TERM LOAN AGREEMENT
between
K.V. MART CO.
and
UNIFIED WESTERN GROCERS, INC.
Dated as of May 12, 2000
TABLE OF CONTENTS
Page
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1. DEFINITIONS AND INTERPRETATION....................................... 1
1.1 Defined Terms................................................... 1
1.2 Singular and Plural Terms....................................... 4
1.3 Accounting Principles........................................... 4
1.4 Exhibits Incorporated........................................... 4
1.5 References...................................................... 4
1.6 Other Terms..................................................... 4
1.7 Headings........................................................ 5
1.8 Conflicts....................................................... 5
2. THE LOAN............................................................. 5
2.1 Amount and Purpose.............................................. 5
2.2 Disbursements................................................... 5
2.3 Payment......................................................... 6
2.4 Reimbursement of Lender......................................... 6
3. LOAN DOCUMENTS....................................................... 7
3.1 Security Documents.............................................. 7
3.2 Guaranties and Security for Guaranties.......................... 7
3.3 Hazardous Materials Agreement................................... 8
4. CONDITIONS TO DISBURSEMENT........................................... 8
5. REPRESENTATIONS AND WARRANTIES....................................... 10
5.1 Formation, Qualifications and Compliance........................ 10
5.2 Execution and Performance of Loan Documents..................... 10
5.3 Financial and Other Information................................. 11
5.4 No Material Adverse Change...................................... 12
5.5 Tax Liability................................................... 12
5.6 Governmental Requirements....................................... 12
5.7 Rights of Others................................................ 13
5.8 Litigation...................................................... 13
5.9 Prior Liens..................................................... 13
6. COVENANTS............................................................ 13
6.1 Notice of Certain Matters....................................... 13
6.2 Additional Reports and Information.............................. 14
6.3 Inspections..................................................... 14
6.4 Further Assurances.............................................. 15
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6.5 Copies of Modifications and New Agreements..................... 15
6.6 Continued Existence............................................ 15
6.7 Annual Operating Statements.................................... 15
6.8 Period Operating Statements.................................... 15
6.9 Senior Loans................................................... 16
6.10 No Sale or Lease of Personal Property.......................... 16
6.11 Restrictions on Distributions.................................. 16
6.12 Mergers, Etc................................................... 16
6.13 Maintenance of Properties...................................... 16
6.14 Other Liens.................................................... 16
6.15 Additional Deeds of Trust...................................... 17
7. DEFAULTS AND REMEDIES............................................... 17
7.1 Events of Default.............................................. 17
7.2 Remedies Upon Default.......................................... 19
7.3 Cumulative Remedies; No Waiver................................. 20
7.4 Cure of Events of Default...................................... 20
8. MISCELLANEOUS....................................................... 21
8.1 Actions........................................................ 21
8.2 No Representations by Lender................................... 21
8.3 Indemnity...................................................... 21
8.4 Obligations Unconditional and Independent...................... 22
8.5 Survival of Representations and Warranties..................... 22
8.6 Notices........................................................ 22
8.7 No Third Parties Benefited..................................... 23
8.8 Binding Effect; Assignment of Obligations...................... 23
8.9 Counterparts................................................... 23
8.10 Prior Agreements; Amendments; Consents......................... 24
8.11 Governing Law.................................................. 24
8.12 Severability of Provisions..................................... 24
8.13 Time of the Essence............................................ 24
8.14 Civil Code Section 2822........................................ 24
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Section
EXHIBITS Reference
"A" Form of Note 1.1
"B" Legal Description of Property 1.1
"C" Description of Senior Lenders 1.1
"D" Leasehold Deed of Trust 3.1(a)
"E" Security Agreement (Personal Property) 3.1(b)
"F" Form of Guaranty 3.2
"G" Hazardous Materials Agreement 3.3
"H" Form of Amendment to Supply Agreement 4.1(l)
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TERM LOAN AGREEMENT
This Term Loan Agreement ("Agreement"), dated as of May __, 2000, is
between K.V. MART CO., a California corporation ("Borrower"), and UNIFIED
WESTERN GROCERS, INC., a California corporation ("Lender").
RECITALS
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A. Borrower is a member of Lender, a wholesale grocery cooperative,
and a customer of Lender.
B. Borrower has applied to Lender for a secured term loan upon the
terms and subject to the conditions set forth herein.
C. Lender is willing to make a term loan to Borrower upon the terms
and subject to the conditions set forth herein.
NOW THEREFORE, in consideration of the covenants and conditions herein
contained, the parties agree as follows:
1. DEFINITIONS AND INTERPRETATION.
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1.1 Defined Terms. As used in this Agreement (and in all other Loan
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Documents, unless otherwise defined), the following capitalized terms shall have
the following meanings:
"Affiliate" means, with respect to any Person, (a) any other Person
which directly or indirectly through one or more intermediaries controls, or is
controlled by, or is under common control with, (i) such Person or (ii) any
general partner, member or manager of such Person; (b) any other Person 5% or
more of the equity interest of which is held beneficially or of record by (i)
such Person or (ii) any general partner, member or manager of such Person; and
(c) any general or limited partner, member or manager of (i) such Person or (ii)
any general partner, member or manager of such Person. As used in the previous
sentence, "control" means the possession, directly or indirectly, of the power
to cause the direction of the management of a Person, whether through voting
securities, by contract, family relationship or otherwise.
"Business Day" means any Monday, Tuesday, Wednesday, Thursday or
Friday on which Lender is open and conducting its customary business operations
in the State of California.
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"Closing" means the day when the conditions to disbursement have been
satisfied or waived and the loan proceeds are disbursed.
"County" means the County in which the Property is located.
"Deeds of Trust" means the leasehold deeds of trust required pursuant
to this Agreement.
"Designated Representative" means a Person authorized by Borrower,
with the approval of Lender, to deliver certificates, requests for disbursements
and other documents on behalf of Borrower to Lender pursuant to the Loan
Documents.
"Disbursements" means disbursements by Lender of Loan funds.
"Event of Default" means any event so designated in this Agreement.
"Financing Statements" means, collectively, each UCC-1 financing
statement required pursuant to this Agreement.
