AMENDED AND RESTATED LOAN AGREEMENT
Dated as of October 31, 2001
GRISTEDE'S FOODS, INC., a Delaware corporation having its principal place
of business at 000 Xxxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 (the "Borrower"),
each of the Subsidiaries of the Borrower listed on Schedule 1 annexed hereto
(each individually, a "Guarantor" and collectively, the "Guarantors") (the
Borrower and the Guarantors, collectively, the "Credit Parties"), CITIBANK,
N.A., a New York banking organization, having an office at 000 Xxxxxxx Xxxxxx,
Xxx Xxxx, Xxx Xxxx 00000 ("Citibank" or a "Bank") ISRAEL DISCOUNT BANK OF NEW
YORK, a New York banking organization, having an office at 000 Xxxxx Xxxxxx, Xxx
Xxxx, Xxx Xxxx 00000 ("Israel Discount" or a "Bank") and BANK LEUMI USA, a New
York trust company, having an office at 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx
00000 ("Leumi" or a "Bank") ("Leumi" or a "Bank") and CITIBANK, N.A., as agent
for the Banks (the "Agent") hereby agree as follows:
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
SECTION 1.01. Certain Defined Terms. As used in this Agreement, 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, as to any Person (i) a Person which directly or
indirectly controls, or is controlled by, or is under common control with, such
Person; (ii) a Person which directly or indirectly beneficially owns or holds
ten (10%) percent or more of any class of voting stock of, or ten (10%) percent
or more of the equity interest in, such Person; or (iii) a Person ten (10%)
percent or more of the voting stock of which, or ten (10%) or more of the equity
interest of which, is directly or indirectly beneficially owned or held by such
Person. The term control means the possession, directly or indirectly, of the
power to direct or cause the direction of the management and policies of a
Person, whether through the ownership of voting securities, by contract, or
otherwise.
"Agent" means Citibank, N.A., or any bank which succeeds to the position
of Agent, as provided in this Agreement.
"Agreement" means this Amended and Restated Loan Agreement, as amended,
supplemented or modified from time to time.
"Asset Sale Recapture Event" means any sale of assets by the Borrower or
any Guarantor other than in the ordinary course of business.
"Asset Sale Recapture Payment" means one hundred (100%) percent of the
"net proceeds" of an Asset Sale Recapture Event. In the case of an Asset Sale
Recapture Event in which assets are sold solely for cash, the "net proceeds"
shall be the sales price for the assets less reasonable and customary
out-of-pocket expenses associated with such sale. In the case of an Asset Sale
Recapture Event in which assets are sold for cash and debt, the "net proceeds"
shall be the cash portion of the sale price for the assets less reasonable and
customary out-of-pocket expenses associated with such sale plus an assignment of
the promissory notes representing the non-cash portion of the sale.
"Bank" or "Banks" means one or more, as the context requires, of Citibank,
Israel Discount, Leumi and each other lender which becomes a party to this
Agreement.
"Benefit Arrangement" means an employee benefit plan, within the meaning
of Section 3(3) of ERISA, which is neither a Plan nor Multiemployer Plan, and
which is maintained, sponsored or otherwise contributed to by the Borrower or
any ERISA Affiliate.
"Board of Governors" means the Board of Governors of the Federal Reserve
System of the United States of America.
"Borrowing Base" means 85% of the Credit Parties' Eligible Accounts
Receivable plus 65% of the Credit Parties' Eligible Warehouse Inventory (as
reasonably determined by the Agent) plus 50% of the Credit Parties' Eligible
Retail Inventory (as reasonably determined by the Agent).
"Business Day" means (i) a day other than a Saturday, Sunday or other day
on which commercial banks in New York City are authorized or required by law to
close and (ii) if the relevant day relates to a Eurodollar Loan, an Interest
Period, or notice with respect to a Eurodollar Loan, a day on which dealings in
Dollar deposits are carried on in the London interbank market.
"Capital Lease" means a lease which has been or should be, in accordance
with GAAP, capitalized on the books of the lessee.
"Cash Flow Recapture" means the obligation of the Borrower to make a Cash
Flow Recapture Payment based on the existence of Excess Cash Flow, beginning
with Excess Cash Flow for the fiscal year ending December 1, 2002.
"Cash Flow Recapture Payment" means, beginning with the fiscal year ending
December 1, 2002, (x) if the Leverage Ratio (as hereinafter defined) is equal to
or greater that 3.00 to 1.0, fifty (50%) percent of Excess Cash Flow (as
hereinafter defined), or (y) if the Leverage Ratio (as hereinafter defined) is
equal to or greater that 2.50 to 1.0 but less than 3.00 to 1.0, twenty five
(25%) percent of Excess Cash Flow, in each case up to a maximum of $750,000.00
each fiscal year, shall be applied to prepay the Term Loan, to be paid not later
than thirty (30) days after the due date for the delivery of the financial
statements for each fiscal year. If the Leverage Ratio (as hereinafter defined)
is less than 2.50 to 1.0, there shall be no Cash Flow Recapture Payment.
"Collateral" means all property which is subject to, or is to be subject
to, the Liens granted by the Security Agreements.
"Commitment" means, with respect to each Bank, the aggregate obligations
of such Bank to (i) make its proportionate share of Revolving Credit Loans to
the Borrower, and (ii) make its proportionate share of the Term Loan to the
Borrower, in each case pursuant to the terms and conditions of this Agreement,
and in each case in the aggregate Dollar amount set forth in Schedule 1.01-A
annexed hereto.
"Commitment Letter" means the letter from Citibank to the Borrower, dated
October 17, 2001 pursuant to which Citibank agreed to extend a 46.15% percent
$15,000,000.00 share of a credit facility as described therein to the Borrower
and the Agent agreed to use its best efforts to arrange, structure and syndicate
such credit facility.
"Consolidated Capital Expenditures" means, as to any Person, the aggregate
amount of any expenditures (including such expenditures financed by purchase
money Debt or secured by purchase money Liens) by such Person and its
Consolidated Subsidiaries for assets (including fixed assets acquired under
Capital Leases) which it is contemplated will be used or usable in fiscal years
subsequent to the year of acquisition, all computed and consolidated in
accordance with GAAP.
"Consolidated Cash Capital Expenditures" means, as to any Person, the
aggregate amount of Consolidated Capital Expenditures less expenditures financed
by Capital Leases (including such
- 3 -
expenditures financed by purchase money Debt or secured by purchase money
Liens).
"Consolidated Current Liabilities" means, as to any Person, the aggregate
amount of all liabilities of such Person and its Consolidated Subsidiaries
(including tax and other proper accruals) which would be properly classified as
current liabilities, all computed and consolidated in accordance with GAAP.
"Consolidated Funded Debt" means, as to the Borrower and its Consolidated
Subsidiaries, the aggregate of the Funded Debt of the Borrower and its
Consolidated Subsidiaries, computed and consolidated in accordance with GAAP.
"Consolidated Subordinated Debt" means, as to any Person, all of the
Subordinated Debt of such Person and its Consolidated Subsidiaries, computed and
consolidated in accordance with GAAP.
"Consolidated Subsidiaries" means, as to any Person, those Subsidiaries of
such Person which are consolidated with such Person in the financial statements
delivered pursuant to Section 5.01(b).
"Consolidated Tangible Net Worth" means, as to any Person, the excess of
(i) (a) such Person's Consolidated Total Assets, less all intangible assets
properly classified as such in accordance with GAAP, including, but without
limitation, patents, patent rights, trademarks, trade names, franchises,
copyrights, licenses, permits and goodwill, plus (b) such Person's Consolidated
Subordinated Debt, over (ii) such Person's Consolidated Total Liabilities.
"Consolidated Total Assets" means, as to any Person, the aggregate net
book value of the assets of such Person and its Consolidated Subsidiaries after
all appropriate adjustments in accordance with GAAP (including without
limitation, reserves for doubtful receivables, obsolescence, depreciation and
amortization and excluding the amount of any write-up or revaluation of any
asset, other than that arising from (i) the consummation of the Acquisition (as
defined in the Prior Agreement), and (ii) the accounting by the Borrower for any
future acquisition of store #53 or store #514 (formerly known as store #414).
"Consolidated Total Liabilities" means, as to any Person, all of the
liabilities of such Person and its Consolidated Subsidiaries, including all
items which, in accordance with GAAP, would be included on the liability side of
the balance sheet (other than capital stock, capital surplus and retained
earnings) computed and consolidated in accordance with GAAP.
- 4 -
"Consolidated Total Unsubordinated Liabilities" means, as to any Person,
the excess of (i) such Person's Consolidated Total Liabilities over (ii) the sum
of (a) such Person's Consolidated Subordinated Debt, and (b) unsecured advances
from Affiliates not subordinated to the Banks.
"Debt" means, as to any Person, (i) all indebtedness or liability of such
Person for borrowed money; (ii) indebtedness of such Person for the deferred
purchase price of property or services (excluding trade obligations); (iii)
obligations of such Person as a lessee under Capital Leases; (iv) current
liabilities of such Person in respect of unfunded vested benefits under any
Plan; (v) obligations of such Person under letters of credit issued for the
account of such Person; (vi) obligations of such Person arising under acceptance
facilities; (vii) obligations secured by any Lien on property owned by such
Person whether or not the obligations have been assumed; and (viii) all other
liabilities for borrowed money and which are recorded as such, or which should
be recorded as such, on such Person's financial statements in accordance with
GAAP.
"Debt Service Ratio" means, as to the Borrower and its Consolidated
Subsidiaries for any period, the ratio of (i) EBITDA for such period to (ii) the
sum of (x) interest expense for such period (excluding interest for such period
on Consolidated Subordinated Debt) plus (y) the principal amount of long term
Debt (excluding Revolving Credit Loans) scheduled to be paid during such period.
The Debt Service Ratio shall be measured and tested at the end of each fiscal
quarter and for a period covering the four (4) fiscal quarters then ended.
"Default" means any of the events specified in Section 6.01 of this
Agreement, whether or not any requirement for notice or lapse of time or any
other condition has been satisfied.
"Dollars" and the sign "$" mean lawful money of the United States of
America.
"EBITDA" means, as to the Borrower and its Subsidiaries for any period,
the sum of (i) net income (excluding extraordinary gains and losses), plus (ii)
interest expense, plus (iii) depreciation expense, plus (iv) amortization of
intangible assets, plus (v) federal, state and local income taxes deducted in
calculating net income, plus (vi) non-cash rent leveling expenses, plus (vii)
non-cash items permitted by GAAP, in each case measured for the Borrower and its
Subsidiaries on a consolidated basis for such period, computed and consolidated
in accordance with GAAP.
- 5 -
"EBITDAR" means, as to the Borrower and its Subsidiaries for any period,
the sum of (i) EBITDA, plus (ii) rent expense, in each case measured for the
Borrower and its Subsidiaries on a consolidated basis for such period, computed
and consolidated in accordance with GAAP.
"Eligible Accounts Receivable" means those accounts receivable of the
Credit Parties which (i) arise in the ordinary course of business, (ii) are
subject to a first, perfected security interest of the Agent, and (iii) are
evidenced by an invoice or other documentary evidence reasonably satisfactory to
the Agent provided, however no account receivable shall be an Eligible Account
Receivable if:
(a) it arises out of a sale made by a Credit Party to an Affiliate
of a Credit Party or to a person controlled by such an Affiliate;
(b) it is due or unpaid more than ninety (90) days after its invoice
(thirty (30) days in the case of credit card receivable);
(c) the account receivable is from an account debtor of which fifty
(50%) percent or more of such account debtor's accounts receivable
are otherwise ineligible hereunder;
(d) any covenant, representation or warranty contained in any Loan
Document with respect to such account receivable has been breached;
(e) the account debtor has commenced a voluntary case under the
federal bankruptcy laws, as now constituted or hereafter amended, or
made an assignment for the benefit of creditors, or a decree or
order for relief has been entered by a court having jurisdiction in
the premises in respect of the account debtor in an involuntary case
under any state or federal bankruptcy laws, as now constituted or
hereafter amended, or if any other petition or other application for
relief under any state or federal bankruptcy law has been filed
against the account debtor, or if the account debtor has failed,
suspended business, ceased to be solvent, called a meeting of its
creditors, or consented to or suffered a receiver, trustee,
liquidator or custodian to be appointed for it or for all or a
significant portion of its assets of affairs;
- 6 -
(f) the sale to the account debtor is on a guaranteed sale,
sale-and-return, sale on approval, consignment or any other
repurchase or return basis or is evidenced by chattel paper;
(g) the account debtor is the United States of America, any state or
any department, agency or instrumentality of the United States of
America or any state;
(h) the account debtor is not domiciled in the United States;
(i) the goods giving rise to such account receivable have not been
shipped and delivered to or have been rejected by the account debtor
or the services giving rise to such receivable have not been
performed by the Credit Parties or have been rejected by the account
debtor or the account receivable otherwise does not represent a
final sale;
(j) the account debtor is also a creditor or supplier of the Credit
Parties or has disputed liability, or has made any claim with
respect to any other account receivable due to the Credit Parties,
or the account receivable otherwise is or may become subject to any
right of set-off;
(k) any of the Credit Parties have made any agreement with the
account debtor for any deduction therefrom, (except for discounts or
allowances made in the ordinary course of business for prompt
payment, all of which discounts or allowances are reflected in the
calculation of the face value of each respective invoice related
thereto) provided, that only the amount of any such deduction shall
be ineligible pursuant to this clause (k);
(l) any return, rejection or repossession of the merchandise has
occurred;
(m) such account receivable is not payable to a Credit Party;
(n) the Agent, in good faith and in the exercise of its discretion
in a reasonable manner, believes that collection of such account
receivable is insecure or that such account receivable may not be
paid by reason of the account debtor's inability to pay, or the
accounts
- 7 -
receivable of the account debtor exceed a credit limit determined by
the Agent, in good faith and in the exercise of its discretion in a
reasonable manner, provided that only the amount of such excess
shall be ineligible; or
(o) the Agent determines in its reasonable discretion, that such
account receivable, or such category of accounts receivable, is
ineligible.
"Eligible Retail Inventory" means all finished goods inventory of the
Credit Parties located in the Credit Parties' retail stores valued at the lower
of cost or market value, determined on a first-in-first-out basis, other than
(i) inventory which is, in the Agent's reasonable opinion, obsolete or
unmerchantable, (ii) inventory located at a business premises not located in the
United States, (iii) inventory not subject to a perfected security interest in
favor of the Agent,(iv) goods or materials which would not be classified as
inventory on a balance sheet of the Credit Parties, (v) produce, (vi) floral
products, (vii) seafood, (viii) meat and poultry, (ix) bakery products, (x) 25%
of pharmacy goods, (xi) dairy products, (xii) goods in transit, (xiii) damaged
or defective goods, or (xiv) supplies.
"Eligible Warehouse Inventory" means all finished goods inventory of the
Credit Parties located in the Credit Parties' warehouse facilities valued at the
lower of cost or market value, determined on a first-in-first-out basis, other
than (i) inventory which is, in the Agent's reasonable opinion, obsolete or
unmerchantable, (ii) inventory located at a business premises not located in the
United States, (iii) inventory not subject to a perfected security interest in
favor of the Agent, (iv) goods or materials which would not be classified as
inventory on a balance sheet of the Credit Parties prepared in accordance with
GAAP, (v) produce, (vi) floral products, (vii) seafood, (viii) meat and poultry,
(ix) bakery products, (x) 25% of pharmacy goods, (xi) dairy products, (xii)
goods in transit,(xiii) damaged or defective goods, or (xiv) supplies.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, the regulations promulgated thereunder and the
published interpretations thereof as in effect from time to time.
"ERISA Affiliate" means any trade or business (whether or not
incorporated) which together with any other Person would be treated, with such
Person, as a single employer under Section 4001 of ERISA.
- 8 -
"Eurocurrency Reserve Requirement" means, with respect to the Reserve
Adjusted LIBOR Rate for an Interest Period, the aggregate (without duplication)
daily average of the rates (expressed as a decimal fraction) of reserve
requirements in effect on such day (including, without limitation, basic,
marginal, supplemental or emergency reserves) under any regulation (including,
but without limitation, Regulation D) promulgated by the Board of Governors (or
any successor thereto or other governmental authority having jurisdiction over
the Agent) by the Agent against "Eurocurrency liabilities" (as such term is used
in Regulation D), but without benefit or credit for proration, exemptions or
offsets that might otherwise be available to the Agent from time to time under
Regulation D. Without limiting the effect of the foregoing, the Eurocurrency
Reserve Requirement shall reflect any other reserves required to be maintained
by the Agent against (1) any category of liabilities that includes deposits by
reference to which the Reserve Adjusted LIBOR Rate is to be determined; or (2)
any category of extension of credit or other assets that include loans bearing a
Reserve Adjusted LIBOR Rate. As of the date of this Agreement there are no
Eurocurrency Reserve Requirements in effect.
