EXHIBIT 99.1
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WAIVER AND FORBEARANCE AGREEMENT
WAIVER AND FORBEARANCE AGREEMENT dated as of August 30, 2002 (the
"AGREEMENT"), among The Penn Traffic Company, Dairy Dell, Inc., Big M
Supermarkets Inc. and Xxxxx Xxxxxxx Baking Company Inc. (individually and
collectively, the "BORROWERS"), the Lenders (as defined below) and Fleet Capital
Corporation as Administrative Agent (the "AGENT"). This Agreement is made with
reference to the Revolving Credit and Term Loan Agreement dated as of June 29,
1999 (as the same has been and may be further amended, supplemented or modified
from time to time in accordance with its terms, the "CREDIT AGREEMENT"), among
the Borrowers, the Lenders party thereto (the "LENDERS"), the Agent, GMAC
Business Credit LLC as documentation agent ("GMAC") and AmSouth Bank and Bank of
America Trust and Savings Association as co-agents (together with GMAC, the
"ADDITIONAL AGENTS"). Capitalized terms used herein and not otherwise defined
shall have the meanings assigned to such terms in the Credit Agreement.
WHEREAS, the Borrowers, the Lenders, the Agent and the Additional
Agents are parties to the Credit Agreement;
WHEREAS, the Borrowers have (i) informed the Agent and the Lenders that
certain Events of Default currently exist, may exist or may arise under the
Credit Agreement and (ii) requested that the Agent and the Lenders temporarily
waive the effect of such Events of Default and forbear from exercising their
rights and remedies under the Credit Agreement;
NOW THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:
SECTION I. WAIVER; FORBEARANCE
1.01 ACKNOWLEDGMENT OF EVENTS OF DEFAULT. The Borrowers represent,
acknowledge and agree that (a) because of an accounting misstatement resulting
primarily from an inventory overstatement continuing for approximately three
years and three months in the Borrowers' Xxxxx Xxxxxxx baking operation, certain
Events of Default have or may have occurred and be continuing, and may arise
prior to the Forbearance Termination Date (as hereinafter defined), under the
Credit Agreement on account of such inventory overstatement, and (b) the
Borrowers may currently and/or prior to the Forbearance Termination Date be out
of compliance with one or more of Sections 8.14, 8.15, 8.16 and 8.17 of the
Credit Agreement which noncompliance would now or hereafter constitute one or
more Events of Default (as so described or specified in clauses (a) and (b),
collectively, the "DESIGNATED EVENTS OF DEFAULT"). The Borrowers also
acknowledge and agree that, but for the terms of this Agreement, the Agent and
the Lenders may, if they so elect, proceed to enforce their rights and remedies
under the Loan Documents. In addition, the Borrowers acknowledge and agree that
as a result of the Designated Events of Default, the Lenders are under no
obligation to advance additional funds to the Borrowers pursuant to the Credit
Agreement.
1.02 WAIVER; FORBEARANCE. Subject to all of the terms and
conditions set forth herein, the Agent and each of the Lenders agree to waive
the Designated Events of Default and
agree to forbear from exercising their rights and remedies under the Credit
Agreement and the other Loan Documents with respect to the Designated Events of
Default until that date (the "FORBEARANCE TERMINATION DATE") which is the
earliest to occur of (a) the failure after the date hereof of the Borrowers to
comply with any of the terms or conditions set forth in the Credit Agreement
and/or the other Loan Documents (except as waived by this Agreement), (b) the
occurrence after the date hereof of any Event of Default other than the
Designated Events of Default, (c) the failure of the Borrowers to comply with
any term set forth in this Agreement, including, without limitation, the
Borrowers' undertakings set forth in Section 5 hereof, (d) the date that the
Borrowers, any affiliate of the Borrowers or any person or entity claiming by or
through the Borrowers joins in, assists, cooperates or participates as an
adverse party or adverse witness in any suit or other proceeding against the
Agent, the Lenders the Additional Agents or any affiliate of the Agent or any
Lender or any Additional Agent relating to the indebtedness referred to as the
Obligations or any amounts owing hereunder in connection with or related to any
of the transactions contemplated by the Credit Agreement, the other Loan
Documents, this Agreement or any documents, agreements or instruments executed
in connection with this Agreement, and (e) October 31, 2002. For purposes of
greater clarity, during the period from the date hereof to the Forbearance
Termination Date, the Borrowers may borrow, repay and reborrow Revolving
Borrowings, subject to the terms, provisions and limitations set forth herein
and in the Credit Agreement (except as waived by this Agreement). On and after
the Forbearance Termination Date, the Agent and the Lenders may proceed, in
accordance with the terms of the Credit Agreement, to enforce any or all of
their rights under or in respect of this Agreement, the Credit Agreement, the
other Loan Documents and applicable law, including, without limitation, the
right to require that the Borrowers repay immediately the Notes.