"Fiscal Year" means Borrower's fiscal year, consisting of 52 weeks (53
weeks every 7 years) which most recently ended on March 23, 2000.
"Governmental Agency" means any governmental or quasi-governmental
agency, board, bureau, commission, department, court, administrative tribunal or
other instrumentality or authority, any central bank or comparable authority,
and any public utility.
"Guaranties" means, collectively, each guaranty required pursuant to
this Agreement and any guaranty pursuant to which any Person now or hereafter
partially or fully guarantees the payment or performance of any indebtedness or
other obligation to Lender under any Loan Document.
"Guarantors" means, collectively, Xxxxxxxx Xxxxxxx and Xxxxxxx
Xxxxxxx, husband and wife, Xxxxxxxx Xxxxxxx, as trustee of the Khaledi Family
Trust under declaration of Trust dated May 17, 1995, K.V. Property Company, a
California general partnership, and Xxxxxx Xxxxx and Xxxx Xxxxx, husband and
wife, and any other Person who now or hereafter partially or fully guarantees
the payment or performance of any indebtedness or other obligation to Lender
under any Loan Document.
"Hazardous Materials" means flammable explosives, radioactive
materials, hazardous wastes, toxic substances and similar substances and
materials, including all substances and materials defined as hazardous or toxic
wastes, substances or materials under any applicable law.
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"Improvements" means, collectively, all improvements and fixtures now
or hereafter comprising any portion of the Property.
"Loan" means the loan to be made by Lender to Borrower hereunder.
"Loan Documents" means, collectively, this Agreement, the Note, the
Security Documents, the Guaranties, the Amendment to Supply Agreement, the
Hazardous Material Agreement and any other document that Lender requires from
time to time to effectuate the purposes of this Agreement.
"Note" means that certain promissory note of even date herewith in the
original principal amount of $7,000,000, executed by Borrower in favor of Lender
to evidence the Loan, substantially in the form of Exhibit A hereto.
"Permitted Encumbrances" means, collectively, all matters listed on
Exhibit B as permitted title insurance exceptions, and all other liens,
restrictions and other title limitations hereafter approved by Lender in
writing.
"Permitted Liens" means, collectively, all liens on the Personal
Property, if any, granted by Borrower to California Bank and Trust and all other
liens on the Personal Property reflected on the UCC search dated April 18, 2000
to Lender.
"Person" means any entity, whether an individual, trustee,
corporation, partnership, limited liability company, trust, unincorporated
organization, Governmental Agency or otherwise.
"Personal Property" means all of Borrower's right, title and interest,
whether now existing or hereafter acquired, personal property now or hereafter
owned by Borrower, whenever located, and in the proceeds thereof.
"Property" means all of Borrower's right, title and interest, whether
now existing or hereafter acquired, as Lessee in and to the real property retail
leases described in Exhibit B.
"Property Agreement" means, any agreement entered into by Borrower or
any Guarantor with Persons other than Lender in connection with the Property.
"Secretary of State" means the Secretary of State of the State of
California.
"Security Agreement" means any security agreement required pursuant to
this Agreement.
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"Security Documents" means, collectively, the documents required
pursuant to Section 3.1 and any other mortgage, deed of trust, security
agreement or assignment now, heretofore or hereafter executed to secure the
obligations of Borrower or any Guarantor to Lender under any Loan Document.
"Senior Lender" means the lenders described in Exhibit C with respect
to the Borrower, any lender that succeeds to the position of Senior Lender by a
refinancing or refunding of the obligations due to the Senior Lender.
"Senior Loan Documents" means all of the instruments and documents
which evidence or secure loans by the Senior Lender to the Borrower or any
Guarantor.
1.2 Singular and Plural Terms. Any defined term used in the plural in any
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Loan Document shall refer to all members of the relevant class and any defined
term used in the singular shall refer to any number of the members of the
relevant class.
1.3 Accounting Principles. Any accounting term used and not specifically
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defined in any Loan Document shall be construed in conformity with, and all
financial data required to be submitted under any Loan Document shall be
prepared in conformity with, generally accepted accounting principles applied on
a consistent basis.
1.4 Exhibits Incorporated. All exhibits to this Agreement, as now
---------------------
existing and as the same may from time to time be modified, are incorporated
herein by this reference.
1.5 References. Any reference to any Loan Document or other document
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shall include such document both as originally executed and as it may from time
to time be modified. References herein to Articles, Sections and Exhibits shall
be construed as references to this Agreement unless a different document is
named. References to subparagraphs shall be construed as references to the same
Section in which the reference appears.
1.6 Other Terms. The term "document" is used in its broadest sense and
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encompasses agreements, certificates, opinions, consents, instruments and other
written material of every kind. The terms "including" and "include" mean
"including (include) without limitation." The requirement that any party
"deliver" any item to another party shall be construed to require that the first
party "deliver or cause to be delivered" such item to the second party. The term
"any," as a modifier to any noun, shall be construed to mean "any and/or all"
preceding the same noun in the plural. The term "agreement" includes both
written and oral agreements. The terms "modify" and "modification," when used
with reference to any document or obligation, include
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amendments, supplements, renewals, extensions, waivers, terminations and other
modifications of every kind. The terms "law" and "laws," unless otherwise
modified, mean, collectively, all federal, state and local laws, rules,
regulations, codes and administrative and judicial precedents. The terms
"herein," "hereunder" and other similar compounds of the word "here" refer to
the entire document in which the term appears and not to any particular
provision or section of the document. This Section 1.6 shall apply to all of the
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Loan Documents.
1.7 Headings. Article and section headings are included in the Loan
--------
Documents for convenience of reference only and shall not be used in construing
the Loan Documents.
1.8 Conflicts. In the event of any conflict between the provisions of
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this Agreement and those of any other Loan Document, this Agreement shall
prevail; provided however that, with respect to any matter addressed in both
such documents, the fact that one document provides for greater, lesser or
different rights or obligations than the other shall not be deemed a conflict
unless the applicable provisions are inconsistent and could not be
simultaneously enforced or performed.