"Eurodollar Loan" means a Loan bearing interest at an interest rate
determined with reference to the Reserve Adjusted LIBOR Rate in accordance with
the provisions of Article II hereof.
"Event of Default" means any of the events specified in Section 6.01 of
this Agreement, provided that any requirement for notice or lapse of time or any
other condition has been satisfied.
"Excess Cash Flow" means, as to the Borrower and its Consolidated
Subsidiaries for any fiscal year, EBITDA minus debt service (principal and
interest), changes in working capital, cash taxes and Consolidated Cash Capital
Expenditures.
"Existing Facility" means the loan facilities described in the Prior
Agreement.
"Federal Funds Effective Rate" means, for any period, a fluctuating
interest rate per annum equal for each day during such period to the weighted
average of the rates on overnight federal funds transactions with members of the
Federal Reserve System arranged by federal funds brokers, as published for such
day (or, if such day is not a Business Day for the next preceding Business Day)
by the Federal Reserve Bank of New York, or, if such rate is not so published
for any day which is a Business Day, the average of the quotations for such day
on such transactions received by the
- 9 -
Agent from three (3) federal funds brokers of recognized standing selected by
it.
"Fee Letter" means the letter dated October 17, 2001 from Citibank to the
Borrower in which the Borrower agreed to pay certain fees in connection with the
credit facility as described therein, as amended.
"Field Audit" means an examination of the books and records of the
Borrower and the Guarantors (exclusive of the Individual Guarantor), to be
performed by employees or other representatives of the Agent.
"Fiscal Month" means, for each fiscal quarter consisting of 13 weeks,
periods equal to the first four (4) weeks, next four (4) weeks and last five (5)
weeks respectively; and for a fiscal quarter consisting of 14 weeks, periods
equal to the first four (4) weeks, next four (4) weeks and last six (6) weeks
respectively.
"Fixed Charge Coverage Ratio" means, as to the Borrower and its
Consolidated Subsidiaries for any period, the ratio of (i) EBITDAR for such
period to (ii) the sum of (x) interest expense for such period (excluding
interest for such period on Consolidated Subordinated Debt) plus,(y) rent
expense (including rent for real estate occupancy and for all other operating
leases) for such period, plus (z) the principal amount of long term Debt
(excluding Revolving Credit Loans) scheduled to be paid during such period. The
Fixed Charge Coverage Ratio shall be measured and tested at the end of each
fiscal quarter and for a period covering the four (4) fiscal quarters then
ended.
"Funded Debt" means, as to any Person, such Debt of such Person which is
(i) all indebtedness or liability for borrowed money (other than (x)
Subordinated Debt payable to United Acquisition Corp. and/or its Affiliates in
an amount not exceeding $12,800,000.00, as such amount may be changed from time
to time, and (y) other unsecured Debt owing to either United Acquisition Corp,
or any Affiliate of Xxxx Xxxxxxxxxxxx); (ii) all indebtedness or liability for
the deferred purchase price of property (excluding trade obligations); (iii) all
obligations for principal as a lessee under Capital Leases, as determined in
accordance with GAAP; (iv) all obligations to reimburse an issuing bank for the
amount of all undrawn letters of credit, unmatured drafts accepted or other
deferred payment obligations incurred under letters of credit, and (v) all
liabilities of such Person under any preferred stock which, at the option of the
holder or upon the occurrence of one or more
- 10 -
certain events, is redeemable by such holder, or which, at the option of such
holder is convertible into Debt.
"Funded Debt to EBITDA Ratio" means, as to the Borrower and its
Consolidated Subsidiaries for any period, the ratio of (i) Consolidated Funded
Debt (as of the last day of such period) to (ii) EBITDA for such period. The
Funded Debt to EBITDA Ratio shall be measured and tested at the end of each
fiscal quarter and, in the case of EBITDA, for a period covering the four (4)
fiscal quarters then ended.
"GAAP" means Generally Accepted Accounting Principles.
"Generally Accepted Accounting Principles" means those generally accepted
accounting principles and practices which are recognized as such by the American
Institute of Certified Public Accountants acting through the Financial
Accounting Standards Board ("FASB") or through other appropriate boards or
committees thereof and which are consistently applied for all periods so as to
properly reflect the financial condition, operations and cash flows of a Person,
except that any accounting principle or practice required to be changed by the
FASB (or other appropriate board or committee of the FASB) in order to continue
as a generally accepted accounting principle or practice may be so changed. Any
dispute or disagreement between the Borrower and the Agent relating to the
determination of Generally Accepted Accounting Principles shall, in the absence
of manifest error, be conclusively resolved for all purposes hereof by the
written opinion with respect thereto, delivered to the Agent, of the independent
accountants selected by the Borrower and approved by the Agent for the purpose
of auditing the periodic financial statements of the Borrower.
"Guarantor" or Guarantors" means one or more of the Guarantors listed on
Schedule 1 of this Agreement and any other Person (other than the Individual
Guarantor) required to guarantee the obligations of the Borrower in accordance
with Section 5.01(k) of this Agreement.
"Guaranty" or "Guaranties" means the guaranty or guaranties executed and
delivered by the Guarantors pursuant to Section 3.01(j) or Section 5.01(k) of
this Agreement.
"Hazardous Materials" includes, without limit, any flammable explosives,
radioactive materials, hazardous materials, hazardous wastes, hazardous or toxic
substances, or related materials defined in the Comprehensive Environmental
Response, Compensation, and Liability Act of 1980, as amended (42 U.S.C.
Sections 9601, et seq.), the Hazardous Materials Transportation Act, as amended
(49
- 11 -
U.S.C. Section 1801 et seq.), the Resource Conservation and Recovery Act, as
amended (42 U.S.C. Sections 9601 et. seq.), and in the regulations adopted and
publications promulgated pursuant thereto, or any other federal, state or local
environmental law, ordinance, rule or regulation.
"Individual Guarantor" means Xxxx Xxxxxxxxxxxx.
"Interest Determination Date" means the date on which a Prime Rate Loan is
converted to a Eurodollar Loan and, in the case of a Eurodollar Loan, the last
day of the applicable Interest Period.
"Interest Payment Date" means (i) as to each Eurodollar Loan, in the case
of Interest Periods of three (3) months or less, the last day of each Interest
Period and in the case of six (6) month Interest Periods, the ninetieth (90th)
day and the last day of such Interest Period and (ii) as to each Prime Rate
Loan, the last Business Day of each month.
"Interest Period" means as to any Eurodollar Loan, the period commencing
on the date of such Eurodollar Loan and ending on the numerically corresponding
day in the calendar month that is one, two, three or six months thereafter, as
the Borrower may elect (or, if there is no numerically corresponding day, on the
last Business Day of such month); provided, however, (i) that no Interest Period
for a Revolving Credit Loan or the Term Loan shall end later than the Revolving
Credit Maturity Date or the Term Loan Maturity Date, respectively (ii) if any
Interest Period would end on a day which shall not be a Business Day, such
Interest Period shall be extended to the next succeeding Business Day unless
such next succeeding Business Day would fall in the next calendar month, in
which case such Interest Period shall end on the next preceding Business Day,
(iii) no Interest Period representing a portion of the principal required to be
paid in accordance with Section 2.10 may be selected unless the outstanding
Prime Rate Loans and Eurodollar Loans for which the relevant Interest Periods
end on or prior to the date of such payment are in an aggregate amount which
will be sufficient to make such payment, (iv) interest shall accrue from and
including the first day of such Interest Period to but excluding the date of
payment of such interest, and (v) no Interest Period of particular duration may
be selected by the Borrower if the Agent determines, in its sole, good faith
discretion, that Eurodollar Loans with such maturities are not generally
available.
"Investment" means any stock, evidence of Debt or other security of any
Person, any loan, advance, contribution of capital, extension of credit or
commitment therefor, including without limitation the guaranty of loans made to
others (except for current
- 12 -
trade and customer accounts receivable for services rendered in the ordinary
course of business and payable in accordance with customary trade terms in the
ordinary course of business) and any purchase of (i) any security of another
Person or (ii) any business or undertaking of any Person or any commitment or
option to make any such purchase, or any other investment.
"Leverage Ratio" means, as to the Borrower and its Consolidated
Subsidiaries, the ratio of (i) Consolidated Total Unsubordinated Liabilities to
(ii) the sum of (x) Consolidated Tangible Net Worth plus (y) Consolidated
Subordinated Debt.
"LIBOR Applicable Margin" shall have the meaning set forth in Sections
2.17 of this Agreement.
"LIBOR Rate" means the rate per annum identified as the LIBOR Rate for a
requested Interest Period as published on page 3750 of the Dow Xxxxx Telerate
service.
"Lien" means any mortgage, deed of trust, pledge, security interest,
hypothecation, assignment, deposit arrangement, encumbrance, lien (statutory or
other), or preference, priority, or other security agreement or preferential
arrangement, charge, or encumbrance of any kind or nature whatsoever, including,
without limitation, any conditional sale or other title retention agreement, any
financing lease having substantially the same economic effect as any of the
foregoing, and the filing of any financing statement under the Uniform
Commercial Code or comparable law of any jurisdiction to evidence any of the
foregoing.
"Loan" or Loans" means Revolving Credit Loans, the Term Loan, or any or
all as the context requires, and may refer to Prime Rate Loans and/or Eurodollar
Loans, as the context requires.
"Loan Documents" means this Agreement, the Notes, the Security Agreements,
the Pledge Agreements, the Guaranties, the Commitment Letter, the Fee Letter and
any other document executed or delivered pursuant to this Agreement.
"Material Adverse Change" means, as to any Person, (i) a material adverse
change in the financial condition, business, operations, properties or results
of operations of such Person or (ii) any event or occurrence which is reasonably
likely to have a material adverse effect on the ability of such Person to
perform its obligations under the Loan Documents.
"Maturity Dates" means, collectively, the Revolving Credit Maturity Date
and the Term Loan Maturity Date.
- 13 -
"Multiemployer Plan" means a Plan described in Section 4001(a)(3) of ERISA
which covers employees of the Borrower or any ERISA Affiliate.
"Note" or "Notes" means one or more of the Revolving Credit Notes or the
Term Loan Notes as the context requires.
"PBGC" means the Pension Benefit Guaranty Corporation or any entity
succeeding to any or all of its functions under ERISA.
"Permitted Investments" means, (i) direct obligations of the United States
of America or any governmental agency thereof, or obligations guaranteed by the
United States of America, provided that such obligations mature within one year
from the date of acquisition thereof; (ii) time certificates of deposit having a
maturity of one year or less issued by (x) any of the Banks or (y) any other
commercial bank organized and existing under the laws of the United States or
any state thereof and having aggregate capital and surplus in excess of
$1,000,000,000.00; (iii) money market mutual funds having assets in excess of
$1,000,000,000; (iv) commercial paper rated not less than P-1 or A-1 or their
equivalent by Xxxxx'x Investor Services, Inc. ("Moody") or Standard & Poor's
Corporation ("S&P"), respectively; (v) tax exempt securities rated Prime 2 or
better by Moody's or A-1 or better by S&P; (vi) investments, loans or advances
by the Borrower in or to any Guarantor (other than the Individual Guarantor);
(vii) any other Investments, (including, without limitation, loans or advances
to employees) in a maximum amount outstanding at any time of $500,000; or (viii)
notes or other evidence of indebtedness from purchasers of assets from the
Borrower or a Guarantor.
"Person" means an individual, partnership, corporation (including a
business trust), limited liability company, joint stock company, trust,
unincorporated association, joint venture or other entity or a federal, state or
local government, or a political subdivision thereof or any agency of such
government or subdivision.
"Plan" means any employee benefit plan (excluding a Multiemployer Plan)
which is covered by Title IV of ERISA or is subject to the minimum funding
standards under Section 412 of the Internal Revenue Code of 1986, as amended,
and which is maintained, sponsored or otherwise contributed to by the Borrower
or any ERISA Affiliate.
"Pledge Agreement" or "Pledge Agreements" means the pledge agreement or
pledge agreements executed and delivered by the
- 14 -
Borrower and/or one or more Guarantors pursuant to Section 3.01(n) or 5.01(k) of
this Agreement.
"Prime Applicable Margin" shall have the meaning set forth in Section 2.17
of this Agreement.
"Prime Rate" means the rate of interest stated by Citibank to be its prime
rate as in effect from time to time; each change in said rate shall be effective
as of the date of such change.
"Prime Rate Loan" means a Loan bearing interest at an interest rate
determined with reference to the Prime Rate.
"Prior Agreement" means that certain loan agreement dated as of the 7th
day of November, 1997, among the Credit Parties, certain former Subsidiaries of
the Borrower, the Agent, the Banks and Dime Savings Bank of New York, FSB
("Dime"), which Loan Agreement has heretofore been amended pursuant to that
certain First Amendment dated April 30, 1998, that certain Second Amendment
dated as of August 29, 1998, that certain Third Amendment dated as of November
28, 1998, that certain Fourth Amendment dated as of February 27, 1999, that
certain Fifth Amendment dated as of May 29, 1999, that certain Sixth Amendment
dated as of November 27, 1999, that certain Seventh Amendment dated as of
December 29, 2000, that certain Eighth Amendment dated as of December 2, 2000
and that certain Ninth Amendment dated as of June 2, 2001.
"Pro Rata Share of the Commitment" means, as to each Bank, the ratio,
expressed as a percentage, of its Commitment to the Total Commitment.
"Prohibited Transaction" means any transaction set forth in Section 406 of
ERISA or Section 4975 of the Internal Revenue Code of 1986, as amended from time
to time.
"Regulation D" means Regulation D of the Board of Governors, as the same
may be amended and in effect from time to time.
"Regulation G" means Regulation G of the Board of Governors, as the same
may be amended and in effect from time to time.
"Regulation T" means Regulation T of the Board of Governors, as the same
may be amended and in effect from time to time.
"Regulation U" means Regulation U of the Board of Governors, as the same
may be amended and in effect from time to time.
- 15 -
"Regulation X" means Regulation X of the Board of Governors, as the same
may be amended and in effect from time to time.
"Reportable Event" means any of the events set forth in Section 4043 of
ERISA.
"Required Banks" means those Banks having, in the aggregate, sixty six and
two thirds (66 2/3%) percent of the Total Commitment.
"Reserve Adjusted LIBOR Rate" means, with respect to any Eurodollar Loan
for any Interest Period, an interest rate per annum determined by the Agent to
be equal to the quotient of (a) the LIBOR Rate divided by (b) a number equal to
1.00 minus the Eurocurrency Reserve Requirement as determined by the Agent on
the date the Reserve Adjusted LIBOR Rate is determined.
"Revolving Credit Loan" or "Revolving Credit Loans" means one or more, as
the context requires, of the revolving credit loans made by the Banks to the
Borrower pursuant to the terms and conditions of this Agreement.
"Revolving Credit Maturity Date" means November 28, 2004.
"Revolving Credit Note" or "Revolving Credit Notes" means one or more, as
the context requires, of the promissory notes of the Borrower payable to the
order of each of the Banks, in substantially the form of Exhibit A annexed
hereto, evidencing the indebtedness of the Borrower to each such Bank resulting
from Revolving Credit Loans made by such Bank to the Borrower pursuant to this
Agreement.
"Security Agreement" or "Security Agreements" means the security agreement
or security agreements executed and delivered by the Borrower and the Guarantors
pursuant to Section 3.01(l) or Section 5.01(k) of this Agreement.
"Subordinated Debt" means Debt of any Person, the repayment of which the
obligee has agreed in writing, or the terms of which provide, such terms to have
been approved by the Agent in advance in writing, shall be subordinate and
junior to the rights of the Banks with respect to Debt owing from such Person to
the Banks.
"Subsidiary" means, as to any Person, any corporation, partnership,
limited liability company, joint venture or other Person whether now existing or
hereafter organized or acquired: (i) in the case of a corporation, of which a
majority of the securities having ordinary voting power for the election of
directors (other
- 16 -
than securities having such power only by reason of the happening of a
contingency) are at the time owned by such Person and/or one or more
Subsidiaries of such Person or (ii) in the case of a partnership, limited
liability company, joint venture or similar entity, of which a majority of the
partnership, membership or other ownership interests are at the time owned by
such Person and/or one or more of its Subsidiaries.
"Term Loan" or "Term Loans" means one or more, as the context requires, of
the term loans made by the Banks to the Borrower pursuant to the terms and
conditions of this Agreement.
"Term Loan Maturity Date" means December 3, 2006.
"Term Loan Note" or "Term Loan Notes" means one or more, as the context
requires, of the promissory notes of the Borrower payable to the order of each
of the Banks, in substantially the form of Exhibit B annexed hereto, evidencing
the indebtedness of the Borrower to each such Bank resulting from the Term Loan
made by such Bank to the Borrower pursuant to this Agreement.