SECTION II. RATIFICATION OF EXISTING AGREEMENTS
2.01 All of the representations and warranties made by the
Borrowers in the Credit Agreement and the other Loan Documents are true and
correct on the date hereof as if made on and as of the date hereof, except to
the extent that any of such representations and warranties relate by their terms
to a prior date or relate to the Borrowers' representations or warranties or
compliance with covenants the breach of which has caused or may cause one or
more Designated Events of Default.
2.02 The Borrowers agree that the Obligations of the Borrowers to
the Agent and each of the Lenders as evidenced by or otherwise arising under the
Credit Agreement and the other Loan Documents (except as waived by this
Agreement) are, by the Borrowers' execution of this Agreement, ratified and
confirmed in all respects.
2.03 The Borrowers acknowledge and agree that all of their
obligations arising under and relating to this Agreement constitute Obligations
under the Credit Agreement.
SECTION III. CONDITIONS PRECEDENT
The Agent's and each of the Lenders' waivers and forbearance
obligations hereunder shall be subject to the fulfillment of the following
conditions on the date hereof:
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3.01 All representations and warranties contained in this Agreement
or otherwise made in writing to the Agent in connection herewith shall be true
and correct.
3.02 No unwaived event shall have occurred which constitutes an
Event of Default under the Credit Agreement (other than the Designated Events of
Default) or would constitute such an Event of Default but for the requirement
that notice be given or time elapse or both.
3.03 The Borrowers shall have delivered to the Agent for the
benefit of each of the Lenders the Forbearance Fee (as such term is defined in
Section 5.04 hereof).
3.04 The Borrowers and the Required Lenders shall have executed and
delivered this Agreement to the Agent.
3.05 The Agent shall have received satisfactory evidence that all
corporate action necessary for the valid execution and delivery by the Borrowers
of this Agreement and any and all other agreements and documents contemplated
pursuant to the transactions contemplated by this Agreement and the performance
of the transactions contemplated hereby and thereby shall have been taken.
3.06 The Agent shall have received from the Borrowers such other
approvals, opinions of counsel or documents as the Agent may reasonably request,
which shall be in form and substance reasonably satisfactory to the Agent.
SECTION IV. COVENANTS OF THE BORROWERS
The Borrowers covenant and agree with the Agent and each of the Lenders
as follows:
4.01 COMPLIANCE WITH LOAN DOCUMENTS. The Borrowers shall comply and
continue to comply with all of the terms, covenants and provisions contained in
the Loan Documents and any other instruments evidencing or creating any of the
Obligations except as such terms, covenants and provisions are expressly
modified by this Agreement.
4.02 CERTAIN COVENANTS. Notwithstanding the waivers provided in
Section 1.02 of this Agreement, and without limitation of Section 4.01 hereof,
the Borrowers shall continue to perform their obligations under Article 7 of the
Credit Agreement; provided, that any information, reports or statements
delivered thereunder (including certifications), may be qualified to the extent
that the accuracy thereof is affected by any circumstances underlying any
Designated Events of Default.