2. THE LOAN.
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2.1 Amount and Purpose. Subject to the terms of this Agreement, Lender
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agrees to make, and Borrower agrees to take, a loan in the principal amount of
$7,000,000 (the "Loan"), evidenced by the Note, the proceeds of which shall be
used for (i) payoff of Lender's deferred trade receivables due from Borrower
together with accrued interest thereon with an estimated balance at May 5, 2000
of approximately $6,000,000; and (ii) general working capital.
2.2 Disbursements. The proceeds of the Loan shall be made available for
-------------
disbursement subject to the conditions set forth in Section 4.
2.3 Payment. Borrower shall repay the Loan in accordance with the
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provisions of the Note and this Agreement. Except as otherwise provided, all
payments shall be applied first to interest and then to principal. Prepayments,
if permitted or accepted, shall be applied against amounts owing in inverse
order of maturity. If any payment to be made by Borrower under any Loan Document
comes due on a day other than a Business Day, such payment shall instead be
considered due on the next succeeding Business Day, and such extension of time
shall be reflected in computing interest.
2.4 Reimbursement of Lender. Borrower shall reimburse Lender immediately
-----------------------
upon written demand for all costs reasonably incurred by Lender (including the
fees and expenses of attorneys, accountants and other outside experts
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retained by Lender) in connection with the negotiation, preparation, execution,
delivery, administration, modification, performance and enforcement of the Loan
Documents and all related matters, including the following:
(a) Title insurance premiums, realty tax services, recording fees,
filing fees, and release and reconveyance fees, if any.
(b) Funds advanced by Lender pursuant to any Loan Document in
connection with the performance by Lender of any obligation that Borrower has
failed to perform.
(c) All liabilities, losses and other costs incurred by Lender as a
direct or indirect result of any Event of Default.
(d) Lender's commencement of, appearance in or defense of any action
or proceeding purporting to affect the rights or obligations of the parties to
any Loan Document other than (i) Lender's defense of any action in which
Borrower is awarded a judgment against Lender and (ii) Lender's prosecution of
any action against Borrower in which Lender fails to obtain a judgment against
Borrower.
(e) All claims, demands, causes of action, liabilities, losses,
commissions, costs and expenses against which Lender is indemnified under the
Loan Documents.
Borrower's reimbursement obligations shall be part of the Loan and part of the
outstanding principal balance of the Note, shall bear interest at the rate
specified in the Note following written demand, and shall be secured by the
Security Documents, notwithstanding that such obligations may cause the
principal balance of the Note to exceed its face amount. Borrower's
reimbursement obligations shall survive the cancellation of the Note and the
release and reconveyance of the Security Documents, and shall bear interest and
be payable in accordance with the Note regardless of the fact that the Note is
canceled.
3. LOAN DOCUMENTS.
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3.1 Security Documents. In consideration of Lender's entry into this
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Agreement and as security for (i) the payment of all amounts owing by Borrower
to Lender under the Loan Documents, together with all modifications of any of
them (including extensions and renewals at different rates of interest and/or
evidenced by new or additional promissory notes), (ii) the performance of all
other obligations of Borrower under the Loan Documents, and (iii) the
performance of all other obligations now or hereafter owing to Lender (but only
when any such other obligation is evidenced by a document, executed at Lender's
request, which states that it is so secured), Borrower shall, at its sole
expense, deliver to Lender (and cause to be
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recorded, where appropriate) the following documents, each in such form and
substance, and executed by such Persons, as Lender requires:
(a) Leasehold Deeds of Trust encumbering all of Borrower's interest as
lessee under the Category A Leases as listed on Exhibit B hereto, substantially
in the form of the Leasehold Deed of Trust attached hereto as Exhibit D.
(b) a Security Agreement granting to Lender a second priority lien on
the Personal Property, substantially in the form of Exhibit E attached hereto;
(c) a UCC-1 Financing Statement perfecting the lien of the Security
Agreement; and
(d) All other documents reasonably required by Lender.
3.2 Guaranties and Security for Guaranties. In consideration of Lender's
--------------------------------------
entry into this Agreement, Borrower shall cause the Guarantors to deliver to
Lender Guaranties, substantially in the form attached hereto as Exhibit F,
pursuant to which each Guarantor guarantees the prompt payment of all amounts
owing to Lender under the Loan Documents and all other amounts now or hereafter
owing to Lender by Borrower.
3.3 Hazardous Materials Agreement. In consideration of Lender's entry
-----------------------------
into this Agreement, Borrower shall deliver to Lender an indemnity agreement
(the "Hazardous Materials Agreement"), substantially in the form attached hereto
as Exhibit G, pursuant to which Borrower agrees to defend, indemnify and hold
Lender harmless from and against all claims, liabilities, losses and other costs
arising in connection with Hazardous Materials located on or otherwise relating
to the Property and makes all representations, warranties and covenants required
by Lender with respect to Hazardous Materials. Notwithstanding any other
provision of any Loan Document, Borrower's obligations under such agreement
shall not be secured by the Deed of Trust or any other real property now or
---
hereafter assigned to Lender as security for any Loan Document.
4. CONDITIONS TO DISBURSEMENT. Lender's obligation to disburse the Loan is
--------------------------
subject to the following conditions precedent:
4.1 Lender shall have received each of the following in form and substance
satisfactory to Lender:
(a) the Note;
(b) the Security Documents, the Guaranties and the Hazardous
Materials Agreement;
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(c) a certified copy of a corporate resolution of Borrower
authorizing the execution and performance of the Loan Documents;
(d) copies of Borrower's articles and by-laws and all modifications
thereto, all certified to be true and complete by the secretary or an assistant
secretary of Borrower;
(e) a certificate of the secretary or an assistant secretary of
Borrower with respect to the incumbency of the officers who sign the Loan
Documents;
(f) for any Guarantor that is a partnership, a partnership borrowing
authorization, copies of the partnership agreement and all filed and recorded
statements and certificates of partnership (and all modifications),
authorizations of all partners that are entities, and a certificate of
incumbency with respect to any partner that is a corporation; for any Guarantor
that is a limited liability company, a borrowing authorization, copies of the
operating agreement and all filed articles of organization and similar documents
(and all modifications), authorizations of all members and managers that are
entities, and a certificate of incumbency with respect to any member or manager
that is a corporation; and for any Guarantor that is a corporation, a corporate
borrowing resolution, copies of the articles and by-laws, and a certificate of
incumbency;
(g) for any Guarantor that is the trustee of a trust, copies of all
applicable documents creating or defining such trust and evidence of the
authority of such Guarantor to execute the Guaranties and evidence of the
authority of the Person executing such documents on behalf of such Guarantor;
(h) all financial statements of Borrower and each Guarantor (i)
required by Lender or (ii) necessary to provide Lender with a true and complete
knowledge of the financial condition of Borrower and each Guarantor;
(i) a written opinion of Borrower's counsel (which counsel shall be
acceptable to Lender) covering all matters relating to Borrower, any Guarantor,
the Property and the Loan that Lender reasonably requires;
(j) a certification of Borrower's non-foreign status and a California
Form 590;
(k) an Intercreditor Agreement with California Bank & Trust in form
and substance satisfactory to Lender;
(l) an amendment to the Supply Agreement between Lender and Borrower
dated December 28, 1995, in the form of the Amendment to Supply Agreement
attached hereto as Exhibit H;
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(m) the originals of stock certificates, with stock powers endorsed
in blank, with respect to all outstanding shares of stock of Borrower to be
delivered to Grocers Capital Company, as pledgee; and
(n) all other documents reasonably required by Lender.