"Total Commitment" means the aggregate of the Commitments of each of the
Banks, which, on the date of this Agreement, is Thirty Two Million Five Hundred
Thousand ($32,500,000.00) Dollars.
"Unused Facility Fee" means the fee payable pursuant to Section 2.15 of
this Agreement.
SECTION 1.02. Computation of Time Periods. In this Agreement in the
computation of periods of time from a specified date to a later specified date,
the word "from" means "from and including" and the words "to" and "until" each
means "to but excluding". All times shall be references to New York City time.
SECTION 1.03. Accounting Terms. Except as otherwise herein specifically
provided, each accounting term used herein shall have the meaning given to it
under GAAP.
- 17 -
ARTICLE II
AMOUNT AND TERMS OF THE LOANS
SECTION 2.01. The Revolving Credit Loans. (a) The Banks agree, severally
but not jointly, on the terms and subject to the conditions of this Agreement,
and in reliance upon the representations and warranties of the Credit Parties
set forth in this Agreement that the Banks will, until the Revolving Credit
Maturity Date, lend to the Borrower such Revolving Credit Loans as the Borrower
may request from time to time, which Loans may be borrowed, repaid and
reborrowed, provided, however, that (y) the aggregate outstanding Revolving
Credit Loans at any one time shall not exceed Seventeen Million ($17,000,000.00)
Dollars (the "Revolving Credit Commitment") as the Revolving Credit Commitment
may be reduced pursuant to Section 2.16 hereof, and (z) each Bank's pro rata
share of Revolving Credit Loans shall not exceed its Pro Rata Share of the
Revolving Credit Commitment.
(b) Each Revolving Credit Loan shall be a Prime Rate Loan or a Eurodollar
Loan (or a combination thereof) as the Borrower may request subject to and in
accordance with Section 2.02. Any Bank may at its option make any Eurodollar
Loan by causing a foreign branch or affiliate to make such Loan, provided that
any exercise of such option shall not affect the obligation of the Borrower to
repay such Loan in accordance with the terms of such Bank's Revolving Credit
Note. Subject to the other provisions of this Agreement, Revolving Credit Loans
of more than one type may be outstanding at the same time provided, however,
that not more than nine (9) Eurodollar Loans may be outstanding at any time.
SECTION 2.02. Notice of Revolving Credit Loans. (a) The Borrower shall
give the Agent irrevocable written, telex, telephonic (immediately confirmed in
writing) or facsimile notice (i) at least two (2) Business Days prior to each
Revolving Credit Loan comprised in whole or in part of one or more Eurodollar
Loans (subject to Section 2.23 hereof) and (ii) prior to 11:00 a.m. on the day
of each Revolving Credit Loan consisting solely of a Prime Rate Loan. Upon
receipt of such notice, the Agent shall promptly notify each Bank of the
contents thereof and of the amount, type and other relevant information
regarding the Loan requested. Thereupon, each Bank shall, not later than 2:00
p.m., transfer immediately available funds equal to such Bank's share of the
requested borrowing to the Agent, which, provided the conditions of Section 3.01
and 3.02 of this Agreement have been met, shall thereupon transfer immediately
available funds equal to the requested borrowing to the Borrower's account with
the Agent. If a notice of borrowing is received by the Agent after 11:00 a.m. on
a
- 18 -
Business Day, such notice shall be deemed to have been given on the next
succeeding Business Day. Any Bank's failure to make any requested Loan shall not
relieve any other Bank of its obligation to make such Loan, but neither the
Agent nor such other Bank shall be liable for such failure of the first Bank.
(b) Each notice given pursuant to this Section 2.02 shall specify the date
of such borrowing, the amount thereof and whether such Loan is to be (or what
portion or portions thereof are to be) a Prime Rate Loan or a Eurodollar Loan
and, if such Loan or any portion thereof is to consist of one or more Eurodollar
Loans, the principal amounts thereof and Interest Period or Interest Periods
with respect thereto. If no election as to a type of Loan is specified in such
notice, such Loan (or portion thereof as to which no election is specified)
shall be a Prime Rate Loan. If no election as to the Interest Period is
specified in such notice with respect to any Eurodollar Loan, the Borrower shall
be deemed to have selected an Interest Period of one month's duration and if a
Eurodollar Loan is requested when such Loans are not available, the Borrower
shall be deemed to have requested a Prime Rate Loan.
(c) The Borrower shall have the right, on such notice to the Agent as is
required pursuant to (a) above, (x) to continue any Eurodollar Loan or a portion
thereof into a subsequent Interest Period (subject to availability) and (y) to
convert a Prime Rate Loan into a Eurodollar Loan (subject to availability)
subject to the following:
(i) if a Default or an Event of Default shall have occurred and be
continuing at the time of any proposed conversion or continuation only Interest
Periods of one month's duration shall be available;
(ii) in the case of a continuation or conversion of fewer than all
Loans, the aggregate principal amount of each Eurodollar Loan continued or into
which a Loan is converted shall be in the minimum principal amount of
$1,000,000.00 and in increased integral multiples of $100,000.00;
(iii) each continuation or conversion shall be effected by each Bank
applying the proceeds of the new Loan to the Loan (or portion thereof) being
continued or converted;
(iv) if the new Loan made as a result of a continuation or
conversion shall be a Eurodollar Loan, the first Interest Period with respect
thereto shall commence on the date of continuation or conversion;
- 19 -
(v) each request for a Eurodollar Loan which shall fail to state an
applicable Interest Period shall be deemed to be a request for an Interest
Period of one month's duration and each request for a Eurodollar Loan made when
such Loans are not available shall be deemed to be a request for a Prime Rate
Loan;
(vi) in the event that the Borrower shall not give notice to
continue a Eurodollar Loan as provided above, such Loan shall automatically be
converted into a Prime Rate Loan at the expiration of the then current Interest
Period.
(d) Unless the Agent shall have received notice from a Bank prior to 2:00
p.m. on the requested date, that such Bank will not make available to the Agent
the Loan requested to be made on such date, the Agent may assume that such Bank
has made such Loan available to the Agent on such date in accordance with
Section 2.01(a) and the Agent in its sole discretion may, in reliance upon such
assumption, make available to the Borrower on such date a corresponding amount
on behalf of such Bank. If and to the extent such Bank shall not have so made
available to the Agent the Loan requested to be made on such date and the Agent
shall have so made available to the Borrower a corresponding amount on behalf of
such Bank, such Bank shall, on demand, pay to the Agent such corresponding
amount together with interest thereon, at the Federal Funds Effective Rate, for
each day from the date such amount shall have been so made available by the
Agent to the Borrower until the date such amount shall have been repaid to the
Agent. If such Bank does not pay such corresponding amount promptly upon the
Agent's demand therefor, the Agent shall promptly notify the Borrower and the
Borrower shall, not later than one (1) Business Day following such notice, repay
such corresponding amount to the Agent together with accrued interest thereon at
the applicable rate or rates provided in Section 2.04.
SECTION 2.03. Revolving Credit Notes. (a) Each Revolving Credit Loan shall
be (i) in the case of each Prime Rate Loan in the minimum principal amount of
$250,000.00, and in increased integral multiples of $50,000.00 and (ii) in the
case of each Eurodollar Loan in the minimum principal amount of $1,000,000.00
and in increased integral multiples of $100,000.00 (except that, if any such
Prime Rate Loan so requested shall exhaust the remaining available Revolving
Credit Commitment, such Prime Rate Loan may be in an amount equal to the amount
of the remaining available Revolving Credit Commitment). Each Revolving Credit
Loan shall be evidenced by the Revolving Credit Notes. Each Revolving Credit
Note shall be dated the date hereof and be in the principal amount set forth
next to the applicable Bank's name on the signature pages hereto, and shall
mature on the Revolving Credit Maturity Date, at
- 20 -
which time the entire outstanding principal balance and all interest thereon
shall be due and payable. Each Revolving Credit Note shall be entitled to the
benefits and subject to the provisions of this Agreement.
(b) At the time of the making of each Revolving Credit Loan and at the
time of each payment of principal thereon, each Bank is hereby authorized by the
Borrower to make a notation on the schedule annexed to its Revolving Credit Note
of the date and amount, and the type and Interest Period, if applicable, of the
Revolving Credit Loan or payment, as the case may be. Failure to make a notation
with respect to any Revolving Credit Loan shall not limit or otherwise affect
the obligation of the Borrower hereunder or under the applicable Revolving
Credit Note with respect to such Revolving Credit Loan, and any payment of
principal by the Borrower shall not be affected by the failure to make a
notation thereof on said schedule.
SECTION 2.04. Payment of Interest on the Revolving Credit Notes. (a) In
the case of a Prime Rate Loan, interest shall be payable at a rate per annum
equal to the Prime Rate plus the Prime Applicable Margin. Such interest shall be
payable on each Interest Payment Date, commencing with the first Interest
Payment Date after the date of such Prime Rate Loan and on the Revolving Credit
Maturity Date. Any change in the rate of interest on the Revolving Credit Notes
due to a change in the Prime Rate or a change in the Prime Applicable Margin
shall take effect as of the date of such change in the Prime Rate or Prime
Applicable Margin, as applicable.
(b) In the case of a Eurodollar Loan, interest shall be payable at a rate
per annum equal to the Reserve Adjusted LIBOR Rate plus the LIBOR Applicable
Margin. Such interest shall be payable on each Interest Payment Date, commencing
with the first Interest Payment Date after the date of such Eurodollar Loan and
on the Revolving Credit Maturity Date. In the event Eurodollar Loans are
available, the Agent shall determine the rate of interest applicable to each
requested Eurodollar Loan for each Interest Period at 11:00 a.m., New York City
time, or as soon as practicable thereafter, two (2) Business Days prior to the
commencement of such Interest Period and shall use its best efforts to notify
the Borrower and the Banks of the rate of interest so determined. Such
determination shall be conclusive absent manifest error.
(c) All interest shall be paid to the Agent for the pro rata distribution
to the Banks.
SECTION 2.05. Use of Proceeds. The proceeds of the Revolving Credit Loans
shall be used by the Borrower exclusively (a) to
- 21 -
refinance existing revolving credit indebtedness to the Banks and to Dime made
pursuant to the Prior Agreement, (b) to finance accounts receivable and
inventory of the Credit Parties, and (c) for working capital. No part of the
proceeds of any Revolving Credit Loan may be used for any purpose that directly
or indirectly violates or is inconsistent with, the provisions of Regulation G,
T, U or X.
SECTION 2.06. Prepayment. (a) The Borrower shall have the right at any
time and from time to time to prepay any Revolving Credit Loan which is a Prime
Rate Loan, in whole or in part, without premium or penalty on irrevocable
written notice to the Agent (to be received by the Agent prior to 12:00 p.m. on
the date such prepayment is to be made) provided, however, that each such
prepayment shall be on a Business Day and shall be in an aggregate principal
amount which is in the minimum amount of $100,000.00 and in increased integral
multiples of $50,000.00, or such lesser amount as shall be necessary to prepay
all of the Revolving Credit Loans.
(b) The Borrower shall have the right at any time and from time to time,
subject to the provisions of this Agreement, including but without limitation
Section 2.21, to prepay any Revolving Credit Loan which is a Eurodollar Loan, in
whole or in part, on three (3) Business Days' prior irrevocable written notice
to the Agent, provided, however, that each such prepayment shall be on a
Business Day and shall be in an aggregate principal amount which is in the
minimum amount of $1,000,000.00 and in increased integral multiples of
$100,000.00.
(c) The notice of prepayment under this Section 2.06 shall set forth the
prepayment date and the principal amount of the Loan being prepaid and shall be
irrevocable and shall commit the Borrower to prepay such Loan by the amount and
on the date stated therein. All prepayments shall be accompanied by accrued
interest on the principal amount being prepaid to the date of prepayment. Each
prepayment under this Section 2.06 shall be applied first towards unpaid
interest on the amount being prepaid and then towards the principal in whole or
partial prepayment of Loans as specified by the Borrower. In the absence of such
specification, amounts being prepaid shall be applied first to any Prime Rate
Loan then outstanding and then to Eurodollar Loans in the order of the nearest
expiration of their Interest Periods.
(d) At any time that the principal amount of outstanding Revolving Credit
Loans exceeds the Borrowing Base, the Borrower shall prepay so much of the
Revolving Credit Loans as shall exceed the Borrowing Base within thirty (30)
days of the date of the
- 22 -
Borrowing Base certificate disclosing such excess. Any such prepayment shall be
applied as set forth in (c) above and if such prepayments of Revolving Credit
Loans shall result in a prepayment of a Eurodollar Loan other than on the last
day of its Interest Period, such prepayment shall be subject to the
reimbursement required by Section 2.22.
(e) At any time that the principal amount of outstanding Revolving Credit
Loans exceed the Revolving Credit Commitment, the Borrower shall prepay so much
of the Revolving Credit Loans as shall exceed the Revolving Credit Commitment.
Any such prepayments shall be applied as set forth in (c) above and if such
prepayments of Revolving Credit Loans shall result in a prepayment of a
Eurodollar Loan other than on the last day of its Interest Period, such
prepayment shall be subject to the reimbursement required by Section 2.22.
SECTION 2.07. The Term Loan. The Banks hereby agree, severally but not
jointly, on the date of this Agreement, and on the terms and conditions and in
reliance upon the representations and warranties of the Credit Parties
hereinafter set forth in this Agreement, to make a Term Loan to the Borrower in
the principal amount of FIFTEEN MILLION FIVE HUNDRED THOUSAND ($15,500,000.00)
DOLLARS and the Borrower agrees to borrow such amount by executing and
delivering to the Agent, for delivery to the Banks, the Term Loan Notes. The
Term Loans, or portions thereof, shall be Prime Rate Loans or Eurodollar Loans
(or a combination thereof) as the Borrower may request subject to and in
accordance with Section 2.08 hereof. Any Bank may at its option make any
Eurodollar Loan by causing a foreign branch or affiliate to make such Loan,
provided that any exercise of such option shall not affect the obligation of the
Borrower to repay such Loan in accordance with the terms of the Notes. Subject
to the other provisions of this Agreement, Term Loans of more than one type may
be outstanding at the same time provided, however, that not more than five (5)
Eurodollar Loans may be outstanding at any time.
SECTION 2.08. Notice of Term Loan Designations. (a) The Borrower may elect
to designate the Term Loan (or a portion thereof) as a Prime Rate Loan or a
Eurodollar Loan by so specifying in the irrevocable notice given pursuant to
this Section 2.08; provided, however, that each Eurodollar Loan requested of the
Agent for any specific Interest Period shall be in the minimum principal amount
of $1,000,000.00 and in increased integral multiples of $100,000.00 thereafter.
(b) The Borrower shall give the Agent irrevocable written, telex,
telephonic (immediately confirmed in writing) or facsimile notice (i) at least
two (2) Business Days' prior to each election
- 23 -
to designate each Term Loan (or a portion thereof) as a Eurodollar Loan, and
(ii) prior to 11:00 a.m. on the day of each election to designate each Term Loan
(or a portion thereof) as a Prime Rate Loan, in each case specifying the date
(which shall be a Business Day) thereof and the aggregate principal amount and,
if any portion thereof is to consist of one or more Eurodollar Loans, the
respective principal amounts and Interest Periods for each such Eurodollar Loan;
provided that:
(i) if the Borrower shall fail to specify the duration of an
Interest Period with regard to any Eurodollar Loan in its notice, the Interest
Period shall be for a period of one month; and
(ii) if the Borrower shall fail to specify the type of Loan
requested, the request shall be deemed to be a request for a Prime Rate Loan.
(c) Upon receipt of such notice, the Agent shall promptly notify each Bank
of the contents thereof and of the amount, type and other relevant information
regarding the Loan requested.
SECTION 2.09. Term Loan Notes. The Term Loans shall be evidenced by the
Term Loan Notes. The Term Loan Notes shall each be dated the date hereof and
each of the Term Loan Notes shall mature on the Term Loan Maturity Date at which
time the entire outstanding principal balance and all interest thereon shall be
due and payable. The Term Loan Notes shall be entitled to the benefits and
subject to the provisions of this Agreement.
SECTION 2.10 Repayment of Term Loan Notes. (a) The principal balance of
each of the Term Loan Notes shall be payable in sixty (60) monthly installments,
each due on the first Business Day of each month, beginning on December 1, 2001
and continuing on each such day thereafter, as follows:
Monthly Aggregate
Principal Payment of all
Period Term Loan Notes
------ ---------------
December 1, 2001 - November 1, 2002 $166,666.67
December 1, 2002 - November 1, 2003 $191,666.67
December 1, 2003 - November 1, 2004 $216,666.67
December 1, 2004 - November 1, 2005 $241,666.67
December 1, 2005 - November 1, 2006 $266,666.67
The final monthly principal installment shall be in an amount equal to the then
aggregate outstanding principal balance of the Term Loan Notes.