SECTION V. MISCELLANEOUS
5.01 The Borrowers jointly and severally represent and warrant
(which representations and warranties shall survive the execution and delivery
hereof) to the Agent and each of the Lenders that:
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(a) Such party has the power and authority to execute,
deliver and carry out the terms and provisions of this Agreement and the
transactions contemplated hereby and has taken or caused to be taken all
necessary action to authorize the execution, delivery and performance of this
Agreement and the transactions contemplated hereby;
(b) No consent of any other person, and no action of, or
filing with any governmental or public body or authority is required to
authorize, or is otherwise required in connection with the execution, delivery
and performance of this Agreement by such party;
(c) This Agreement has been duly executed and delivered
on behalf of such party by a duly authorized officer of such party, and
constitutes the legal, valid and binding obligation of such party enforceable in
accordance with its terms, subject to bankruptcy, reorganization, insolvency,
moratorium and other similar laws affecting the enforcement of creditors' rights
generally and the exercise of judicial discretion in accordance with general
principles of equity;
(d) The execution, delivery and performance of this
Agreement will not violate any law, statute or regulation or any order or decree
of any court or governmental instrumentality, or conflict with, or result in the
breach of, or constitute a default under any contractual obligation of such
party; and
(e) (i) On and as of the date hereof and giving effect to
this Agreement, (x) no Event of Default has occurred under the Credit Agreement,
and (y) no default or event of default has occurred under the Senior Notes
Indenture, and (ii) giving effect to this Agreement no default or event of
default will occur under the Senior Notes Indenture through the Forebearance
Termination Date on account of the circumstances underlying the Designated
Events of Default.
5.02 NO PRESENT CLAIMS. The Borrowers acknowledge and agree that,
as of the date hereof in respect of the Loan Documents and transactions
thereunder: (a) none of the Borrowers or any of their affiliates has any claim
or cause of action against any of the Lenders or the Agent or the Additional
Agents (or any of their directors, officers, employees, attorneys or agents);
(b) none of the Borrowers or any of their affiliates has offset rights,
counterclaims or defenses of any kind against any of their obligations,
indebtedness or liabilities to any of the Lenders or the Agent; and (c) each of
the Lenders, the Agent and the Additional Agents have heretofore properly
performed and satisfied in a timely manner all of their obligations to the
Borrowers and each of their affiliates. The Lenders, the Agent and the
Additional Agents wish (and the Borrowers agree) to eliminate any possibility
that any past conditions, acts, omissions, events, circumstances or matters in
respect of the Loan Documents and transactions thereunder (except as waived by
this Agreement), would impair or otherwise adversely affect any of the rights,
interests, contracts, collateral security or remedies of the Lenders, the Agent
and the Additional Agents. Therefore, the Borrowers, on their behalf and on
behalf of each of their respective successors and assigns, hereby waive, release
and discharge the Lenders, the Agent and the Additional Agents and all of their
directors, officers, employees, attorneys and agents, from any and all claims,
demands, actions or causes of action arising out of or in any way relating to
the Loan Documents and any documents, instruments, agreements (including this
Agreement), dealings or other matters connected with the Loan Documents,
including, without limitation, all known and unknown matters, claims,
transactions or things occurring on or prior
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to the date of this Agreement related to the Loan Documents. The waivers,
releases, and discharges in this paragraph shall be effective regardless of any
other event that may occur or not occur on or after the date hereof.
5.03 NO WAIVER. Except as otherwise expressly provided for in this
Agreement, nothing in this Agreement shall extend to or affect in any way any of
the rights or obligations of the Borrowers or any of the Agent's or the Lenders'
obligations, rights and remedies arising under the Loan Documents, and neither
the Agent nor any Lender shall be deemed to have waived any or all of its rights
or remedies with respect to any Default of Event of Default existing on the date
hereof or arising hereafter other than the Designated Events of Default.
5.04 FEES. In consideration of the Lenders' agreement to this
Agreement, the Borrowers agree to pay to the Agent a forbearance fee, in
addition to any and all other fees which are due or may become due to the
Lenders, in an amount equal to 1/10th of 1% of the Lenders' Aggregate Exposure
(the "FORBEARANCE FEE") payable on or before August 29, 2002 for distribution
thereafter by the Agent to the Lenders agreeing or consenting to this Agreement
in writing on or before August 29, 2002, in accordance with each such Lender's
Pro Rata Share. The Borrowers acknowledge and agree that the Forbearance Fee set
forth herein constitutes an Obligation under the Credit Agreement. The Pro Rata
Share of any Lender not so agreeing or consenting hereto shall be returned to
the Borrowers.