4.2 The Deeds of Trust with respect to the Category A Leases shall have
been recorded in the Official Records of the County.
4.3 All appropriate Financing Statements shall have been (a) filed with
each appropriate Secretary of State, and (b) recorded in the official records of
all appropriate counties.
4.4 Borrower shall, at its sole expense, have delivered to Lender
preliminary title reports with respect to each Category A Property listed on
Exhibit B reflecting title in condition satisfactory to Lender in its sole
discretion.
4.5 All representations and warranties set forth in the Loan Documents
shall be correct as of the date of the Disbursement as though made as of that
date, and Lender shall have received a certificate to that effect signed by a
Designated Representative.
4.6 No Event of Default shall remain uncured and no event shall have
occurred which, with the giving of notice or the passage of time or both, would
constitute an Event of Default, and Lender shall have received a certificate to
that effect signed by a Designated Representative.
5. REPRESENTATIONS AND WARRANTIES. As a material inducement to Lender's entry
------------------------------
into this Agreement, Borrower represents and warrants to Lender that:
5.1 Formation, Qualifications and Compliance. Borrower (a) is a
----------------------------------------
corporation validly existing and in good standing under the laws of the State of
California, (b) has all requisite authority to conduct its business and own and
lease its properties, and (c) is qualified and in good standing in every
jurisdiction in which the nature of its business makes qualification necessary
or where failure to qualify could have a material adverse effect on its
financial condition or the performance of its obligations under the Loan
Documents. Borrower is in compliance in all material respects with all laws and
requirements applicable to its business and has obtained all approvals,
licenses, exemptions and other authorizations from, and has accomplished all
filings, registrations and qualifications with, any Governmental Agency that are
necessary for the transaction of its business. Similarly, each Guarantor that is
not a natural person, if any, is validly existing and in good standing in all
appropriate jurisdictions, has all requisite authority to conduct its business
and own and lease its
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properties, and has complied with all applicable requirements of Governmental
Agencies.
5.2 Execution and Performance of Loan Documents.
-------------------------------------------
5.2.1 Borrower has and each Guarantor has all requisite authority to
execute, and to perform all of its or their obligations under, the Loan
Documents.
5.2.2 The execution by Borrower and each Guarantor of, and the
performance by Borrower and each Guarantor of their obligations under, each Loan
Document have been authorized by all necessary action and do not and will not:
(a) require any consent or approval not heretofore obtained of any
Person having any interest in Borrower or any Guarantor;
(b) violate any provision of, or require any consent or approval
not heretofore obtained under, any operating agreement, partnership agreement,
articles of incorporation, by-laws or other governing document applicable to
Borrower, any Guarantor, or any general partner, member or manager of any
Guarantor;
(c) result in or require the creation of any lien, claim, charge or
other right of others of any kind (other than under the Loan Documents) on or
with respect to any property now or hereafter owned or leased by Borrower or any
Guarantor;
(d) violate any provision of any law, order, writ, judgment,
injunction, decree, determination or award presently in effect; or
(e) constitute a breach or default under, or permit the
acceleration of obligations owed under, any contract, loan agreement, lease or
other agreement or document to which Borrower or any Guarantor is a party or by
which Borrower or any Guarantor or any of their property is bound.
5.2.3 Neither Borrower nor any Guarantor is in default, in any
respect that is materially adverse to Lender's interests under the Loan
Documents or that would have any material adverse effect on the financial
condition of Borrower or any Guarantor or the conduct of their business, under
any law, order, writ, judgment, injunction, decree, determination, award,
contract, lease or other agreement or document described in subparagraph (d) or
(e) of the previous Subsection.
5.2.4 No approval, license, exemption or other authorization from, or
filing, registration or qualification with, any Governmental Agency is required
in connection with:
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(a) the execution by Borrower and each Guarantor of their obligations
under the Loan Documents; and
(b) the creation of the liens described in the Loan Documents.
5.3 Financial and Other Information. All financial information furnished
-------------------------------
to Lender with respect to Borrower, each Guarantor and the Property in
connection with the Loan (a) is complete and correct in all material respects,
(b) accurately presents the financial condition of Borrower and each Guarantor
and (c) has been prepared in accordance with generally accepted accounting
principles consistently applied. All other documents and information furnished
to Lender with respect to Borrower and each Guarantor in connection with the
Loan are correct in all material respects and complete insofar as completeness
is necessary to give Lender an accurate knowledge of their subject matter.
Borrower has no material liability or contingent liability not disclosed to
Lender in writing and there is no material lien, claim, charge or other right of
others of any kind (including liens or retained security titles of conditional
vendors) on any property of Borrower not disclosed in such financial statements
or otherwise disclosed to Lender in writing. Without limiting the generality of
the foregoing, Borrower has furnished Lender with true and complete copies of
all Senior Loan Documents.
5.4 No Material Adverse Change. There has been no material adverse
--------------------------
change in the condition, financial or otherwise, of Borrower or any Guarantor
since the dates of the latest financial statements furnished to Lender. Since
those dates, Borrower has not entered into any material transaction not
disclosed in such financial statements or otherwise disclosed to Lender in
writing.