- 24 -
(b) All payments of installments on the Term Loan Notes shall be made to
the Agent for the pro rata distributions to the Banks.
SECTION 2.11 Payment of Interest on the Term Loan Notes. (a) In the case
of a Prime Rate Loan, interest shall be payable at a rate per annum equal to the
Prime Rate plus the Prime Applicable Margin. Such interest shall be payable to
the Agent, for the pro rata distribution to the Banks, on each Interest Payment
Date, commencing with the first Interest Payment Date after the date of such
Prime Rate Loan, on each Interest Determination Date and on the Term Loan
Maturity Date. Any change in the rate of interest on the Term Loan Notes due to
a change in the Prime Rate or a change in the Prime Applicable Margin shall take
effect as of the date of such change in the Prime Rate or the Prime Applicable
Margin.
(b) In the case of a Eurodollar Loan, interest shall be payable at a rate
per annum (computed on the basis of the actual number of days elapsed over a
year of 360 days) equal to the Reserve Adjusted LIBOR Rate plus the LIBOR
Applicable Margin. Such interest shall be payable to the Agent, for the pro rata
distribution to the Banks on each Interest Payment Date, commencing with the
first Interest Payment Date after the date of such Eurodollar Loan, on each
Interest Determination Date and on the Term Loan Maturity Date. The Agent shall
determine the rate of interest applicable to each requested Eurodollar Loan for
each Interest Period at 11:00 a.m., New York City time, or as soon as
practicable thereafter, two (2) Business Days prior to the commencement of such
Interest Period and shall notify the Borrower of the rate of interest so
determined. Such determination shall be conclusive absent manifest error.
SECTION 2.12 Conversion and Continuation of Term Loans. The Borrower shall
have the right, at any time, on such notice to the Agent as set forth in Section
2.08(b) of this Agreement, (i) to continue any part of the Term Loan which is a
Eurodollar Loan or portion thereof into a subsequent Interest Period (subject to
availability) or (ii) to convert part of the Term Loan which is a Prime Rate
Loan into a Eurodollar Loan (subject to availability), subject to the following:
(a) if a Default or Event of Default shall have occurred and be continuing
at the time of any proposed conversion or continuation only Interest Periods of
one month's duration shall be available;
(b) in the case of a continuation or conversion of fewer than all Loans,
the aggregate principal amount of each Eurodollar Loan
- 25 -
continued or converted shall be in the minimum amount of $1,000,000.00 and in
increased integral multiples of $100,000.00;
(c) each continuation or conversion shall be effected by each Bank
applying the proceeds of the new Loan to the Loan (or portion thereof) being
continued or converted;
(d) if the new Loan made as a result of a continuation or conversion shall
be a Eurodollar Loan, the first Interest Period with respect thereto shall
commence on the date of continuation or conversion;
(e) each request for a Eurodollar Loan which shall fail to state an
applicable Interest Period shall be deemed to be a request for an Interest
Period of one month;
(f) unless sufficient Prime Rate Loans are outstanding or other Eurodollar
Loans are outstanding with Interest Periods expiring prior to the next scheduled
installment payment of the Term Loan Notes, and are sufficient to enable the
Borrower to make such installment payments, any Eurodollar Loan, a portion of
which is required to be repaid on any such installment payment date shall be
automatically converted at the end of such Interest Period into a Prime Rate
Loan; and
(g) in the event that the Borrower shall not give notice to continue a
Eurodollar Loan as provided above, such Loan shall automatically be converted
into a Prime Rate Loan at the expiration of the then current Interest Period.
SECTION 2.13. Use of Proceeds. The proceeds of the Term Loans shall be
used by the Borrower (i) to refinance the term loan and improvement term loans
owing to the Banks and Dime under the Existing Facility, (ii) to finance
improvements to the Credit Parties' stores, and, (iii) to finance working
capital of the Borrower and its Subsidiaries. No part of the proceeds of any
Loan may be used for any purpose that directly or indirectly violates or is
inconsistent with, the provisions of Regulations G, T, U or X.
SECTION 2.14. Prepayment. (a) Subject to the provisions of this Agreement,
the Borrower shall have the right at any time and from time to time to prepay
any part of the Term Loan which is a Prime Rate Loan, in whole or in part,
without premium or penalty on prior irrevocable written notice to the Agent (to
be received by the Agent prior to 12:00 p.m. on the date such prepayment is to
be made) provided, however, that each such prepayment shall be on a
- 26 -
Business Day and shall be in an aggregate minimum principal amount of
$100,000.00 and in increased integral multiples of $50,000.00.
(b) The Borrower shall have the right at any time and from time to time,
subject to the provisions hereof and of Section 2.22, to prepay any part of the
Term Loan which is a Eurodollar Loan, in whole or in part, on three (3) Business
Days prior irrevocable written notice to the Agent, provided, however, that such
prepayment shall be in an aggregate minimum principal amount of $1,000,000.00
and in increased integral multiples of $100,000.00.
(c) Upon the occurrence of any Asset Sale Recapture Event, the Borrower
shall, without demand or notice from the Agent, make an Asset Sale Recapture
Payment. Such payment shall be applied to the Term Loan as set forth in (e)
below.
(d) Upon the existence of Excess Cash Flow for any fiscal year, beginning
with the fiscal year ending December 1, 2002, the Borrower shall, without demand
or notice from the Agent, and not later than thirty (30) days after the due date
for the delivery of the financial statements for the fiscal year in which the
Excess Cash Flow occurred, make a Cash Flow Recapture Payment to the extent, and
if, required. Such payment shall be applied to the Term Loan as set forth in (e)
below.
(e) The notice of prepayment under this Section 2.14 shall set forth the
prepayment date and the principal amount of the Loan being prepaid and shall be
irrevocable and shall commit the Borrower to prepay such Loan by the amount and
on the date stated therein. All prepayments shall be accompanied by accrued
interest on the principal amount being prepaid to the date of prepayment. Each
prepayment under this Section 2.14 shall be applied first towards unpaid
interest on the principal amount being prepaid and then towards the principal in
whole or partial prepayment of Term Loans by the Borrower. All prepayments shall
be applied first to any Prime Rate Loans then outstanding and then to Eurodollar
Loans outstanding in the order of the nearest expiration of their Interest
Periods. All partial prepayments of the Term Loan shall be applied to
installments of principal of the Term Loan in the inverse order of maturity. All
principal payments or prepayments shall be made to the Agent for the pro rata
distribution to the Banks.
SECTION 2.15. Fees. (a) The Borrower agrees to pay to the Agent, for the
pro rata distribution to the Banks, from the date each of the conditions of
Section 3.01 of this Agreement has been satisfied and for so long as the
Revolving Credit Commitment remains in effect, on the last Business Day of each
fiscal quarter
- 27 -
of the Borrower, and on any day that the Revolving Credit Commitment is reduced
or terminated, an Unused Facility Fee computed at a rate per annum equal to one
quarter of one (0.25%) percent (computed on the basis of the actual number of
days elapsed over 360 days) on the average daily unused amount of the Revolving
Credit Commitment, such Unused Facility Fee being payable for the fiscal quarter
of the Borrower, or part thereof, preceding the payment date.
(b) The Borrower agrees to pay to the Agent not later than the third
Business Day after the date of this Agreement, for its services as Agent
hereunder, those fees, charges and expenses as set forth in the Fee Letter and
as the Borrower and the Agent may otherwise mutually agree in a separate
writing.
SECTION 2.16. Reduction of Revolving Credit Commitment. Upon at least
three (3) Business Days' prior written notice to the Agent, the Borrower may
irrevocably elect to have the unused Revolving Credit Commitment terminated in
whole or reduced in part provided, however, that any such partial reduction
shall be in a minimum amount of $250,000.00, or whole multiples thereof. The
Revolving Credit Commitment, once terminated or reduced, shall not be reinstated
without the express written approval of the Agent and the Banks. Any reduction
to the Revolving Credit Commitment shall be applied pro rata to the respective
Revolving Credit Commitments of each Bank.
SECTION 2.17. Applicable Margin. The Prime Applicable Margin and the LIBOR
Applicable Margin shall each be determined on the basis of the Borrower's Funded
Debt to EBITDA Ratio, as calculated based on the Borrower's consolidated
financial statements for its most recent fiscal year or quarter. The Prime
Applicable Margin and the LIBOR Applicable Margin shall be determined as
follows:
(i) The initial Prime Applicable Margin shall be 125 basis points
and the initial LIBOR Applicable Margin shall be 300 basis points, and
each shall be applicable until delivery of the Borrower's consolidated
financial statements for its fiscal year ending December 2, 2001 pursuant
to Section 5.01(b) hereof.
(ii) Beginning with delivery of the Borrower's financial statements
for the fiscal year ending December 2, 2001, and for each fiscal quarter
thereafter the Applicable Margins shall be as follows:
- 28 -
Funded Debt/EBITDA Prime Margin LIBOR Margin
------------------ ------------ ------------
> 3.0 times 1.25% 3.00%
<= 3.0 times 1.00% 2.75%
<= 2.5 times 0.75% 2.50%
<= 2.0 times 0.50% 2.25%
<= 1.5 times 0.00% 1.75%
The Agent shall determine the Applicable Margins within five (5) Business
Days of its receipt of all required financial statements and certificates.
Upon the occurrence and during the continuance of a Default or an Event of
Default the Prime Applicable Margin and the LIBOR Applicable Margin may, as a
result of changes in the Borrower's Funded Debt to EBITDA Ratio, increase but
will not decrease.
SECTION 2.18. Eurocurrency Reserve Requirement. It is understood that the
cost to the Banks of making or maintaining Eurodollar Loans may fluctuate as a
result of the applicability of, or change in, the Eurocurrency Reserve
Requirement. The Borrower agrees to pay to the Agent on behalf of the Banks from
time to time, as provided in Section 2.19, such amounts as shall be necessary to
compensate each Bank for the portion of the cost of making or maintaining any
Eurodollar Loans made by it resulting from any change in the Eurocurrency
Reserve Requirement, it being understood that the rates of interest applicable
to Eurodollar Loans hereunder have been determined on the basis of the
Eurocurrency Reserve Requirement in effect at the time of determination of the
Reserve Adjusted LIBOR Rate and that such rates do not reflect costs imposed on
each Bank in connection with any change to the Eurocurrency Reserve Requirement.
It is agreed that for purposes of this paragraph the Eurodollar Loans made
hereunder shall be deemed to constitute Eurocurrency Liabilities as defined in
Regulation D and to be subject to the reserve requirements of Regulation D
without benefit or credit of proration, exemptions or offsets which might
otherwise be available to each Bank from time to time under Regulation D.
SECTION 2.19. Increased Costs. If, after the date of this Agreement, the
adoption of, or any change in, any applicable law, regulation, rule or
directive, or any interpretation thereof by any authority charged with the
administration or interpretation thereof:
(i) subjects any Bank to any tax with respect to the Notes, the
Total Commitment or on any amount paid or to be paid under or pursuant to this
Agreement or the Notes (other than any tax measured by or based upon the overall
net income of such Bank);
- 29 -
(ii) changes the basis of taxation of payments to any Bank of any
amounts payable hereunder (other than any tax measured by or based upon the
overall net income of such Bank);
(iii) imposes, modifies or deems applicable any reserve, capital
adequacy or deposit requirements against any assets held by, deposits with or
for the account of, or loans made by, any Bank; or
(iv) imposes on the Agent or any Bank, any other condition affecting
the Notes or this Agreement; and the result of any of the foregoing is to
increase the cost to the Agent or any Bank of maintaining this Agreement or
making the Loans, or to reduce the amount of any payment (whether of principal,
interest or otherwise) receivable by the Agent or any Bank or to require the
Agent or any Bank to make any payment on or calculated by reference to the gross
amount of any sum received by them, in each case by an amount which the Agent in
its sole, reasonable judgment deems material, then and in any such case:
(a) the Agent shall promptly advise the Borrower of such event,
together with the date thereof, the amount of such increased cost or
reduction or payment and the way in which such amount has been calculated;
and
(b) the Borrower shall pay to the Agent on behalf of itself or such
Bank, within ten (10) days after the advice referred to in subsection (a)
above, such an amount or amounts as will compensate the Agent or such Bank
for such additional cost, reduction or payment for so long as the same
shall remain in effect.
The determination of the Agent as to additional amounts payable
pursuant to this Section 2.19 shall be conclusive evidence of such amounts
absent manifest error and if made in good faith.
SECTION 2.20. Capital Adequacy. If the Agent or any Bank shall have
reasonably determined that, subsequent to the date hereof, any change in the
applicability of any law, rule, regulation or guideline, or the adoption after
the date hereof of any other law, rule, regulation or guideline regarding
capital adequacy, or any change in any of the foregoing or in the interpretation
or administration of any of the foregoing by any governmental authority, central
bank or comparable agency charged with the interpretation or administration
thereof, or compliance by the Agent or such Bank (or any lending office of such
Bank) or the Agent's or such Bank's holding company with any request or
directive regarding capital adequacy (whether or not having the
- 30 -
force of law) of any such authority, central bank or comparable agency, has or
would have the effect of reducing the rate of return on the Agent's or such
Bank's capital or on the capital of the Agent's or such Bank's holding company,
if any, as a consequence of its obligations hereunder to a level below that
which the Agent or such Bank or the Agent's or such Bank's holding company could
have achieved but for such adoption, change or compliance (taking into
consideration the Agent's or such Bank's policies and the policies of the
Agent's or such Bank's holding company with respect to capital adequacy) by an
amount deemed by the Agent or such Bank to be material, then from time to time
the Borrower shall pay to the Agent on behalf of the Agent or such Bank such
additional amount or amounts as will reasonably compensate the Agent or such
Bank or its or their holding company or companies for any such reduction
suffered.
SECTION 2.21. Change in Legality. (a) Notwithstanding anything to the
contrary contained elsewhere in this Agreement, if any change after the date
hereof in law, rule, regulation, guideline or order, or in the interpretation
thereof by any governmental authority charged with the administration thereof,
shall make it unlawful for any of the Banks to make or maintain any Eurodollar
Loan or to give effect to its obligations as contemplated hereby with respect to
a Eurodollar Loan, then, by written notice to the Borrower, the Agent, on behalf
of such Bank may:
(i) declare that Eurodollar Loans will not thereafter be made by
such Bank hereunder, whereupon the Borrower shall be prohibited from
requesting such Eurodollar Loans from such Bank hereunder unless such
declaration is subsequently withdrawn; and
2 (ii) require that, subject to the provisions of Section 2.22, all
outstanding Eurodollar Loans made by it be converted to a Prime Rate Loan,
whereupon all of such Eurodollar Loans shall be automatically converted to
a Prime Rate Loan as of the effective date of such notice as provided in
paragraph (b) below.
(b) For purposes of this Section 2.21, a notice to the Borrower by the
Agent pursuant to paragraph (a) above shall be effective, for the purposes of
paragraph (a) above, if lawful, and if any Eurodollar Loans shall then be
outstanding, on the last day of the then current Interest Period; otherwise,
such notice shall be effective on the date of receipt by the Borrower.
- 31 -
SECTION 2.22. Funding Losses. The Borrower agrees to compensate each Bank
for any loss or expense which such Bank may sustain or incur as a consequence of
(a) default by the Borrower in payment when due of the principal amount of or
interest on any Eurodollar Loan, (b) default by the Borrower in making a
borrowing of, conversion into or continuation of Eurodollar Loans after the
Borrower has given a notice requesting the same in accordance with the
provisions of this Agreement, (c) default by the Borrower in making any
prepayment after the Borrower has given a notice thereof in accordance with the
provisions of this Agreement or (d) the making of a prepayment of Eurodollar
Loans on a day which is not the last day of an Interest Period with respect
thereto, including, without limitation, in each case, any such loss or expense
arising from the reemployment of funds obtained by it or from amounts payable by
such Bank to lenders of funds obtained by it in order to make or maintain such
Loans. Such compensation shall include an amount equal to the excess, if any, of
(i) the amount of interest which would have accrued on the amount so prepaid, or
not so borrowed, converted or continued, for the period from the date of such
prepayment or of such failure to borrow, convert or continue to the last day of
such Interest Period (or, in the case of a failure to borrow, convert or
continue, the Interest Period that would have commenced on the date of such
failure) in each case at the applicable rate of interest for such Loans provided
for herein, excluding, the LIBOR Applicable Margin included therein, if any,
over (ii) the amount of interest (as reasonably determined by such Bank) which
would have accrued to such Bank on such amount by placing such amount on deposit
for a comparable period with leading banks in the interbank eurodollar market.
This covenant shall survive the termination of this Agreement and the payment of
the Loans and all other amounts payable hereunder for a period of ninety (90)
days from the date of termination of this Agreement and the payment of the Loans
and all other amounts payable hereunder. When claiming under this Section 2.22,
the claiming Bank shall provide to the Borrower a statement, signed by an
officer of such Bank, explaining the amount of any such loss or expense
(including the calculation of such amount), which statement shall, in the
absence of manifest error, and provided it is made in good faith be conclusive
evidence of such amounts with respect to the parties hereto.
