents
shall be governed by, and construed in accordance with, the internal laws of the
State of New York (without giving effect to principles of conflicts of law).
Section 8.05. Integration; Entirement Agreement. This Agreement and the
other Loan Documents are intended by the parties hereto and thereto to be an
integrated contract, which together contain the entire understanding of the
parties with respect to the subject matter contained herein and therein; this
Agreement and the other Loan Documents supersede all prior agreements and
understandings between or among the parties (or any of them) with respect to
such subject matter, whether written or oral. Without limiting the generality of
the foregoing, this Agreement and the Note supersede and replace the promissory
notes and other agreement previously executed and delivered by MOI to PT to
evidence the PT Debt.
Section 8.06 Jurisdiction, Etc. MOI accepts and agrees that courts sitting
in the City, County and State of New York having concurrent jurisdiction over
it, its Subsidiaries, if any, and its and their respective properties and will
pay all legal fees and disbursements which PT may incur after the date hereof in
order to be advised as to its rights and responsibilities under the Loan
Documents and/or to enforce the Loan Documents.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be executed by their respective officers thereunto duly authorized,
as of the date first above
written.
ATTEST: MIKE'S ORIGINAL, INC.
/s/_______________________ By: /s/ _________________________
THE PENN TRAFFIC COMPANY
By: /s/__________________________
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EXHIBIT A
PROMISSORY NOTE
$830,274.59 April 10, 1996
MIKE'S ORIGINAL, INC., a corporation organized and existing under the laws
of Delaware ("MOI"), for value received, hereby promises to pay to the order of
THE PENN TRAFFIC COMPANY ("PT"), at its office at c/o Gilmartin, Poster &
Xxxxxx, One Xxxxxxx Street, New York, New York (or at such other location as PT
shall designate in writing), the principal amount of Eight Hundred Thirty
Thousand Two Hundred Seventy-Four Dollars and Fifty-Nine Cents ($830,274.59) in
lawful money of the United States of America, on the dates provided in the
Credit Agreement referred to below. MOI also promises to pay interest on the
principal balance hereof outstanding from time to time, at said office, in like
money, at the rate of interest as provided in the Credit Agreement described
below on the dates provided in said Credit Agreement.
This is the Note referred to in that certain Credit Agreement ("Credit
Agreement") dated the date hereof between MOI and PT, and this Note evidences
the PT Debt owing to PT thereunder. As provided in the Credit Agreement, this
Note supersedes and replaces any other promissory note previously evidenced
hereby. All terms not defined herein shall have the meanings given to them in
the Credit Agreement.
The Credit Agreement provides for the acceleration of the maturity of
the principal upon the occurrence of certain Events of Default and for
prepayments on the terms and conditions specified therein.
The Borrower waives presentment, notice of dishonor and protest with
respect to this Note and further waives right to trial by jury.
This Note shall be governed by, and interpreted and construed in
accordance with, the laws of the State of New York.
ATTEST: MIKE'S ORIGINAL, INC. By,
By: _______________________
Name:
Title:
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SETTLEMENT AGREEMENT
THIS AGREEMENT, made as of the 10th day of April, 1996, by and between THE
PENN TRAFFIC COMPANY, a Delaware corporation ("PT") and MIKE'S ORIGINAL, INC., a
Delaware corporation ("MOI").
W I T N E S S E T H:
WHEREAS, MOI is indebted to PT in the sum of $830,274.59
("Balance") for goods sold to MOI and packaged and delivered by PT to
various entities as directed by MOI for sale by MOI; and
WHEREAS, PT and MOI have reached the conclusion that it is in their mutual
and respective interests to (a) agree on a schedule for the payment of the
Balance upon the terms and conditions set forth below, and (b) provide for the
ongoing business relationship between them on such terms and conditions as are
mutually acceptable.
NOW, THEREFORE, in consideration of the premises and other good and valuable
consideration, PT and MOI hereby agree as follows:
1. PT and MOI shall simultaneously herewith enter into a Credit Agreement,
substantially in the form annexed hereto as Exhibit A ("Credit Agreement") , as
well as the Note, Security Agreement and Confession of Judgment referred to
therein.