5.5 Tax Liability. Borrower has filed all required federal, state and
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local tax returns and has paid all taxes due (including interest and penalties)
other than taxes being promptly and actively contested in good faith and by
appropriate proceedings. Borrower is maintaining adequate reserves for tax
liabilities (including contested liabilities) in accordance with generally
accepted accounting principles.
5.6 Governmental Requirements. Borrower is in compliance with all laws
-------------------------
relating to the Property and is complying with the conditions of all licenses,
exemptions, approvals and other authorizations of Governmental Agencies that are
required in connection with the Property, including each of the following as
applicable:
(a) zoning, land use and planning requirements, including requirements
arising from, or relating to the adoption or amendment of, any applicable
general plan;
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(b) subdivision and parcel map requirements;
(c) environmental requirements, including requirements of the
California Environmental Quality Act and the National Environmental Policy Act
and the preparation and approval of all required environmental impact statements
and reports;
(d) requirements in connection with use, occupancy and building
permits; and
(e) requirements of public utilities.
5.7 Rights of Others. Borrower is in compliance with all covenants,
----------------
conditions, restrictions, easements, rights of way and other rights of third
parties relating to the Property.
5.8 Litigation. There are no material actions or proceedings pending or,
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to the best of Borrower's knowledge, threatened against or affecting Borrower or
any property of Borrower in any court or before any other Governmental Agency,
except as disclosed to Lender in writing prior to the execution of this
Agreement.
5.9 Prior Liens. Except for the liens of the Senior Lender or liens
-----------
disclosed in writing to Lender prior to the date of this Agreement, there are no
prior liens on the Property or the Personal Property.
6. COVENANTS. While any obligation of Borrower or any Guarantor under the
---------
Loan Documents remains outstanding, the following provisions shall apply, except
to the extent that Lender otherwise consents in writing:
6.1 Notice of Certain Matters. Borrower shall give notice to Lender,
-------------------------
within 7 days of Borrower's learning thereof, of each of the following:
(a) any uninsured litigation or claim affecting or relating to the
Property and involving an amount in excess of $10,000; and any litigation or
claim that might subject Borrower or any Guarantor to liability in excess of
$250,000, whether covered by insurance or not;
(b) any dispute between Borrower and any Governmental Agency relating
to the Property, the adverse determination of which might materially affect the
Property;
(c) any trade name hereafter used by Borrower and any change in
Borrower's principal place of business or chief executive offices;
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(d) any default by Borrower under any material Property Agreement, or
the receipt by Borrower of any notice of default under any material Property
Agreement;
(e) any default by Borrower under any Senior Loan Document, or the
receipt by Borrower of any notice of default under any Senior Loan Document;
(f) any Event of Default or event which, with the giving of notice or
the passage of time or both, would constitute an Event of Default; or
(g) any material adverse change in the financial condition of Borrower
or any Guarantor.
6.2 Additional Reports and Information. Borrower shall deliver to
----------------------------------
Lender, in form and substance reasonably satisfactory to Lender and within 10
days of Lender's request therefor from time to time, (a) copies of all financial
statements and reports that Borrower sends to its shareholders, (b) copies of
all reports which are available for public inspection or which Borrower is
required to file with any Governmental Agency, (c) a certificate setting forth
in reasonable detail all existing Events of Default, and events which, with the
giving of notice or the passage of time or both, would constitute Events of
Default, (d) all compliance certificates delivered to Senior Lenders, (e) any
notice of default delivered to Borrower, or any amendment or waiver, with
respect to the Senior Loan Documents (f) all other information relating to
Borrower, the Property, any Guarantor or the Loan reasonably required by Lender
from time to time. At least 30 days prior to the sale or closure of any store
that is operated by Borrower, Borrower shall provide advanced written notice to
Lender of such sale or closure.
6.3 Inspections. Borrower shall, at reasonable times and following
-----------
reasonable notice (except in emergencies), permit Lender and its representatives
to conduct inspections of the Property, and inspect and copy any books and
records relating to the business or Borrower, for the purpose of monitoring
Borrower's compliance with its obligations under the Loan Documents.
6.4 Further Assurances. Borrower shall execute and acknowledge (or cause
------------------
to be executed and acknowledged) and deliver to Lender all documents, and take
all actions, reasonably required by Lender from time to time to confirm the
rights created or now or hereafter intended to be created under the Loan
Documents, to protect and further the validity, priority and enforceability of
the Security Documents, to subject to the Security Documents any property
intended by the terms of any Loan Document to be covered by the Security
Documents, or otherwise to carry out the purposes of the Loan Documents and the
transactions contemplated thereunder.
-13-
6.5 Copies of Modifications and New Agreements. Borrower shall promptly
------------------------------------------
deliver to Lender a copy of any supplement or modification to any document
delivered to Lender pursuant to this Agreement, and a copy of each additional
material Property Agreement entered into subsequent to the execution of this
Agreement.
6.6 Continued Existence. Borrower shall maintain its existence and
-------------------
6.7 Annual Operating Statements. Borrower shall deliver to Lender,
---------------------------
within 90 days after the end of each Fiscal Year, (a) an audited balance sheet
for Borrower as of the end of such Fiscal Year and a statement of profit and
loss for Borrower's operations, together with all supporting schedules and (b)
certificates of Borrower's chief financial officer and a certified public
accountant acceptable to Lender that such documents (i) were prepared in
accordance with generally accepted accounting principles applied on a consistent
basis, (ii) fairly present Borrower's financial condition, (iii) show all
material liabilities, direct and contingent, and (iv) fairly present the results
of Borrower's operations.
6.8 Period Operating Statements. Borrower shall deliver to Lender, within
---------------------------
30 days after the end of each period, a balance sheet as of the end of the
period and statements of profit and loss and cash flow for the period. Such
period statements shall contain all information reasonably required by Lender.
6.9 Senior Loans. Borrower shall timely perform its obligations under the
------------
Senior Loan Documents and shall not cause or permit the occurrence of any
default under any such document.