SECTION 2.23. Change in LIBOR; Availability of Rates. In the event, and on
each occasion, that, on the day the interest rate for any Eurodollar Loan is to
be determined, the Agent shall have determined in good faith (which
determination, absent manifest error, shall be conclusive and binding upon the
Borrower) that dollar deposits in the amount of the principal amount of the
requested Eurodollar Loan are not generally available in the London
- 32 -
interbank market, or that the rate at which such dollar deposits are being
offered will not adequately and fairly reflect the cost to the Banks of making
or maintaining the principal amount of such Eurodollar Loan during such Interest
Period, such Eurodollar Loan shall be unavailable. The Agent shall, as soon as
practicable thereafter, given written, telex or telephonic notice of such
determination of unavailability to the Borrower. Any request by the Borrower for
an unavailable Eurodollar Loan shall be deemed to have been a request for a
Prime Rate Loan. After such notice shall have been given and until the Agent
shall have notified the Borrower that the circumstances giving rise to such
unavailability no longer exist, each subsequent request for an unavailable
Eurodollar Loan shall be deemed to be a request for a Prime Rate Loan.
SECTION 2.24. Authorization to Debit Borrower's Account. The Agent is
hereby authorized to debit the Borrower's account maintained with the Agent for
(i) all scheduled payments of principal and/or interest or fees under the Notes,
(ii) the Agent's fees, and (iii) all other amounts due hereunder; all such
debits to be made on the days such payments are due in accordance with the terms
hereof.
SECTION 2.25. Late Charges, Default Interest. (a) If the Borrower shall
default in the payment of any principal installment of or interest on any Loan,
or any other amount becoming due hereunder, upon the consent and determination
of the Required Banks, the Borrower shall pay to the Agent for the pro rata
distribution to the Banks interest, to the extent permitted by law, on such
defaulted amount up to the date of actual payment (after as well as before
judgment) at an increased rate per annum (computed on the basis of the actual
number of days elapsed over a year of 360 days) of up to a rate equal to three
(3%) percent in excess of the interest rate otherwise in effect with respect to
the type of Loan in connection with which the required payments have not been
made.
(b) Upon the occurrence and during the continuation of an Event of
Default, upon the consent and determination of the Required Banks, the Borrower
shall pay to the Agent, for the pro rata distribution to the Banks, interest, to
the extent permitted by law, on the Loans outstanding (after as well as before
judgment) at an increased rate per annum (computed on the basis of the actual
number of days elapsed over a year of 360 days) of up to a rate equal to three
(3%) percent in excess of the interest rate otherwise in effect hereunder.
- 33 -
SECTION 2.26. Payments. All payments by the Borrower hereunder or under
the Notes shall be made in U.S. dollars in immediately available funds at the
office of the Agent by 2:00 p.m. on the date on which such payment shall be due.
SECTION 2.27. Interest Adjustments. (a) If the provisions of this
Agreement or the Notes would at any time otherwise require payment by the
Borrower to any Bank of any amount of interest in excess of the maximum amount
then permitted by applicable law the interest payments shall be reduced to the
extent necessary so that such Bank shall not receive interest in excess of such
maximum amount. To the extent that, pursuant to the foregoing sentence, the
Agent shall receive interest payments on behalf of the Banks hereunder or under
the Notes in an amount less than the amount otherwise provided, such deficit
(hereinafter called the "Interest Deficit") will cumulate and will be carried
forward (without interest) until the termination of this Agreement. Interest
otherwise payable to any Bank hereunder or under the Notes for any subsequent
period shall be increased by such maximum amount of the Interest Deficit that
may be so added without causing such Bank to receive interest in excess of the
maximum amount then permitted by applicable law.
(b) The amount of the Interest Deficit at the time of any complete payment
of the Loans at that time outstanding (other than an optional prepayment
thereof) shall be cancelled and not paid.
SECTION 2.28. Interest Rate Hedge Contract. Upon the written request of
the Required Banks, the Borrower shall enter into interest rate hedge agreements
with the Agent, an affiliate of the Agent or any other bank reasonably
acceptable to the Agent (and, in the case of such other bank, shall deliver
copies of the hedge agreements to the Agent) to purchase interest rate caps for
a maximum notional value equal to fifty (50%) percent of floating rate Term
Loans for a period of two (2) years on usual and customary terms and conditions.
- 34 -
ARTICLE III
CONDITIONS OF LENDING
SECTION 3.01. Conditions Precedent to the Making of the Initial Revolving
Credit Loan and the Term Loan. The obligation of the Banks to make the initial
Revolving Credit Loans and the Term Loan contemplated by this Agreement are each
subject to the condition precedent that the Agent and the Banks shall have
received from the Borrower and the Guarantors on or before the date of this
Agreement the following, each dated such day, in form and substance satisfactory
to the Agent and its counsel:
(a) A Revolving Credit Note, duly executed by the Borrower and payable to
the order of each of the Banks.
(b) A Term Loan Note, duly executed by the Borrower and payable to the
order of each of the Banks.
(c) Certified (as of the date of this Agreement) copies of (i) the
resolutions of the Board of Directors of the Borrower authorizing the Loans and
authorizing and approving this Agreement and the other Loan Documents and the
execution, delivery and performance thereof, and (ii) all documents evidencing
other necessary corporate action and governmental approvals, if any, with
respect to this Agreement and the other Loan Documents.
(d) Certified (as of the date of this Agreement) copies of the resolutions
of the Boards of Directors and the shareholders of each of the Guarantors,
authorizing and approving this Agreement, their Guaranties and any other Loan
Document applicable to the Guarantors, and the execution, delivery and
performance thereof and certified copies of all documents evidencing other
necessary corporate action and governmental approvals, if any, with respect to
this Agreement, their Guaranties and the other Loan Documents.
(e) A certificate of the Secretary or an Assistant Secretary (attested to
by another officer) of the Borrower certifying: (i) the names and true
signatures of the officer or officers of the Borrower authorized to sign this
Agreement, the Notes and the other Loan Documents to be delivered hereunder on
behalf of the Borrower; and (ii) a copy of the Borrower's by-laws as complete
and correct on the date of this Agreement.
(f) A Certificate of the Secretary or an Assistant Secretary (attested to
by another officer) of each of the Guarantors certifying (i) the names and true
signatures of the officer or officers of the Guarantors authorized to sign this
Agreement, their
- 35 -
Guaranties and any other Loan Documents to be delivered hereunder on behalf of
the Guarantors; (ii) a copy of each of the Guarantors' by-laws as complete and
correct on the date of this Agreement; and (iii) the stock ownership of each
Guarantor.
(g) Copies of the certificate of incorporation and all amendments thereto
of the Borrower and the Guarantors certified in each case by the Secretary of
State (or equivalent officer) of the state of incorporation of each of the
Borrower and the Guarantors and a certificate of existence and good standing
with respect to the Borrower and the Guarantors from the Secretary of State (or
equivalent officer) of the state of incorporation of the Borrower and the
Guarantors) and from the Secretary of State (or equivalent officer) of any state
in which the Borrower or the Guarantors are authorized to do business.
(h) An opinion of Wolf, Block, Xxxxxx and Xxxxx-Xxxxx, LLP, counsel for
the Borrower and the Guarantors as to certain matters referred to in Article IV
hereof and as to such other matters as the Agent or its counsel may reasonably
request.
(i) Intentionally omitted.
(j) From each of the Guarantors, an executed Guaranty.
(k) From the Individual Guarantor, an executed guaranty in form and
substance reasonably satisfactory to the Agent and the Banks.
(l) From the Borrower and each of the Guarantors, an executed Security
Agreement giving to the Agent, on behalf of the Banks, a first priority security
interest in all assets of the Borrower and the Guarantors including, but not
limited to, all personal property, equipment, fixtures, inventory, accounts,
chattel paper and general intangibles all whether now owned or hereafter
acquired (the "Collateral"). Such Collateral shall not include the Borrower's or
any Guarantor's interest as a tenant under any leases of real estate.
(m) From the Borrower and each of the Guarantors, UCC-1 filings perfecting
the Agent's security interests in the Collateral.
(n) From the Borrower and any Guarantor which owns all or any of the stock
of another Guarantor or any Subsidiary of the Borrower, a Pledge Agreement
granting to the Agent, on behalf of the Banks, a first priority security
interest in all of the stock in such Guarantor and/or Subsidiary.
- 36 -
(o) From the Borrower and any Guarantor executing and delivering a Pledge
Agreement, the stock certificate(s) for the shares pledged thereunder, together
with a stock power executed in blank.
(p) A property damage insurance policy for the Collateral in the amount of
the replacement value of the Collateral naming the Agent as loss payee with
insurance companies acceptable to the Agent. The policies shall provide for
thirty (30) days notice to the Agent of cancellation or change.
(q) From the Borrower, copies of all of the Borrower's credit agreements,
loan agreements, indentures, mortgages and other documents relating to the
extension of credit.
(r) From the Borrower, the fees and expenses to be paid pursuant to this
Agreement, the Commitment Letter and the Fee Letter.
(s) The Agent and the Banks shall, prior to the date of this Agreement,
have completed their due diligence reviews of the Borrower, the results of which
shall be satisfactory to the Agent and the Banks in their sole discretion.
(t) From United Acquisition Corp. and/or the Individual Guarantor a
subordination agreement in form and substance satisfactory to the Agent
subordinating to the prior payment of the Credit Facility $12,800,000.00 in
loans to the Credit Parties.
(u) The following statements shall be true and the Agent shall have
received a certificate signed by the President or Chief Financial Officer of the
Borrower dated the date hereof, stating that:
(i) The representations and warranties contained in Article IV of
this Agreement and in the other Loan Documents are true and correct on and as of
such date; and
(ii) No Default or Event of Default has occurred and is continuing,
or would result from the making of the initial Revolving Credit Loans or the
Term Loan.
(v) All legal matters incident to this Agreement and the Loan transactions
contemplated hereby shall be reasonably satisfactory to Cullen and Xxxxxx, LLP,
counsel to the Agent.
- 37 -
(w) Receipt by the Agent of such other approvals, opinions or documents as
the Agent or its counsel may reasonably request.
(x) From the Borrower, an appraisal of all store lease, which appraisal is
reasonably satisfactory to the Agent and the Banks.
SECTION 3.02. Conditions Precedent to All Revolving Credit Loans. The
obligation of the Banks to make each Revolving Credit Loan shall be subject to
the further condition precedent that on the date of such Revolving Credit Loan:
(a) The following statements shall be true and the Agent shall have
received a certificate signed by the President or the Chief Financial Officer of
the Borrower dated the date of such Revolving Credit Loan, stating that:
(i) The representations and warranties contained in Article IV of
this Agreement and in the other Loan Documents are true and correct in all
material respects on and as of such date as though made on and as such date
(provided that the representation made in Section 4.01(f) shall be deemed made
as to the then most recent fiscal year and interim period financial statements
delivered to the Agent and the Banks and any other representation that refers to
a specific date shall be restated as of such date); and
(ii) No Default or Event of Default has occurred and is continuing,
or would result from such Revolving Credit Loan.
(b) The Agent shall have received such other approvals, opinions or
documents as the Agent or its counsel may reasonably request.
- 38 -
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
SECTION 4.01. Representations and Warranties. On the date of this
Agreement and on each date that the Borrower requests a Revolving Credit Loan,
the Borrower and each of the Guarantors represent and warrant as follows:
(a) Subsidiaries. On the date hereof, the only Subsidiaries of the
Borrower or a Guarantor are those set forth on Schedule 4.01(a) annexed hereto,
which Schedule accurately sets forth with respect to each such Subsidiary, its
name and address, any other addresses at which it conducts business, its state
of incorporation and each other jurisdiction in which it is qualified to do
business and the identity and share holdings of its stockholders. Except as set
forth on Schedule 4.01(a), all of the issued and outstanding shares of each
Subsidiary which are owned by the Borrower or a Guarantor are owned by the
Borrower or such Guarantor free and clear of any mortgage, pledge, lien or
encumbrance. Except as set forth on Schedule 4.01(a) or in filings made with the
Securities and Exchange Commission (the "SEC Documents"), there are not
outstanding any warrants, options, contracts or commitments of any kind
entitling any Person to purchase or otherwise acquire any shares of common or
capital stock or other equity interest of the Borrower or any Guarantor or any
Subsidiary of the Borrower or a Guarantor, nor are there outstanding any
securities which are convertible into or exchangeable for any shares of the
common or capital stock of the Borrower or any Guarantor or any Subsidiary of
the Borrower or a Guarantor.
(b) Good Standing. The Borrower and the Guarantors are each corporations
duly incorporated, validly existing and in good standing under the laws of the
States of their respective incorporation and each has the corporate power to own
their assets and to transact the business in which they are presently engaged
and are duly qualified and are in good standing in such other jurisdictions
where failure to qualify or otherwise maintain such standing could result in a
Material Adverse Change in the Borrower or in the Borrower and the Guarantors,
taken as a whole.
(c) Due Execution, Etc. The execution, delivery and performance by the
Borrower and each Guarantor of the Loan Documents to which they are a party are
within the Borrower's and the Guarantors' corporate power and have been duly
authorized by all necessary corporate action and do not and will not (i) require
any consent or approval of the stockholders of the Borrower or Guarantors other
than those already obtained; (ii) do not
- 39 -
contravene the Borrower's or any of the Guarantors' certificates of
incorporation, charters or by-laws; (iii) violate any provision of any law,
rule, regulation, contractual restriction, order, writ, judgment, injunction, or
decree, determination or award binding on or affecting the Borrower or any
Guarantor; (iv) result in a breach of or constitute a default under any
indenture or loan or credit agreement, or any other agreement, lease or
instrument to which the Borrower or any Guarantor is a party or by which it or
its properties may be bound or affected; or (v) result in, or require, the
creation or imposition of any Lien (other than the Lien of the Loan Documents)
upon or with respect to any of the properties now owned or hereafter acquired by
the Borrower or any Guarantor.
(d) No Consents Required. No authorization or approval or other action by,
and no notice to or filing with, any governmental authority or regulatory body
is required for the due execution, delivery and performance by the Borrower or
any Guarantor of any Loan Document to which it is a party, except
authorizations, approvals, actions, notices or filings which have been obtained,
taken or made, as the case may be.
(e) Validity and Enforceability. The Loan Documents when delivered
hereunder will have been duly executed and delivered on behalf of the Borrower
and each Guarantor, as the case may be, and will be legal, valid and binding
obligations of the Borrower and each Guarantor, as the case may be, enforceable
against the Borrower or such Guarantor in accordance with their respective terms
except as enforcement thereof may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws or equitable principles
affecting the enforcement of creditors rights.
(f) Financial Statements. The consolidated financial statements of the
Borrower and its Consolidated Subsidiaries for the fiscal year ended December 3,
2000, and for the most recent interim fiscal period, and the combining financial
statements of the Borrower and its Consolidated Subsidiaries for the fiscal year
ended December 3, 2000, copies of which have been furnished to the Agent and the
Banks, fairly present the financial condition of the Borrower and its
Consolidated Subsidiaries as at such dates and the results of operations of the
Borrower and its Consolidated Subsidiaries for the periods ended on such dates,
all in accordance with GAAP, and since such dates there has been (i) other than
as set forth in Schedule 4.01(f) hereto, and, in the ordinary course of business
no material increase in the liabilities of the Borrower and its Consolidated
Subsidiaries, and (ii) no Material Adverse Change in the Borrower or in the
Borrower and any of its Consolidated Subsidiaries, taken as a whole.
- 40 -
(g) No Litigation. As of the date hereof, except as disclosed in Schedule
4.01(g) or in the SEC Documents, there is no pending or, to the Borrower's
knowledge, threatened in writing, action, proceeding or investigation affecting
the Borrower, any Guarantor or any Subsidiary of the Borrower or a Guarantor,
before any court, governmental agency or arbitrator, which either in one case or
in the aggregate, is reasonably likely to result in a Material Adverse Change in
the Borrower or in the Borrower and the Guarantors, taken as a whole.
(h) Taxes. The Borrower and each Guarantor have filed all federal, state
and local tax returns required to be filed and have paid all taxes, assessments
and governmental charges and levies thereon to be due, including interest and
penalties (other than taxes being contested in good faith and by appropriate
proceedings by the Borrower and for which appropriate reserves are maintained).
Other than as set forth in Schedule 4.01(h) hereto, the federal income tax
liability of the Borrower and each Guarantor has been finally determined and
satisfied for all taxable years up to and including the taxable year ending
November 30, 1997.