5.05 GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE
WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK (OTHER THAN CONFLICTS OF
LAWS PRINCIPLES THEREOF REQUIRING THE APPLICATION OF THE LAW OF A DIFFERENT
JURISDICTION).
5.06 WAIVER OF JURY TRIAL. THE BORROWERS HEREBY WAIVE THEIR RIGHTS
TO A JURY TRIAL WITH RESPECT TO ANY ACTION OR CLAIM ARISING OUT OF ANY DISPUTE
IN CONNECTION WITH THIS AGREEMENT, THE LOAN DOCUMENTS OR ANY OF THE BORROWERS'
OBLIGATIONS HEREUNDER OR THEREUNDER OR THE PERFORMANCE OF SUCH OBLIGATIONS. THE
BORROWERS hereby waive any right THEY may have to claim or recover in any
litigation referred to in the preceding sentence any special, exemplary,
punitive or consequential damages or any damages other than, or in addition to,
actual damages. the Borrowers confirm that none of the Agent, any of the
Lenders, nor any of their respective agents, employees, or representatives has
indicated, either orally or in writing, that the Agent or any lender would not
seek to enforce the foregoing waivers.
5.07 COUNTERPARTS; FACSIMILE SIGNATURE. This Agreement may be
executed in counterparts, each of which shall constitute an original but all of
which when taken together shall constitute but one contract, and shall become
effective when copies hereof which, when taken together, bear the signatures of
each of the Borrowers, the Agent and the Required Lenders shall be delivered to
the Agent. Delivery of an executed counterpart of a signature page to this
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Agreement by telecopier shall be as effective as delivery of a manually executed
signature page hereto and the full text of this Agreement.
5.08 HEADINGS. Headings used herein are for convenience of
reference only and are not to affect the construction of, or to be taken into
consideration in interpreting, this Agreement.
5.09 WAIVERS; AMENDMENTS. Neither this Agreement nor any provision
hereof may be waived, amended or modified except pursuant to an agreement or
agreements in writing entered into by the Borrowers, the Agent and the Required
Lenders.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers as of the day and year
first above written.
BORROWERS:
THE PENN TRAFFIC COMPANY
By:
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Title:
DAIRY DELL, INC.
By:
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Title:
BIG M SUPERMARKETS, INC.
By:
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Title:
XXXXX XXXXXXX BAKING COMPANY
By:
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Title:
ADMINISTRATIVE AGENT:
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FLEET CAPITAL CORPORATION
By:
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Title:
SWING LINE LENDER:
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FLEET CAPITAL CORPORATION
By:
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Title:
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LENDERS:
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FLEET CAPITAL CORPORATION
By:
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Title:
GMAC BUSINESS CREDIT, LLC.
By:
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Title:
AMSOUTH BANK
By:
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Title:
BANK OF AMERICA NATIONAL
TRUST AND SAVINGS ASSOCIATION
By:
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Title:
XXXXXX FINANCIAL, INC.
By:
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Title:
LASALLE BUSINESS CREDIT, INC.
By:
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Title:
CITIZENS BUSINESS CREDIT COMPANY
By:
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Title:
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THE CIT GROUP/BUSINESS CREDIT, INC.
By:
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Title:
IBJ WHITEHALL BUSINESS CREDIT CORPORATION
By:
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Title:
FOOTHILL CAPITAL CORPORATION
By:
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Title:
TRANSAMERICA BUSINESS CREDIT CORPORATION
By:
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Title:
SOVEREIGN BANK
By:
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Title:
THE PROVIDENT BANK
By:
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Title:
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ACKNOWLEDGED AND AGREED:
P.T. FAYETTEVILLE/UTICA, LLC
By:
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Name:
Title:
P.T. DEVELOPMENT, LLC
By:
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Name:
Title:
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