6.10 No Sale or Lease of Personal Property. Borrower shall not sell,
-------------------------------------
lease or otherwise transfer any interest in the Personal Property other than in
the ordinary course of business without the prior written consent of Lender,
unless Borrower provides Lender with collateral of equal value to the Personal
Property being sold, leased, or otherwise transferred; provided that any sale,
lease or transfer in connection with the sale of a store which is permitted in
writing by the Senior Lender shall be deemed consented to by Lender.
6.11 Restrictions on Distributions. Borrower will not pay any dividends or
-----------------------------
make any distributions on or with respect to any of its capital stock or
purchase or redeem any of its capital stock or issue any shares of capital stock
of any class provided that any distribution which is permitted by the Senior
Lender shall be deemed consented to by Lender.
6.12 Mergers, Etc. Borrower will not participate in any merger or
-------------
consolidation or alter or amend its capital structure.
-14-
6.13 Maintenance of Properties. Borrower will maintain all of its
-------------------------
properties and assets in good order, condition and repair and will maintain
insurance in such amounts and against such risks as Lender may reasonably
require. Borrower shall duly pay and discharge all taxes, assessments and
governmental charges upon it or against its properties prior to the date
penalties are attached thereto, unless and to the extent only that the same
shall be contested in good faith and by appropriate proceedings. Borrower shall
(i) timely make all payments due pursuant to any Property Agreement; and (ii)
timely perform all other obligations pursuant to any Property Agreement.
6.14 Other Liens. Not to create, assume, or allow any security interest
-----------
or lien (including judicial liens) on property Borrower now or later owns,
except:
(a) Liens or security interests which currently exist in favor of
Senior Lender or Lender;
(b) Liens for taxes not yet due;
(c) Liens outstanding on the date of this Agreement disclosed in
writing to Lender prior to the execution of this Agreement; and
(d) Purchase money liens and liens with respect to the lease or
purchase of personal property subsequent to the date of this Agreement.
6.15 Additional Deeds of Trust. Borrower shall:
-------------------------
(a) Promptly secure and deliver to Lender a Deed of Trust, Landlord
Consent and Memorandum of Lease with respect to each Category B Property if at
the date six months from the date of this Agreement such property is operated by
Borrower;
(b) Secure and promptly deliver to lender a Deed of Trust, Landlord
Consent and Memorandum of Lease with respect to Category C Properties upon
completion of refinancing of such Category C Property subsequent to the date
hereof;
(c) Use its best efforts to secure and deliver to Lender a Deed of
Trust, Landlord Consent and Memorandum of lease with respect to each Category D
Property.
For purposes of this Section 6.15, each Deed of Trust, Landlord Consent and
Memorandum of Lease shall be fully executed and in recordable form. Use of
"best efforts" shall not obligate Borrower to pay funds to any landlord or to
modify the Lease terms in any manner which is adverse to Borrower as the tenant;
provided, however, that in the event any landlord demands modification of any
Lease terms,
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Borrower shall give Lender written notice of such demands and Lender may, in its
sole discretion, elect to satisfy such demands on behalf of, and with no
obligation to, or cost to, Borrower.
7. DEFAULTS AND REMEDIES.
---------------------
7.1 Events of Default.
-----------------
The occurrence of any of the following, whatever the reason therefor, shall
constitute an Event of Default:
(a) Borrower fails to make any regularly scheduled payment of
principal or interest under the Note; or
(b) Borrower, any Guarantor or any other person fails to pay any
amount owing to Lender under any Loan Document (other than scheduled Note
payments), or fails to perform any other obligation under any Loan Document
which consists of an obligation to pay an amount owing to a third party, within
10 days after receipt of written notice; or
(c) Borrower, any Guarantor or any other person fails to perform any
obligation to Lender under any Loan Document (other than obligations described
in subparagraphs (a) and (b), above) within 30 days after receipt of written
notice; provided that, if cure cannot reasonably be effected within such 30-day
period, such failure shall not be an Event of Default so long as Borrower or
such Guarantor or other person promptly commences cure (in any event, within 10
days after receipt of such notice), thereafter diligently prosecutes such cure
to completion, and completes such cure within 60 days after receipt of such
notice; or
(d) Any representation or warranty in any Loan Document proves to have
been incorrect in any material respect when made; or
(e) Borrower or any Guarantor that is not a natural person is
dissolved, liquidated or terminated, or all or substantially all of the assets
of Borrower or any Guarantor are sold or otherwise transferred without Lender's
prior written consent; or
(f) Borrower or any Guarantor is the subject of an order for relief by
a bankruptcy court, or is unable or admits its inability to pay its debts as
they mature, or makes an assignment for the benefit of creditors; or Borrower or
any Guarantor applies for or consents to the appointment of any receiver,
trustee, custodian, conservator, liquidator, rehabilitator or similar officer
for it or any part of its property; or any receiver, trustee, custodian,
conservator, liquidator, rehabilitator or similar officer is appointed without
the application or consent of Borrower or any Guarantor, as the case may be, and
the appointment continues undischarged or unstayed for 60 days; or Borrower or
any Guarantor institutes or consents to any bankruptcy,
-16-
insolvency, reorganization, arrangement, readjustment of debt, dissolution,
custodianship, conservatorship, liquidation, rehabilitation or similar
proceeding relating to it or any part of its property; or any similar proceeding
is instituted without the consent of Borrower or any Guarantor, as the case may
be, and continues undismissed or unstayed for 60 days; or any judgment, writ,
warrant of attachment or execution, or similar process is issued or levied
against any property of Borrower or any Guarantor and is not released, vacated
or fully bonded within 30 days after its issue or levy; or
(g) Any Guaranty is revoked or terminated without Lender's prior
written consent, or any Guarantor claims that its Guaranty is ineffective or
unenforceable, in whole or in part and for any reason, with respect to amounts
then outstanding or amounts that might in the future be outstanding; or
(h) A default occurs under any Senior Loan Document, subject to any
applicable cure period set forth therein; or
(i) Borrower or any Guarantor defaults in any obligation to Lender
other than in connection with the Loan, subject to any applicable cure
period(s).
(j) Borrower fails to pay for inventory purchased from Lender in
accordance with Standard Terms as defined in the Supply Agreement.