(i) Licenses, Etc. The Borrower, each Guarantor and each Subsidiary of the
Borrower or each Guarantor possess all licenses, permits, franchises, patents,
copyrights, trademarks and trade names, or rights thereto, to conduct their
respective businesses substantially as now conducted and as presently proposed
to be conducted, and, to their knowledge, neither the Borrower, any Guarantor
nor any such Subsidiary are in violation of any similar rights of others.
(j) Burdensome Agreements. Neither the Borrower nor any of the Guarantors
are a party to any indenture, loan or credit agreement or any other agreement,
lease or instrument or subject to any charter, corporate or partnership
restriction which could result in a Material Adverse Change in the Borrower or
in the Borrower and the Guarantors, taken as a whole. Neither the Borrower nor
any Guarantor is in default in any respect in the performance, observance, or
fulfillment of any of the obligations or covenants contained in any agreement or
instrument material to its business.
(k) Margin Stock. The Borrower is not engaged in the business of extending
credit for the purpose of purchasing or carrying margin stock (within the
meaning of Regulation G, T, U or X), and no proceeds of any Loan will be used to
purchase or carry any margin stock or to extend credit to others for the purpose
of purchasing or carrying any margin stock or in any other way which
- 41 -
will cause the Borrower to violate the provisions of Regulations G, T, U or X.
(l) Compliance With Laws. The Borrower, each Guarantor and each Subsidiary
of the Borrower or a Guarantor are in compliance with all federal and state laws
and regulations in all jurisdictions where the failure to comply with such laws
or regulations could result in a Material Adverse Change in the Borrower or in
the Borrower and the Guarantors, taken as a whole.
(m) ERISA. The Borrower, each Guarantor, each Subsidiary of the Borrower
or a Guarantor and each ERISA Affiliate are in compliance with all applicable
provisions of ERISA. Neither a Reportable Event nor a Prohibited Transaction has
occurred and is continuing with respect to any Benefit Arrangement or Plan (and
to the best of their knowledge, to any Multiemployer Plan); no notice of intent
to terminate a Plan has been filed nor has any Plan been terminated; no
circumstances exist which constitute grounds under Section 4042 of ERISA
entitling the PBGC to institute proceedings to terminate, or appoint a trustee
to administrate a Plan, nor has the PBGC instituted any such proceedings;
neither the Borrower, any Guarantor, any Subsidiary of the Borrower or a
Guarantor, nor any ERISA Affiliate has completely or partially withdrawn under
Sections 4201 or 4204 of ERISA from a Multiemployer Plan. The Borrower, each
Guarantor, each Subsidiary of the Borrower or a Guarantor and each ERISA
Affiliate:
(i) have met their minimum funding requirements under ERISA with
respect to all of their Plans;
(ii) have made when due any and all payments required to be made
under any agreement relating to a Multiemployer Plan and that to the best of
their knowledge, each Multiemployer Plan is able to pay benefits thereunder when
due;
(iii) represent that for all Plans, the present fair market value of
all Plan assets exceeds the present value of all vested benefits under each
Plan, as determined on the most recent valuation date of the Plan, determined on
Financial Accounting Statements 35 and 36 basis for such Plan;
(iv) represent that to the extent that any Benefit Arrangement is
insured, they have paid when due all premiums required to be paid; and to the
extent that any Benefit Arrangement is funded other than with insurance, they
have made when due all contributions required to be paid;
- 42 -
(v) represent that for each Benefit Arrangement, Plan, and to the
best of their knowledge each Multiemployer Plan, that neither the Borrower, any
Guarantor, any such Subsidiary nor any ERISA Affiliate has incurred any
liability to the PBGC under ERISA.
(n) Hazardous Materials. The Borrower, each Guarantor and each Subsidiary
of the Borrower or a Guarantor are in compliance with all federal, state or
local laws, ordinances, rules, regulations or policies governing Hazardous
Materials and neither the Borrower, any Guarantor nor any such Subsidiary has
used Hazardous Materials on, from, or affecting any property now owned or
occupied or hereafter owned or occupied by the Borrower, any Guarantor or any
such Subsidiary in any manner which violates federal, state or local laws,
ordinances, rules, regulations or policies governing the use, storage,
treatment, transportation, manufacture, refinement, handling, production or
disposal of Hazardous Materials, and to the Borrower's, Guarantors' and such
Subsidiaries' knowledge, no prior owner of any such property or any tenant,
subtenant, prior tenant or prior subtenant have used Hazardous Materials on,
from or affecting such property in any manner which violates federal, state or
local laws, ordinances, rules, regulations, or policies governing the use,
storage, treatment, transportation, manufacture, refinement, handling,
production or disposal of Hazardous Materials.
(o) Use of Proceeds. The proceeds of the Revolving Credit Loans and the
Term Loan shall be used exclusively for the purposes set forth in Section 2.05
and Section 2.13, respectively of this Agreement.
(p) No Liens. The properties and assets of the Borrower and the Guarantors
are not subject to any Lien other than those described in Section 5.02(a)
hereof.
(q) Casualties. Neither the business nor the properties of the Borrower,
any Guarantor or any Subsidiary of the Borrower or a Guarantor are affected by
any fire, explosion, accident, strike, hail, earthquake, embargo, act of God or
of the public enemy, or other casualty (whether or not covered by insurance),
which could result in a Material Adverse Change in the Borrower or in the
Borrower and the Guarantors, taken as a whole.
(r) Solvency of Guarantors. The liability of the Guarantors as a result of
the execution of their respective Guaranties and the execution of this Agreement
shall not cause the liabilities (including contingent liabilities) of each of
the Guarantors to exceed the fair saleable value of their respective assets.
- 43 -
(s) Advantage to Guarantors. The Guarantors acknowledge they have derived
or expect to derive a financial or other advantage from the Loans obtained by
the Borrower from the Banks.
(t) Credit Agreements. Schedule 4.01(t) is a complete and correct list of
all credit agreements, indentures, purchase agreements, guaranties, Capital
Leases, and other investments, agreements and arrangements presently in effect
providing for or relating to extensions of credit (including agreements and
arrangements for the issuance of letters of credit or for acceptance financing)
in respect of which the Borrower or any Guarantor is in any manner directly or
contingently obligated, and the maximum principal or face amounts of the credit
in question, outstanding or to be outstanding, are correctly stated, and all
Liens of any nature given or agreed to be given as security therefor are
correctly described or indicated in such Schedule and neither the Borrower nor
any Guarantor is in default with respect to its obligations thereunder.
- 44 -
ARTICLE V
COVENANTS OF THE BORROWER
SECTION 5.01. Affirmative Covenants. So long as (i) the Total Commitment
shall be in effect or (ii) any amount shall remain outstanding under any of the
Notes, the Borrower and each of the Guarantors will, unless the Required Banks
shall otherwise consent in writing:
(a) Compliance with Laws, Etc. Comply, and cause each Subsidiary of the
Borrower or a Guarantor to comply, with all applicable laws, rules, regulations
and orders, where the failure to so comply could result in a Material Adverse
Change in the Borrower or in the Borrower and the Guarantors, taken as a whole.
(b) Reporting Requirements. Furnish to the Agent and each of the Banks:
(i) Annual Financial Statements. As soon as available and in any
event not later than the date it is required to be filed with the Securities and
Exchange Commission, a copy of Form 10-K for each fiscal year of the Borrower,
including the audited consolidated financial statements of the Borrower and its
Consolidated Subsidiaries for such year, including a balance sheet with a
related statement of income and retained earnings and statement of cash flows,
all in reasonable detail and setting forth in comparative form the figures for
the previous fiscal year, together with an unqualified opinion, prepared by BDO
Xxxxxxx, LLP or such other independent certified public accountants selected by
the Borrower and reasonably satisfactory to the Agent, all such financial
statements to be prepared in accordance with GAAP.
(ii) Quarterly Financial Statements. As soon as available and in any
event not later than the date it is required to be filed with the Securities and
Exchange Commission, a copy of Form 10-Q for each fiscal quarter of the
Borrower, including the consolidated financial statements of the Borrower and
its Consolidated Affiliates for such quarter and for year to date, including a
balance sheet with a related statement of income and retained earnings and a
statement of cash flows, all in reasonable detail and setting forth in
comparative form the figures for the comparable quarter and comparable year to
date period for the previous fiscal year, all such financial statements to be
prepared by management of the Borrower in accordance with GAAP (subject to year
end audit adjustments).
- 45 -
(iii) Consolidating Financial Statements. (1) As soon as available
and in any event within ninety (90) days after the end of each fiscal year of
the Borrower and within sixty (60) days after the end of each of the first three
fiscal quarters of the Borrower, a copy of the consolidating financial
statements of the Borrower and its operating Subsidiaries for such year or
quarter, including balance sheets with related statements of income and retained
earnings and statements of cash flows, all in reasonable detail and setting
forth in comparative form the figures for the previous fiscal year or previous
fiscal quarter, all such financial statements to be prepared by management of
the Borrower in accordance with GAAP (subject to year end audit adjustments),
and (2) as soon as available and in any event within sixty (60) days after the
end of each fiscal quarter of the Borrower (90 days in the case of the fourth
fiscal quarter of each year), a copy of a financial schedule showing EBITDA
operating results by store location for such quarter, prepared by management of
the Borrower.
(iv) Intentionally omitted.
(v) Management Letters. Promptly upon receipt thereof, copies of any
reports submitted to the Borrower or any Guarantor by independent certified
public accountants in connection with examination of the financial statements of
the Borrower and each Guarantor made by such accountants.
(vi) Certificate of No Default. Simultaneously with the delivery of
the financial statements referred to in Section 5.01(b)(i) and (ii), a
certificate of the President or the Chief Financial Officer of the Borrower (1)
certifying that no Default or Event of Default has occurred and is continuing,
or if a Default or Event of Default has occurred and is continuing, a statement
as to the nature thereof and the action which is proposed to be taken with
respect thereto; and (2) with computations demonstrating compliance with the
covenants contained in Section 5.03.
(vii) Notice of Litigation. Promptly after the commencement thereof,
notice of all actions, suits and proceedings before any court or governmental
department, commission, board, bureau, agency, or instrumentality, domestic or
foreign, affecting the Borrower, any Guarantor or any Subsidiary of the Borrower
or a Guarantor which, if determined adversely to the Borrower, any Guarantor or
any such Subsidiary could result in a Material Adverse Change in the Borrower
and the Guarantors, taken as a whole.
(viii) Notice of Defaults and Events of Default. As soon as possible
and in any event within five (5) days after the occurrence of each Default or
Event of Default, a written notice
- 46 -
setting forth the details of such Default or Event of Default and the action
which is proposed to be taken by the Borrower with respect thereto.
(ix) ERISA Reports. Promptly after the filing or receiving thereof,
copies of all reports, including annual reports, and notices which the Borrower
any Guarantor and any Subsidiary of the Borrower or a Guarantor, files with or
receives from the PBGC or the U.S. Department of Labor under ERISA; and as soon
as possible after the Borrower, any Guarantor or any such Subsidiary knows or
has reason to know that any Reportable Event or Prohibited Transaction has
occurred with respect to any Plan or that the PBGC or the Borrower, any
Guarantor or any such Subsidiary has instituted or will institute proceedings
under Title IV of ERISA to terminate any Plan, the Borrower or such Guarantor
will deliver to the Agent a certificate of the President or the Chief Financial
Officer of the Borrower or such Guarantor setting forth details as to such
Reportable Event or Prohibited Transaction or Plan termination and the action
the Borrower or such Guarantor proposes to take with respect thereto.
(x) Reports to Other Creditors. Promptly after the furnishing
thereof, copies of any statement or report furnished to any other party pursuant
to the terms of any indenture, loan, or credit or similar material agreement and
not otherwise required to be furnished to the Agent pursuant to any other clause
of this Section 5.01(b).
(xi) Proxy Statements, Etc. Promptly after the sending or filing
thereof, copies of all proxy statements, financial statements and reports which
the Borrower or any Guarantor sends to its public stockholders, and copies of
all regular, periodic, and special reports, and all registration statements
which the Borrower or any Guarantor files with the Securities and Exchange
Commission or any governmental authority which may be substituted therefor, or
with any national securities exchange.
(xii) Personal Financial Statements. At least once in each calendar
year, and not later than fifteen (15) months after the last delivery of such
financial statement, a copy of the personal financial statement of the
Individual Guarantor dated as of date not more than six (6) months prior to the
date of delivery.
(xiii) Lease Status Certificate. As soon as available and in any
event within sixty (60) days after the end of each fiscal quarter of the
Borrower (90 days in the case of the fourth fiscal quarter of each year), a
certificate from the chief financial officer of the Borrower setting forth the
Credit Parties'
- 47 -
payment status for all leases of real property, in form and substance reasonably
satisfactory to the Agent.
(xiv) Borrowing Base Certificate. As soon as available and in any
event within thirty (30) days after the end of each of the first three (3)
Fiscal Months following the date hereof and twenty (20) days after the end of
each Fiscal Month thereafter, monthly Borrowing Base certificates dated as of
the end of each such month in form and substance reasonably satisfactory to the
Agent.
(xv) Accounts Receivable Aging. As soon as available and in any
event within thirty (30) days after the end of each of the first three (3)
Fiscal Months following the date hereof and twenty (20) days after the end of
each Fiscal Month thereafter, monthly accounts receivable agings dated as of the
end of each such month in form and substance reasonably satisfactory to the
Agent.
(xvi) General Information. Such other information respecting the
condition or operations, financial or otherwise, of the Borrower, any Guarantor
or any Subsidiary of the Borrower or a Guarantor as the Bank may from time to
time reasonably request.
(c) Taxes. Pay and discharge, and cause its Subsidiaries to pay and
discharge, all taxes, assessments and governmental charges upon it or them, its
or their income and its or their properties prior to the dates on which
penalties are attached thereto, unless and only to the extent that (i) such
taxes shall be contested in good faith and by appropriate proceedings by the
Borrower, any Guarantor or any such Subsidiary, as the case may be, and (ii)
there be adequate reserves therefor in accordance with GAAP entered on the books
of the Borrower, any Guarantor or any such Subsidiary.
(d) Corporate Existence. Preserve and maintain, and cause its Subsidiaries
to preserve and maintain, their corporate existence and good standing in the
jurisdiction of their incorporation and the rights, privileges and franchises of
the Borrower, each Guarantor and each such Subsidiary in each case where failure
to so preserve or maintain could result in a Material Adverse Change in the
Borrower or any of the Guarantors.
(e) Maintenance of Properties and Insurance. (i) Keep, and cause any
Subsidiaries to keep, the respective properties and assets (tangible or
intangible) that are useful and necessary in its business, in good working order
and condition, reasonable wear and tear excepted; and (ii) maintain, and cause
any Subsidiaries to maintain, insurance with financially sound and reputable
insurance companies or associations in such amounts and covering such risks
- 48 -
as are usually carried by companies engaged in similar businesses and owning
properties doing business in the same general areas in which the Borrower, any
Guarantors and any such Subsidiaries operate.
(f) Books of Record and Account. Keep and cause any Subsidiaries to keep,
adequate records and proper books of record and account in which complete
entries will be made in a manner to enable the preparation of financial
statements in accordance with GAAP, reflecting all financial transactions of the
Borrower, the Guarantors, and any such Subsidiaries.
(g) Visitation; Field Audit. (a) From time to time, permit the Agent or
any of the Banks or any agents or representatives thereof, to examine and make
copies of and abstracts from the books and records of, and visit the properties
of, the Borrower or any Guarantor and to discuss the affairs, finances and
accounts of the Borrower or any Guarantor with any of the respective executive
officers or directors of the Borrower or such Guarantor or the Borrower's or
such Guarantor's independent accountants.
(b) From time to time, allow the Bank to conduct, and cooperate with
the Bank in connection therewith, a Field Audit. The expense of such Field Audit
shall be for the account of the Borrower, provided that as long as no Default or
Event of Default exists, Field Audits shall be limited to one per fiscal year of
the Borrower during the term of this Agreement and the cost of such Field Audits
shall not exceed $5,000.00 in any fiscal year of the Borrower.
(c) Any Field Audits or other visitations shall be made during
normal business hours and on reasonable notice. The Agent shall use its best
efforts to preserve the confidentiality of any non-public information obtained
by it.
(h) Performance and Compliance with Other Agreements. Perform and comply
with each of the provisions of each and every agreement the failure to perform
or comply with which would be reasonably likely to result in a Material Adverse
Change in the Borrower or in the Borrower and the Guarantors, taken as a whole.