2. MOI shall, in full and final payment of the Balance, together with
reimbursement to PT of its legal fees and disbursements in connection with the
subject matter hereof, pay to PT all of the following: (a) the principal sum of
Eight Hundred Ten Thousand Two Hundred Seventy-Four Dollars and Fifty-Nine Cents
($810,274.59), (b) Twenty Thousand Dollars ($20,000) in accrued interest through
April 10, 1996, which too shall be principal, and (c) interest on the unpaid
principal balance (i.e., the unpaid balance of the aggregate of (a), and (b)
aforesaid), at one (1%) percent in excess of the floating rate of Chase
Manhattan Bank, N.A. ("Chase") from time to time announced as its so-called
"prime rate", from the date hereof until paid in full, provided that if an Event
of Default (as defined in the Credit Agreement) shall occur and be continuing,
then such interest rate shall be increased to 2% above said Chase prime rate,
but not higher than the maximum rate permitted by law (collectively, the
"Settlement Amount"). The Settlement Amount shall be paid in installments as
provided in the Credit Agreement. Each payment shall be applied as provided in
the Credit Agreement.
3. All payments to be made by MOI shall be made as provided in the
Credit Agreement, by check sent to a lock-box for the benefit of PT.
4. As security for the payment of amounts set forth in paragraph 2 of
this Agreement, and for any future advances that may be made by PT for MOI's
benefit in the future (including, without limitation, the shipment of additional
product), (a) MOI shall execute and deliver to PT the Security Agreement
referred to in the Credit Agreement, and (b) MOI shall execute and deliver to PT
(i) an Affidavit of Confession of Judgment in the form annexed hereto as Exhibit
B, (ii) any other Loan Documents required by the Credit Agreement, and (iii) any
Replacement Confessions as provided in the Credit Agreement. PT agrees that it
will not file any such Affidavit of Confession of Judgment (or Replacement
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Confession) until there has occurred an Event of Default as provided in the
Credit Agreement. In the event judgment is entered pursuant to an Affidavit of
Confession of Judgment or Replacement Confession, PT shall have execution only
for the balance due hereunder or as a result of any advances made to MOI
pursuant to the Credit Agreement after crediting MOI for all payments made
hereunder.
5. All notices to be sent by PT to MOI pursuant to this Agreement
shall be faxed addressed as follows:
Mike's Original, Inc.
000 Xxxxxxx Xxxxxxxx
Xxxxxxx, Xxx Xxxx 00000
000-000-0000
with a faxed copy to:
Xxxxxxx X. Satin, Esq.
000 Xxxxx Xxxxxxx
Xxxxx 000
Xxxxxxxxx, Xxx Xxxx 00000
000-000-0000
6. This Agreement may be executed in counterparts and each such
counterpart shall be deemed an original and part of a single instrument for all
purposes.
7. This Agreement shall not be changed orally and may be
amended only by a writing signed by both parties
hereto.
8. This Agreement shall be governed and construed in accordance
with the laws of the State of New York.
9. This Agreement and the other agreements and documents executed
simultaneously herewith constitute the entire agreement of the parties hereto
with respect to the subject matter hereof, and supersede all prior agreements
and understandings, whether written or oral.
THE PENN TRAFFIC COMPANY
By: /s/ Xxxxxx Poster
Name: Xxxxxx Poster
Title:Director
ATTEST: MIKE'S ORIGINAL, INC.
Xxxxxx X. Xxxxx By: /s/ Xxxxxxx Xxxxx
Name: Xxxxxxx Xxxxx
Title: Chairman of the Board
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EXHIBIT C
SECURITY AGREEMENT
MIKE'S ORIGINAL, INC., a Delaware corporation (the "Debtor"), hereby
grants to THE PENN TRAFFIC COMPANY (the "Secured Party") a security interest in
all the Debtors' respective:
(i) equipment, fixtures, furnishings and leasehold
improvements;
(ii) inventory (including, without limitation, raw materials, work in
process and goods held for sale);
(iii) accounts and contract rights;
(iv) chattel paper;
(v) instruments;
(vi) documents;
(vii) general intangibles;
(viii) intellectual property including, without limitation,
all trade names, trademarks, logos and patents; and
(ix) proceeds of the foregoing, including proceeds of insurance thereof
(as such terms are defined in the New York Uniform Commercial
Code), whether now owned or hereafter acquired (all of the
foregoing being called the "Collateral") to secure the payment and
performance of the Note (as such capitalized term is
defined in the Credit Agreement hereinafter referred to).
This Security Agreement is being executed and delivered pursuant to a
certain Credit Agreement dated the date hereof (the "Credit Agreement") between
the Debtor and the Secured Party.
The Debtor and the Secured Party hereby agree as follows:
(a) The Debtor shall keep the tangible Collateral insured to
the extent it is in its possession or control for the benefit of the Secured
Party against fire (including extended coverage) and such other hazards as the
Secured Party may reasonably request with the Secured Party named as loss payee.