(k) Borrower fails at any time to maintain in good standing its status
as a member-patron of Lender and to fully comply with all such rules,
regulations and policies for the servicing of accounts as may be established
from time to time by Lender.
(l) Any transfer or change in ownership or control of a controlling
percentage of the capital stock of Borrower. The phrase "controlling
percentage" means the direct or indirect beneficial ownership of, or the direct
or indirect right to vote or dispose of, capital stock possessing at least fifty
percent (50%) of the total combined voting power of all classes of Borrower's
capital stock issued, outstanding, and entitled to vote for the election of
directors.
7.2 Remedies Upon Default. Upon the occurrence of any Event of Default,
---------------------
Lender may, at its option and in its absolute discretion, do any or all of the
following:
(a) Terminate the disbursement or release of Loan proceeds and apply
all or any part of such proceeds as Lender reasonably deems appropriate to
fulfill Loan Document obligations which Borrower does not timely perform and/or
to protect Lender's interests under the Loan Documents;
-17-
(b) By written notice to Borrower, declare the principal of all
amounts owing under the Loan Documents, and all other indebtedness of Borrower
to Lender, together with all accrued interest and other amounts owing in
connection therewith, to be immediately due and payable, regardless of any other
specified due date; provided that any Event of Default described in Section
7.1(f) shall automatically, without notice or other action on Lender's part,
------
cause all such amounts to be immediately due and payable; and
(c) Exercise any of its rights under the Loan Documents and any rights
provided by law, including the right to foreclose on any collateral and exercise
any other rights with respect to any security, all in such order and manner as
Lender elects in its absolute discretion.
7.3 Cumulative Remedies; No Waiver. Lender's rights and remedies under
------------------------------
the Loan Documents are cumulative and in addition to all rights and remedies
provided by law from time to time, and each such right or remedy may be
exercised, concurrently or independently, from time to time and as often as
Lender deems expedient. The exercise by Lender of any right or remedy shall not
constitute a cure or waiver of any default, nor invalidate any notice of default
or any act done pursuant to any such notice, nor prejudice Lender in the
exercise of any other right or remedy. No waiver of any default shall be implied
from any omission by Lender to take action on account of such default if such
default persists or is repeated. No waiver of any default shall affect any
default other than the default expressly waived, and any such waiver shall be
operative only for the time and to the extent stated. No waiver of any provision
of any Loan Document shall be construed as a waiver of any subsequent breach of
the same provision. Lender's consent to or approval of any act by Borrower
requiring further consent or approval shall not be deemed to waive or render
unnecessary Lender's consent to or approval of any subsequent act. Lender's
acceptance of the late performance of any obligation shall not constitute a
waiver by Lender of the right to require prompt performance of all further
obligations; Lender's acceptance of any performance following the sending or
filing of any notice of default shall not constitute a waiver of Lender's right
to proceed with the exercise of its remedies for any unfulfilled obligations;
and Lender's acceptance of any partial performance shall not constitute a waiver
by Lender of any rights relating to the unfulfilled portion of the applicable
obligation.
7.4 Cure of Events of Default. Notwithstanding the fact that a curable
-------------------------
default by Borrower under the Loan Documents does not become an "Event of
-----
Default" until the applicable cure period, if any, has elapsed, various
provisions of the Loan Documents include the phrase, "while any Event of Default
remains uncured," or otherwise imply that Events of Default may be cured. No
such provision shall be construed to give Borrower any right to cure any Event
of Default. Notwithstanding the fact that the Loan Documents do not permit
Borrower to cure any Event of Default,
-18-
however, any Event of Default shall be deemed cured in the event that (a)
Lender, in its absolute discretion, elects to accept a cure and acknowledges to
Borrower in writing that such Event of Default shall be deemed fully cured, or
(b) any applicable law provides Borrower with an absolute right (which by law
may neither be waived by Borrower nor conditioned upon Lender's consent) to cure
such Event of Default and Borrower timely performs all actions required by such
law to effect such cure.
8. MISCELLANEOUS.
-------------
8.1 Actions. Lender shall have the right to commence, appear in and
-------
defend any action or proceeding relating to the rights or obligations of the
----------
parties to any Loan Document.
8.2 No Representations by Lender. By accepting or approving anything
----------------------------
required to be performed or given to Lender under the Loan Documents, including
any certificate, financial statement, survey, appraisal or insurance policy,
---------
Lender shall not be deemed to have warranted or represented the sufficiency or
legal effect of the same, and no such acceptance or approval shall constitute a
warranty or representation by Lender to anyone.
8.3 Indemnity. Borrower shall defend, indemnify and hold harmless Lender
---------
and its directors, officers, agents and employees (collectively, the
--------
"indemnitees") from and against:
(a) all claims, demands and causes of action asserted against any
indemnitee by any Person if the claim, demand or cause of action directly or
indirectly relates to (i) a claim, demand or cause of action that the Person has
or asserts against Borrower or any Guarantor; (ii) the payment of any
commission, charge or brokerage fee incurred in connection with the Loan; (iii)
any act or omission of Borrower or any other Person with respect to the
Property; or (iv) the ownership, occupancy or use of the Property; and
(b) all liabilities, losses and other costs (including court costs and
attorneys' fees) incurred by any indemnitee as a result of any claim, demand or
cause of action described in subparagraph (a).
Lender's indemnity rights shall not be limited, prejudiced or impaired in any
way by any finding or allegation that Lender's conduct is active, passive or
subject to any other classification or that Lender is directly or indirectly
responsible under any theory for any act or omission by Borrower or any other
Person. Notwithstanding the foregoing, Borrower shall not be obligated to
indemnify Lender with respect to the consequences of any act of gross negligence
or willful misconduct which Lender is determined by a court of competent
jurisdiction (sustained on appeal, if any) to have committed.
-19-
Borrower's obligations under this Section shall survive the cancellation of the
Note and the release and reconveyance of the Security Documents.
8.4 Obligations Unconditional and Independent. Borrower's obligations
-----------------------------------------
under the Loan Documents are unconditional and independent and shall be
---------
performed in accordance with the Loan Documents under all circumstances.