(i) Pension Funding. Comply with the following and cause each ERISA
Affiliate of the Borrower, any Guarantor or any Subsidiary of the Borrower or a
Guarantor to comply with the following:
(i) engage solely in transactions which would not subject any of
such entities to either a civil penalty assessed pursuant to Section
502(i) of ERISA or a tax imposed by
- 49 -
Section 4975 of the Internal Revenue Code in either case in an amount in
excess of $25,000.00;
(ii) make full payment when due of all amounts which, under the
provisions of any Plan or ERISA, the Borrower, any Guarantor, any such
Subsidiary or any ERISA Affiliate of any of same is required to pay as
contributions thereto;
(iii) all applicable provisions of the Internal Revenue Code and the
regulations promulgated thereunder, including but not limited to Section
412 thereof, and all applicable rules, regulations and interpretations of
the Accounting Principles Board and the Financial Accounting Standards
Board;
(iv) not fail to make any payments in an aggregate amount greater
than $25,000.00 to any Multiemployer Plan that the Borrower, any
Guarantor, any such Subsidiary or any ERISA Affiliate may be required to
make under any agreement relating to such Multiemployer Plan, or any law
pertaining thereto; or
(v) not take any action regarding any Plan which could result in the
occurrence of a Prohibited Transaction.
(j) Licenses. Maintain at all times, and cause each Subsidiary to maintain
at all times, all licenses or permits necessary to the conduct of its business
or as may be required by any governmental agency or instrumentality thereof, the
failure to maintain would be reasonably likely to result in a Material Adverse
Change in the Borrower or in the Borrower and the Guarantors, taken as a whole.
(k) New Subsidiaries. Cause any Subsidiary of the Borrower or any
Guarantor formed after the date of this Agreement, to (x) become a guarantor of
all obligations of the Borrower under this Agreement and the other Loan
Documents, (y) to secure its obligations with a security interest in all of its
personal property (other than rights as lessees under leases for real property)
and (z) become a party to this Agreement. The parent company of any such
Subsidiary shall pledge its shares in such Subsidiary to the Agent for the
benefit of the Banks.
(l) Agent's Fees. Pay to the Agent (i) an annual administrative fee, and
(ii) those fees (other than the annual administrative fee), in each case as set
forth in the Fee Letter.
(m) Trademarks. The Borrower shall deliver or cause to be delivered to the
Bank certified copies of all trademarks owned by the Borrower and the Guarantors
within thirty (30) days of the date of this Agreement. The Borrower and the
Guarantors, as the case
- 50 -
may be, shall enter into a Trademark Security Agreement for each of such
trademarks within thirty (30) days of the date hereof.
SECTION 5.02. Negative Covenants. So long as (i) the Total Commitment
shall be in effect or (ii) any amount shall remain outstanding under any of the
Notes, neither the Borrower nor any of the Guarantors will, without the written
consent of the Required Banks:
(a) Liens, Etc. Create, incur, assume or suffer to exist, any Lien, upon
or with respect to any of its properties, now owned or hereafter acquired,
except:
(i) Liens in favor of the Banks securing Debt permitted by Section
5.02;
(ii) Liens for taxes or assessments or other government charges or
levies if not yet due and payable or if due and payable if they are being
contested in good faith by appropriate proceedings and for which appropriate
reserves are maintained;
(iii) Liens imposed by law, such as mechanics', materialmen's,
landlords', warehousemen's, and carriers' Liens, and other similar Liens,
securing obligations incurred in the ordinary course of business which are not
past due or which are being contested in good faith by appropriate proceedings
and for which appropriate reserves have been established;
(iv) Liens under workers' compensation, unemployment insurance,
Social Security, or similar legislation;
(v) Liens, deposits, or pledges to secure the performance of bids,
tenders, contracts (other than contracts for the payment of money), leases
(permitted under the terms of this Agreement), public or statutory obligations,
surety, stay, appeal, indemnity, performance or other similar bonds, or other
similar obligations arising in the ordinary course of business;
(vi) Liens described in Schedule 5.02(a), provided that no such
Liens shall be renewed, extended or refinanced except for the refinance of the
then outstanding balance of Debt secured by such Lien;
(vii) Judgment and other similar Liens arising in connection with
court proceedings (other than those described in Section 6.01(f)), provided (i)
the execution or other enforcement of such Liens is effectively stayed and the
claims secured thereby
- 51 -
are being actively contested in good faith and by appropriate proceedings, or
(ii) any such judgment is fully covered by insurance;
(viii) Easements, rights-of-way, restrictions, and other similar
encumbrances which, in the aggregate, do not materially interfere with the
Borrower's or a Guarantor's occupation, use and enjoyment of the property or
assets encumbered thereby in the normal course of its business or materially
impair the value of the property subject thereto; and
(ix) Purchase money Liens on any property hereafter acquired or the
assumption of any Lien on property (excluding leases for the use or occupation
of real property) existing at the time of such acquisition, or a Lien incurred
in connection with any conditional sale or other title retention agreement or a
Capital Lease, provided that:
(1) Any property subject to any of the foregoing is acquired
by the Borrower or any Guarantor in the ordinary course of its respective
business and the Lien on any such property is created contemporaneously with
such acquisition;
(2) The obligation secured by any Lien so created, assumed, or
existing shall not exceed one hundred (100%) percent of lesser of cost or fair
market value of the property acquired as of the time of the Borrower or any
Guarantor acquiring the same;
(3) Each such Lien shall attach only to the property so
acquired and fixed improvements thereon;
(4) The Debt secured by all such Liens shall not exceed
$15,000,000.00 at any time outstanding in the aggregate; and
(5) The obligation secured by such Lien is permitted by the
provisions of Section 5.02(b) and the related expenditure is permitted by the
provisions of Section 5.03(b).
(x) Leasehold mortgage liens against stores 413 and/or 599.
(b) Debt. Create, incur, assume, or suffer to exist, any Debt, except:
(i) Debt of the Borrower under this Agreement or the Notes;
- 52 -
(ii) Debt described in Schedule 5.02(b), provided that no such Debt
shall be renewed, extended or refinanced except for the refinance of the then
outstanding balance of such Debt;
(iii) Accounts payable to trade creditors for goods or services and
current operating liabilities (other than for borrowed money), in each case
incurred and paid in the ordinary course of business, unless contested in good
faith and by appropriate proceedings;
(iv) Debt of the Borrower or any Guarantor secured by purchase money
Liens permitted by Section 5.02(a)(ix); and
(v) Unsecured intercompany Debt among the Borrower and its
Affiliates.
(c) Lease Obligations. Create, incur, assume, or suffer to exist any
obligation as lessee for the rental or hire of any real or personal property,
except (i) Capital Leases permitted by Section 5.02(a); (ii) leases existing on
the date of this Agreement and any extensions or renewals thereof; (iii) leases
for the use and occupancy of real property (other than leases described in
clause (i) or (ii)) which do not, in the aggregate, require the Borrower and the
Guarantors to make payments (including taxes, insurance, maintenance, and
similar expenses which the Borrower or any Guarantor is required to pay under
the terms of any lease) in any fiscal year of the Borrower in excess of
$3,000,000.00 during each fiscal year of the Borrower, it being the intent of
this clause (iii) that the Borrower may enter into such leases which add not
more than such amounts of incremental "Average Annual Cost" in each fiscal year,
and (iv) all other operating leases (other than leases described in (i), (ii) or
(iii)), which do not, in the aggregate, require the Borrower and the Guarantors
to make annual payments under such leases in excess of $1,500,000.00 in the
aggregate over the term of this Agreement. For purposes hereof, "Average Annual
Cost" shall mean the total amount to be paid by the lessee under any lease over
the term of such lease, for any and all purposes, including rent, escalations,
taxes, operating costs, pass throughs, electric and other utility costs,
commissions, build-outs, and all other amounts payable to or for the benefit of
the lessor divided by the term of the lease, in years.
(d) Merger. Merge into, or consolidate with or into, or have merged into
it, any Person (for the purpose of this subsection (d), the acquisition or sale
by the Borrower or any Guarantor by lease, purchase or otherwise, of all, or
substantially all, of the common stock or the assets of any Person or of it
shall be deemed a merger of such Person with the Borrower or any Guarantor)
other than a
- 53 -
merger of a Subsidiary into its parent corporation or a Subsidiary into a
Subsidiary.
(e) Sale of Assets, Etc. Sell, assign, transfer, lease or otherwise
dispose of any of its assets, (including a saleleaseback transaction) with or
without recourse, except for (i) inventory disposed of in the ordinary course of
business; (ii) the sale or other disposition of assets no longer used or useful
in the conduct of its business; and (iii) upon notice to the Agent, rights as a
tenant under leases of real estate provided that (x) not more than one (1) such
lease shall be sold during each fiscal year of the Borrower and (y) the Borrower
complies with the provisions of Section 2.14(c) of this Agreement.
(f) Investments, Etc. Make any Investment other than Permitted
Investments.
(g) Transactions With Affiliates. Except in the ordinary course of
business and pursuant to the reasonable requirements of the Borrower's, a
Guarantor's or a Subsidiary's business and upon fair and reasonable terms no
less favorable to the Borrower, or the Guarantor or the Subsidiary than would be
obtained in a comparable arm's length transaction with a Person not an
Affiliate, enter into any transaction, including, without limitation, the
purchase, sale, or exchange of property or the rendering of any service, with
any Affiliate.
(h) Prepayment of Outstanding Debt. Pay, in whole or in part, any
outstanding Debt (other than the Loans) of the Borrower or any Guarantor which
by its terms is not then due and payable.
(i) Guarantees. Guaranty, or in any other way become directly or
contingently obligated for any Debt of any other Person (including any
agreements relating to working capital maintenance, take or pay contracts or
similar arrangements) other than (i) the endorsement of negotiable instruments
for deposit in the ordinary course of business; (ii) guarantees existing on the
date hereof and set forth in Schedule 5.02(i) annexed hereto; (iii) guarantees
of Debt permitted hereunder or (iv) guarantees by a Credit Party of any
obligation of any other Credit Party provided the incurrence of such obligation
does not result in a Default or an Event of Default.
(j) Change of Business. Materially alter the nature of its business.
(k) Fiscal Year. Change the ending date of its fiscal year.
- 54 -
(l) Losses. Incur a net loss for (i) the fiscal year ending on December 2,
2001, or (ii) any fiscal year thereafter.
(m) Accounting Policies. Change any accounting policies, except as
permitted by GAAP.
(n) Change of Tax Status. Change its tax reporting status as a C
corporation.
(o) Change in Ownership. Fail or cease to maintain the ownership by Xxxx
Xxxxxxxxxxxx, directly or indirectly, of a majority of such classes of voting
stock of the Borrower and the Guarantors such as would enable the holder thereof
to elect a majority of the members of the Board of Directors of the Borrower and
each Guarantor.
(p) Management. Fail to retain Xxxx Xxxxxxxxxxxx in a reasonably active
full time capacity in the management of the Borrower and Guarantors.
(q) Hazardous Material. The Borrower, each Guarantor and each Subsidiary
of the Borrower or a Guarantor shall not cause or permit any property owned or
occupied by the Borrower, any Guarantor or any such Subsidiary to be used to
generate, manufacture, refine, transport, treat, store, handle, dispose,
transfer, produce or process Hazardous Materials, except in compliance with all
applicable federal, state and local laws or regulations nor shall the Borrower,
any Guarantor or any such Subsidiary cause or permit, as a result of any
intentional or unintentional act or omission on the part of the Borrower, any
Guarantor or any such Subsidiary or any tenant or subtenant, a release of
Hazardous Materials onto any property owned or occupied by the Borrower, any
Guarantor or any such Subsidiary or onto any other property. The Borrower, each
Guarantor and each such Subsidiary shall not fail to comply with all applicable
federal, state and local laws, ordinances, rules and regulations, whenever and
by whomever triggered, and shall not fail to obtain and comply with, any and all
approvals, registrations or permits required thereunder. The Borrower and the
Guarantors shall execute any documentation reasonably required by the Agent in
connection with the representations, warranties and covenants contained in this
paragraph and Section 4.01 of this Agreement.
SECTION 5.03. Financial Requirements. So long as (i) the Total Commitment
shall be in effect or (ii) any amount shall remain outstanding under any of the
Notes:
(a) Minimum Consolidated Tangible Net Worth. The Borrower and Guarantors
will maintain at all times a Consolidated Tangible Net
- 55 -
Worth ("TNW") plus Subordinated Debt of not less than the following, to be
tested quarterly at the end of each fiscal quarter:
Date/Fiscal Year Ending ("FYE") Minimum TNW
------------------------------- -----------
Quarter ended September 2, 2001 $20,000.000
End of FYE 2001 and through the first
three fiscal quarters of FYE 2002 $20,000,000
End of FYE 2002 and through the first
three fiscal quarters of FYE 2003 $22,000,000
End of FYE 2003 and thereafter $24,500,000
(b) Maximum Consolidated Cash Capital Expenditures. The Borrower, the
Guarantors and their respective Subsidiaries will not make Consolidated Cash
Capital Expenditures during any fiscal year commencing with the fiscal year
ending December 1, 2002 and each fiscal year thereafter in excess of twenty five
(25%) percent of EBITDA for such fiscal year plus Subordinated Debt in excess of
$12,800,000.00 (the "Permitted Consolidated Cash Capital Expenditures"). If
Consolidated Cash Capital Expenditures for any such fiscal year shall exceed
Permitted Consolidated Cash Capital Expenditures for such fiscal year as
reported in the Borrower"s audited annual financial statements referred to in
Section 5.01(b)(i) hereof, then the Borrower may obtain additional Subordinated
Debt from its Affiliates within sixty (60) days of the due date for the delivery
of such financial statements to the Agent and the Banks.