Should the Debtor fail to provide insurance as herein required, the Secured
Party may, at its option, provide such insurance. Any sum so paid by the Secured
Party shall constitute obligations of the Debtor secured hereby which the Debtor
shall repay to the Secured Party on demand.
(b) Upon the occurrence of an Event of Default, the Secured Party shall
have, in addition to all other rights and remedies provided in this agreement or
otherwise, the remedies of a secured party under the Uniform Commercial Code,
including without limitation, the right to take possession of the Collateral,
and for that purpose the Secured Party may, so far as the Debtor can give
authority therefor, enter upon any premises upon which Secured Party may require
the Debtor to assemble the Collateral and make it available to the Secured Party
at a place to be designated by the Secured Party which is reasonably convenient
to the Secured Party. The Secured Party shall give the Debtor 45 days' notice of
the time and place of any public sale of any Collateral or of the time after
which any private sale or any other intended disposition is to be made, the
sufficiency of which notice is hereby acknowledged by the Debtor and Debtor
agrees that said notice period may be reduced to three days in the case of sale
of perishable inventory.
(c) The Debtor agrees that the Secured Party, in its discretion, may, after
an Event of Default (as hereinafter defined) has occurred, demand, xxx for,
collect and receive any money receivable in respect of any account, chattel
paper, instrument, documents or general intangible comprising the Collateral.
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3. General. The Secured Party's rights and remedies, whether-evidenced
hereby or by any other agreement, instrument or paper, shall be cumulative and
may be exercised singularly or concurrently. This agreement and all rights and
obligations hereunder, including matters of construction, validity and
performance, shall be governed by the laws of the State of New York. Any
provisions of this agreement prohibited by law shall be ineffective to the
extent of such prohibition without invalidating the remaining provisions hereof.
All rights of the Secured Party herein shall inure to the benefit of its
successors and assigns.
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IN WITNESS WHEREOF, the Debtor and the Secured Party have executed this
Agreement as of the 10th day of April, 1996.
DEBTOR:
ATTEST: MIKE'S ORIGINAL, INC.
_____________________ By:________________________
SECURED PARTY:
THE PENN TRAFFIC COMPANY
By: _______________________
20
AGREEMENT, dated as of January 1, 1997, between THE PENN
TRAFFIC COMPANY, a Delaware corporation ("PT"), and MIKE'S
ORIGINAL, INC., a Delaware corporation ("MOI").
W I T N E S S E T H:
WHEREAS, the parties hereto previously entered into a
Settlement Agreement ("Settlement Agreement") and a Credit
Agreement ("Credit Agreement"), each dated April 10, 1996 (the
"Agreements"); and
WHEREAS, the parties hereto desire to amend in certain
respects the Settlement Agreement and the Credit Agreement on the
terms hereinafter set forth.
NOW, THEREFORE, the parties hereto hereby agree as
follows:
1. MOI has heretofore furnished to PT a check in the
amount of $44,629, which amount represents the last payment due
under Subsection 2.01(b) of the Credit Agreement (including
interest), as well as two additional payments, in advance, for the
months of January and February 1997. In consideration of such
additional payments, MOI and PT have agreed to extend the date set
forth in Subsection 2.01(d) of the Credit Agreement from December
31, 1996 to February 28, 1997. Unless the public offering
contemplated by the Credit Agreement ("Offering") shall close prior
to March 1, 1997, all amounts outstanding under Subsection 2.01(d)
of the Credit Agreement, as well as all other outstanding amounts
due and payable by MOI to PT, shall be payable in full on March 1,
1997.
21
2. Should the Offering be concluded prior to March 1,
1997,then, directly from the proceeds of such Offering, PT shall
receive the following payments by certified or bank check or by
wire transfer:
(i) the outstanding account receivable balance
which, as of the date hereof, is $61,786.23;
(ii) The $75,000 payment described in Subsection
2.01(c) of the Credit Agreement;
(iii) The $150,000 payment also described in
Subsection 2.01(c) of the Credit Agreement, together with an
additional payment of $100,000 (such additional payment to be
applied to outstanding principal); and
(iv) All gross proceeds received in the public
offering in excess of $5,750,000.
3. Except as expressly modified hereby, the Settlement
Agreement and Credit Agreement shall remain in full force and
effect.
IN WITNESS WHEREOF, the undersigned have executed this
amendment this 30th day of January, 1997.
THE PENN TRAFFIC COMPANY
By:/s/Xxxxxxx X.Xxxxx, Xx.
Vice President
MIKE'S ORIGINAL, INC.
By:/s/Xxxxxxx Xxxxx