Notwithstanding the existence at any time of any obligation or liability of
Lender to Borrower, or any other claim by Borrower against Lender, in connection
with the Loan or otherwise, Borrower hereby waives any right it might otherwise
have (a) to offset any such obligation, liability or claim against Borrower's
obligations under the Loan Documents or (b) to claim that the existence of any
such outstanding obligation, liability or claim excuses the nonperformance by
Borrower of any of its obligations under the Loan Documents.
8.5 Survival of Representations and Warranties. All representations and
------------------------------------------
warranties of Borrower and each Guarantor in the Loan Documents shall survive
the making of the Loan and have been or will be relied on by Lender
notwithstanding any investigation made by Lender.
8.6 Notices. All notices, demands, approvals and other communications
-------
provided for in the Loan Documents shall be in writing and be delivered to the
appropriate party at its address as follows:
If to Borrower:
K.V. Mart Co.
0000 Xxxx Xxxxxx Xxxxxx Xxxx
Xxxxxx, Xxxxxxxxxx 00000-0000
Attention: Xx. Xx Xxxx
Senior Vice President and
Chief Financial Officer
with a copy to:
Xxxxx X. Xxxxxx, Esquire
00000 Xxxxxxxxx Xxxxxxxxx, Xxxxx 000
Xxxxxxxx, XX 00000
-20-
If to Lender:
Unified Western Grocers, Inc.
0000 Xxxxxx Xxxxxx
Xxxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxx X. Xxxx, Xx.
Executive Vice President,
General Counsel and Secretary
with a copy to:
Sheppard, Mullin, Xxxxxxx & Xxxxxxx LLP
000 Xxxxx Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxx X. Xxxxxx, Esquire
Addresses for notice may be changed from time to time by written notice to all
other parties. All communications shall be effective when actually received;
provided, however, that nonreceipt of any communication as the result of a
change of address of which the sending party was not notified or as the result
of a refusal to accept delivery shall be deemed receipt of such communication.
8.7 No Third Parties Benefited. This Agreement is made for the purpose of
--------------------------
setting forth rights and obligations of Borrower and Lender, and no other Person
shall have any rights hereunder or by reason hereof.
8.8 Binding Effect; Assignment of Obligations. This Agreement shall bind,
-----------------------------------------
and shall inure to the benefit of, Borrower and Lender and their respective
successors and assigns. Borrower shall not assign any of its rights or
obligations under any Loan Document without the prior written consent of Lender,
which consent may be withheld in Lender's absolute discretion. Any such
assignment without such consent shall, at Lender's option, be void.
8.9 Counterparts. Any Loan Document other than the Note may be executed
------------
in counterparts and any party may execute any counterpart, each of which shall
be deemed to be an original and all of which, taken together, shall be deemed to
be one and the same document. The execution of any Loan Document by any party
shall not become effective until such document is executed by all of the parties
thereto.
8.10 Prior Agreements; Amendments; Consents. This Agreement (together with
--------------------------------------
the other documents executed pursuant hereto) contains the entire agreement
between Lender and Borrower with respect to the Loan, and all prior
negotiations, understandings and agreements are superseded by this Agreement. No
modification of
-21-
any Loan Document (including waivers of rights and conditions) shall be
effective unless in writing and signed by the party against whom enforcement of
such modification is sought, and then only in the specific instance and for the
specific purpose given.
8.11 Governing Law. All of the Loan Documents shall be governed by, and
-------------
construed and enforced in accordance with, the laws of the State of California.
8.12 Severability of Provisions. No provision of any Loan Document that is
--------------------------
held to be unenforceable or invalid shall affect the remaining provisions, and
to this end all provisions of the Loan Documents are hereby declared to be
severable.
8.13 Time of the Essence. Time is of the essence of all of the Loan
-------------------
Documents.
8.14 Civil Code Section 2822. In the event that, at any time, any surety
-----------------------
exists that is liable upon only a portion of Borrower's obligations under the
Loan Documents and Borrower provides partial satisfaction of any such
obligation(s), Borrower hereby waives any right it would otherwise have, under
Section 2822 of the California Civil Code, to designate the portion of the
obligation to be satisfied. The designation of the portion of the obligation to
be satisfied shall, to the extent not expressly made by the terms of the Loan
Documents, be made by Lender rather than Borrower.
[END OF TEXT]
-22-
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date first written above.
"Borrower":
K.V. MART CO.
By: _____________________________________
_____________________________________
[Printed Name and Title]
"Lender":
UNIFIED WESTERN GROCERS, INC.
By: _____________________________________
_____________________________________
[Printed Name and Title]
-23-
Exhibit A
Form of Note
EXHIBIT A
Page 1 of __
EXHIBIT B
(Description of Property)
-----------------------
Category A. Properties:
Stores 6, 7, 9, 11 and 12 per the attached list.
Permitted Encumbrances:
Encumbrances reflected on the preliminary title reports for Stores 6, 7, 9,
11 and 12 delivered to Lender prior to Closing.
Category B. Properties
Store 10 per the attached list
Permitted Encumbrances:
Encumbrances reflected on the preliminary title reports for Store 10
delivered to Lender prior to Closing.
Category C. Properties:
Stores 33, 34 and 35 per the attached list.
Permitted Encumbrances:
Encumbrances reflected on the preliminary title reports for Stores 33, 34
and 35 to be delivered to Lender promptly following financing of the
properties with NCB.
Category D. Properties:
Stores 3, 4, 14, 15, 16, 17, 18, 19, 21, 22 and 37.
Permitted Encumbrances:
Encumbrances of record when the Leasehold Deed of Trust is recorded.
EXHIBIT B
Page 1 of __
EXHIBIT C
Senior Lenders
--------------
California Bank & Trust
National Cooperative Bank
EXHIBIT C
Page 1 of __
Exhibit D
Leasehold Deed of Trust
-----------------------
EXHIBIT D
Page 1 of __
Exhibit E
Security Agreement (Personal Property)
--------------------------------------
EXHIBIT E
Page 1 of __
Exhibit F
Form of Guaranty
----------------
EXHIBIT F
Page 1 of __
Exhibit G
Hazardous Materials Agreement
-----------------------------
EXHIBIT G
Page 1 of __
Exhibit H
Form of Amendment to Supply Agreement
-------------------------------------
EXHIBIT H
Page 1 of __