(c) Leverage Ratio. The Borrower and the Guarantors will at all times
maintain a Leverage Ratio of not greater than the following, to be tested
quarterly at the end of each fiscal quarter:
Date/Fiscal Year Ending Maximum Leverage Ratio
----------------------- ----------------------
Quarter ended September 2, 2001 4.00 to 1.0
End of FYE 2001 and through the first
three fiscal quarters of FYE 2002 3.75 to 1.0
End of FYE 2002 and through the first
three fiscal quarters of FYE 2003 3.50 to 1.0
End of FYE 2003 and thereafter 3.00 to 1.0
(d) Funded Debt to EBITDA Ratio. The Borrower and Guarantors will maintain
at all times on a consolidated basis, a Funded Debt to EBITDA Ratio of not
greater than the following, to be measured and tested at the end of each fiscal
quarter, and in the case of
- 56 -
EBITDA, for a period covering the four (4) fiscal quarters then ended:
Date/Fiscal Year Ending Funded Debt/EBITDA
----------------------- ------------------
Quarter ended September 2, 2001 4.00 to 1.0
End of FYE 2001 and through the first
three fiscal quarters of FYE 2002 3.75 to 1.0
End of FYE 2002 and through the first
three fiscal quarters of FYE 2003 3.50 to 1.0
End of FYE 2003 and thereafter 3.00 to 1.0
(e) Fixed Charge Coverage Ratio. The Borrower and Guarantors will maintain
at all times, on a consolidated basis, a minimum Fixed Charge Coverage Ratio of
not less than the following, such ratio to be tested quarterly on a rolling four
quarter basis at the end of each fiscal quarter:
Date/Fiscal Year Ending Fixed Charge Coverage Ratio
----------------------- ---------------------------
Quarter ended September 2, 2001 1.05 to 1.0
End of FYE 2001 and through the first
three fiscal quarters of FYE 2002 1.10 to 1.0
End of FYE 2002 and through the first
three fiscal quarters of FYE 2003 1.15 to 1.0
End of FYE 2003 and thereafter 1.20 to 1.0
(f) Debt Service Ratio. The Borrower and Guarantors will maintain at all
times, on a consolidated basis, a minimum Debt Service Ratio of not less the
following, such ratio to be tested quarterly on a rolling four quarter basis at
the end of each fiscal quarter:
Date/Fiscal Year Ending Debt Service Ratio
----------------------- ------------------
Quarter ended September 2, 2001 1.15 to 1.0
End of FYE 2001 and through the first
three fiscal quarters of FYE 2002 1.25 to 1.0
End of FYE 2002 and through the first
three fiscal quarters of FYE 2003 1.30 to 1.0
End of FYE 2003 and thereafter 1.50 to 1.0
(g) Minimum EBITDA. The Borrower and the Guarantors shall have minimum
EBITDA of not less than the following, to be tested annually at the end of each
fiscal year:
- 57 -
Fiscal Year Ending Minimum EBITDA
------------------ --------------
FYE 2001 $12,000,000
FYE 2002 $13,000,000
FYE 2003 and thereafter $14,000,000
- 58 -
ARTICLE VI
EVENTS OF DEFAULT
SECTION 6.01. Events of Default. If any of the following events ("Events
of Default") shall occur and be continuing:
(a) The Borrower shall fail to pay any installment of principal of, or
interest on, any of the Notes when due, or any fees or other amounts owed in
connection with this Agreement; or
(b) Any representation or warranty made by the Borrower or any Guarantor
herein or in the Loan Documents or which is contained in any certificate,
document, opinion, or financial or other statement furnished at any time under
or in connection with any Loan Document shall prove to have been incorrect in
any material respect when made; or
(c) The Borrower or any Guarantor shall fail to perform any term,
covenant, or agreement contained in this Agreement or in any other Loan Document
(other than the Notes) on its part to be performed or observed; or
(d) The Borrower, any Guarantor, or any Subsidiary of the Borrower or a
Guarantor shall fail to pay any Debt in a minimum outstanding principal balance
of $250,000.00 (excluding Debt evidenced by the Notes) of the Borrower, any
Guarantor or any such Subsidiary (as the case may be), or any interest or
premium thereon, when due (whether by scheduled maturity, required prepayment,
acceleration, demand or otherwise) and such failure shall continue after the
applicable grace period, if any, specified in the agreement or instrument
relating to such Debt; or any other default under any agreement or instrument
relating to any such Debt, or any other event shall occur and shall continue
after the applicable grace period, if any, specified in such agreement or
instrument, if the effect of such default or event is to accelerate the maturity
of such Debt; or any such Debt shall be declared to be due and payable, or
required to be prepaid (other than by a regularly scheduled required
prepayment), prior to the stated maturity thereof; or
(e) The Borrower, any Guarantor or any Subsidiary of the Borrower or a
Guarantor shall generally not pay its Debts as such Debts become due, or shall
admit in writing its inability to pay its Debts generally, or shall make a
general assignment for the benefit of creditors; or any proceeding shall be
instituted by or against the Borrower, any Guarantor or any such Subsidiary
seeking to adjudicate it a bankrupt or insolvent, or seeking liquidation,
- 59 -
winding up, reorganization, arrangement, adjustment, protection, relief, or
composition of it or its Debts under any law relating to bankruptcy, insolvency
or reorganization or relief of debtors, or seeking the entry of an order for
relief or the appointment of a receiver, trustee, or other similar official for
it or for any substantial part of its property and if instituted against the
Borrower, any Guarantor or any such Subsidiary shall remain undismissed for a
period of 30 days; or the Borrower, any Guarantor or any such Subsidiary shall
take any action to authorize any of the actions set forth above in this
subsection (e); or
(f) Any judgment or order or combination of judgments or orders for the
payment of money, in excess of $500,000.00 in the aggregate, which sum shall not
be subject to full, complete and effective insurance coverage, shall be rendered
against the Borrower, any Guarantor or any Subsidiary of the Borrower or a
Guarantor and either (i) enforcement proceedings shall have been commenced by
any creditor upon such judgment or order or (ii) there shall be any period of 90
consecutive days during which a stay of enforcement of such judgment or order,
by reason of a pending appeal or otherwise, shall not be in effect; or
(g) Any Guarantor shall fail to perform or observe any term or provision
of its Guaranty or any representation or warranty made by any Guarantor (or any
of its officers or partners) in connection with such Guarantor's Guaranty shall
prove to have been incorrect in any material respect when made; or
(h) Any of the following events occur or exist with respect to the
Borrower, any Guarantor, any Subsidiary of the Borrower or a Guarantor, or any
ERISA Affiliate: (i) any Prohibited Transaction involving any Plan; (ii) any
Reportable Event with respect to any Plan; (iii) the filing under Section 4041
of ERISA of a notice of intent to terminate any Plan or the termination of any
Plan; (iv) any event or circumstance that might constitute grounds entitling the
PBGC to institute proceedings under Section 4042 of ERISA for the termination
of, or for the appointment of a trustee to administer, any Plan, or the
institution of the PBGC of any such proceedings; (v) complete or partial
withdrawal under Section 4201 or 4204 of ERISA from a Multiemployer Plan or the
reorganization insolvency, or termination of any Multiemployer Plan; and in each
case above, such event or condition, together with all other events or
conditions, if any, could in the opinion of the Agent subject the Borrower, any
Guarantor, any such Subsidiary or any ERISA Affiliate to any tax, penalty, or
other liability to a Plan, a Multiemployer Plan, the PBGC, or otherwise (or any
combination thereof) which in the aggregate exceeds or may exceed $500,000.00;
or
- 60 -
(i) This Agreement or any other Loan Document, at any time after its
execution and delivery and for any reason, ceases to be in full force and effect
in all material respects or shall be declared to be null and void, or the
validity or enforceability of any document or instrument delivered pursuant to
this Agreement shall be contested by the Borrower, any Guarantor or any party to
such document or instrument or the Borrower, any Guarantor or any party to such
document or instrument shall deny that it has any or further liability or
obligation under any such document or instrument; or
(j) An event of default specified in any Loan Document other than this
Agreement shall have occurred and be continuing.
SECTION 6.02. Remedies on Default. Upon the occurrence and continuance of
an Event of Default the Agent may, and at the request of the Required Banks
shall, by notice to the Borrower take any or all of the following actions: (i)
terminate the Commitment, (ii) declare the Notes, all interest thereon and all
other amounts payable under this Agreement to be forthwith due and payable,
whereupon the Commitment shall be terminated, the Notes, all such interest, and
all such other amounts shall become and be forthwith due and payable, without
presentment, demand, protest or further notice of any kind, all of which are
hereby expressly waived by the Borrower and (iii) proceed to enforce its rights
whether by suit in equity or by action at law, whether for specific performance
of any covenant or agreement contained in this Agreement or any Loan Document,
or in aid of the exercise of any power granted in either this Agreement or any
Loan Document or proceed to obtain judgment or any other relief whatsoever
appropriate to the enforcement of its rights, or proceed to enforce any other
legal or equitable right which the Agent or the Banks may have by reason of the
occurrence of any Event of Default hereunder or under any Loan Document,
provided, however, upon the occurrence of an Event of Default referred to in
Section 6.01(e), the Commitment shall be immediately terminated, the Notes, all
interest thereon, and all other amounts payable under this Agreement shall be
immediately due and payable without presentment, demand, protest or further
notice of any kind, all of which are hereby expressly waived by the Borrower.
Any amounts collected pursuant to action taken under this Section 6.02 shall be
applied to the payment of, first, any costs incurred by the Agent in taking such
action, including but without limitation reasonable attorneys fees and expenses,
second, to payment of the accrued interest on the Notes and third, to payment of
the unpaid principal of the Notes.
- 61 -
SECTION 6.03. Remedies Cumulative. No remedy conferred upon or reserved to
the Agent or the Banks hereunder or in any Loan Document is intended to be
exclusive of any other available remedy, but each and every such remedy shall be
cumulative and in addition to every other remedy given under this Agreement or
any Loan Document or now or hereafter existing at law or in equity. No delay or
omission to exercise any right or power accruing upon any Event of Default shall
impair any such right or power or shall be construed to be a waiver thereof, but
any such right and power may be exercised from time to time and as often as may
be deemed expedient. In order to entitle the Agent or the Banks to exercise any
remedy reserved in this Article VI, it shall not be necessary to give any
notice, other than such notice as may be herein expressly required in this
Agreement or in any Loan Document.
- 62 -
ARTICLE VII
THE AGENT; RELATIONS AMONG BANKS AND BORROWER
SECTION 7.01. Appointment, Powers and Immunities of Agent. Each Bank
hereby irrevocably appoints and authorizes the Agent to act as its agent
hereunder and under any other Loan Document with such powers as are specifically
delegated to the Agent by the terms of this Agreement and any other Loan
Document, together with such other powers as are reasonably incidental thereto.
The Agent shall have no duties or responsibilities except those expressly set
forth in this Agreement and any other Loan Document, and shall not by reason of
this Agreement be a trustee or fiduciary for any Bank. The Agent shall not be
responsible to the Banks for any recitals, statements, representations or
warranties made by the Borrower or the Guarantors, or any officer or official of
the Borrower or Guarantors, or any of them, or any other Person contained in
this Agreement or any other Loan Document, or in any certificate or other
document or instrument referred to or provided for in, or received by any of
them under, this Agreement or any other Loan Document, or for the value,
legality, validity, effectiveness, genuineness, enforceability or sufficiency of
this Agreement or any other Loan Document or any other document or instrument
referred to or provided for herein or therein, except as explicitly provided
herein, or for the failure by the Borrower, the Guarantors, or any of them to
perform any of their or its respective obligations hereunder or thereunder. The
Agent may employ agents and attorneys-in-fact and shall not be responsible,
except as to money or securities received by it or its authorized agents, for
the negligence or misconduct of any such agents or attorneys-in-fact selected by
it with reasonable care. Except as otherwise explicitly provided herein, neither
the Agent nor any of its directors, officers, employees or agents shall be
liable or responsible to any Bank for any action taken or omitted to be taken by
it or them hereunder or under any other Loan Document or in connection herewith
or therewith, except for its or their own gross negligence or wilful misconduct.
The Borrower shall pay any fee agreed to in writing by the Borrower and the
Agent with respect to the Agent's services hereunder.
SECTION 7.02. Reliance by Agent. The Agent shall be entitled to rely upon
any certification, notice or other communication (including any thereof by
telephone, telex, telegram or cable) believed by it to be genuine and correct
and to have been signed or sent by or on behalf of the proper Person or Persons,
and upon advice and statements of legal counsel, independent accountants and
other experts selected by the Agent with reasonable care. The Agent may deem and
treat each Bank as the holder of the Loans made
- 63 -
by it for all purposes hereof unless and until a notice of the permitted
transfer thereof satisfactory to, the Agent signed by such Bank shall have been
furnished to the Agent but the Agent shall not be required to deal with any
Person who has acquired a participation in any Loan from a Bank. As to any
matters not expressly provided for by this Agreement or any other Loan Document,
the Agent shall in all cases be fully protected in acting, or in refraining from
acting, hereunder in accordance with instructions signed by the Required Banks,
and such instructions of the Required Banks and any action taken or failure to
act pursuant thereto shall be binding on all of the Banks and any other holder
of all or any portion of any Loan.
SECTION 7.03. Defaults. The Agent shall not be deemed to have knowledge of
the occurrence of a Default or Event of Default (other than the non-payment of
principal of or interest on the Loans) unless the Agent has actual knowledge of
any Default or Event of Default or has received notice from a Bank or the
Borrower specifying such Default or Event of Default and stating that such
notice is a "Notice of Default." In the event that the Agent receives such a
notice of, or otherwise has actual knowledge of the occurrence of a Default or
Event of Default, the Agent shall give prompt notice thereof to the Banks (and
shall give each Bank prompt notice of each such non-payment). The Agent shall
(subject to Section 7.08) take such action with respect to such Default or Event
of Default which is continuing as shall be directed by the Required Banks;
provided that, unless and until the Agent shall have received such directions,
the Agent may take such action, or refrain from taking such action, with respect
to such Default or Event of Default as it shall deem advisable in the best
interest of the Banks; and provided further that the Agent shall not be required
to take any such action which it determines to be contrary to law.
SECTION 7.04. Rights of Agent as a Bank. With respect to the Loans made by
it, the Agent in its capacity as a Bank hereunder shall have the same rights and
powers hereunder as any other Bank and may exercise the same as though it were
not acting as the Agent, and the term "Bank" or "Banks" shall, unless the
context otherwise indicates, include the Agent in its capacity as a Bank. The
Agent or any Bank and their respective Affiliates may (without having to account
therefor to any other Bank except as otherwise expressly provided in this
Agreement) accept deposits from, lend money to (on a secured or unsecured
basis), and generally engage in any kind of banking, trust or other business
with, the Borrower, the Guarantors or any of them (and any of their Affiliates);
provided that no payment or lien priority shall be given to the Agent or to any
Bank for any other transaction without the express
- 64 -
written approval of all of the other Banks. In the case of Citibank, it may do
so as if it were not acting as the Agent, and the Agent may accept fees and
other consideration from the Borrower, the Guarantors or any of them for
services in connection with this Agreement or otherwise without having to
account for the same to the Banks. Although the Agent or a Bank or any of their
respective Affiliates may in the course of such relationships and relationships
with other Persons acquire information about the Borrower, the Guarantors, their
Affiliates and such other Persons, neither the Agent nor such Bank shall have
any duty to the other Banks or the Agent to disclose such information to the
other Banks or the Agent except as otherwise provided herein with respect to the
occurrence of an Event of Default.
SECTION 7.05. Indemnification of Agent. The Banks agree to indemnify the
Agent (to the extent not reimbursed under Section 8.04 or under the applicable
provisions of any other Loan Document, but without limiting the obligations of
the Borrower and Guarantors under Section 8.04 or such provisions), ratably in
accordance with their respective percentages of the Total Commitment (without
giving effect to any participation in all or any portion of the Total Commitment
sold by them to any other Person), for any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind and nature whatsoever which may be imposed on,
incurred by or asserted against the Agent in any way relating to or arising out
of this Agreement, any other Loan Document or any other documents contemplated
by or referred to herein or the transactions contemplated hereby or thereby
(including, without limitation, the costs and expenses which the Borrower and
Guarantors are obligated to pay under Section 8.04 or under the applicable
provisions of any other Loan Document but excluding, unless a Default or Event
of Default has occurred, normal administrative costs and expenses incidental to
the performance of its agency duties hereunder) or the enforcement of any of the
terms hereof or thereof or of any such other documents or instruments; provided
that no Bank shall be liable for any of the foregoing to the extent they arise
from the gross negligence or wilful misconduct of the party to be indemnified.
SECTION 7.06. Documents. It is the responsibility of the Borrower to
forward to each Bank, on or before the due dates set forth herein, a copy of
each report, notice or other document required by this Agreement or any other
Loan Document to be delivered to the Agent. The Agent is not responsible for
forwarding such information to the Banks.
- 65 -
SECTION 7.07. Non-Reliance on Agent and Other Banks. Each Bank agrees that
it has, independently and without reliance on the Agent or any other Bank, and
based on such documents and information as it has deemed appropriate, made its
own credit analysis of the Borrower, the Guarantors and their Subsidiaries and
decision to enter into this Agreement and that it will, independently and
without reliance upon the Agent or any other Bank, and based on such documents
and information as it shall deem appropriate at the time, continue to make its
own analysis and decisions in taking or not taking action under this Agreement
or any other Loan Document. The Agent shall not be required to keep itself
informed as to the performance or observance by the Borrower or Guarantors of
this Agreement or any other Loan Document or any other document referred to or
provided for herein or therein or to inspect the properties or books of the
Borrower, the Guarantors or any Subsidiary. Except for notices, reports and
other documents and information expressly required to be furnished to the Banks
by the Agent hereunder, the Agent shall not have any duty or responsibility to
any other Bank to provide any Bank with any credit or other information
concerning the affairs, financial condition or business of the Borrower, the
Guarantors or any Subsidiary (or any of their Affiliates) which may come into
the possession of the Agent or of its Affiliates. The Agent shall not be
required to file this Agreement, any other Loan Document or any document or
instrument referred to herein or therein, or record or give notice of this
Agreement, any other Loan Document or any document or instrument referred to
herein or therein, to any Person.
SECTION 7.08. Failure of Agent to Act. Except for action expressly
required of the Agent hereunder, the Agent shall in all cases be fully justified
in failing or refusing to act hereunder unless it shall have received further
assurances (which may include cash collateral) of the indemnification
obligations of the Banks under Section 7.05 in respect of any and all liability
and expense which may be incurred by it by reason of taking or continuing to
take any such action.
SECTION 7.09. Resignation of Agent. Subject to the appointment and
acceptance of a successor Agent as provided below, the Agent may resign at any
time by giving written notice thereof to the Banks and the Borrower. Upon any
such resignation, the Required Banks shall have the right to appoint a successor
Agent which shall have an office in New York State and shall be subject to the
reasonable approval of the Borrower. If no successor Agent shall have been so
appointed by the Required Banks and shall have accepted such appointment within
30 days after the retiring Agent's giving of notice of resignation, then the
retiring Agent may, on
- 66 -
behalf of the Banks, appoint a successor Agent, which shall be a bank which has
an office in New York, New York. The Required Banks or the retiring Agent, as
the case may be, shall upon the appointment of a Successor Agent promptly so
notify the Borrower, the Guarantors and the other Banks. Upon the acceptance of
any appointment as Agent hereunder by a successor Agent, such successor Agent
shall thereupon succeed to and become vested with all the rights, powers,
privileges and duties of the retiring Agent, and the retiring Agent shall be
discharged from its duties and obligations hereunder. After any retiring Agent's
resignation as Agent, the provisions of this Article 7 shall continue in effect
for its benefit in respect of any actions taken or omitted to be taken by it
while it was acting as the Agent.
SECTION 7.10. Amendments Concerning Agency Function. The Agent shall not
be bound by any waiver, amendment, supplement or modification of this Agreement
or any other Loan Document which affects its duties hereunder or thereunder
unless it shall have given its prior written consent thereto.
SECTION 7.11. Liability of Agent. The Agent shall not have any liabilities
or responsibilities to the Borrower, the Guarantors or any of them on account of
the failure of any Bank to perform its obligations hereunder or to any Bank on
account of the failure of the Borrower, the Guarantors or any of them to perform
their or its obligations hereunder or under any other Loan Document.
SECTION 7.12. Transfer of Agency Function. Without the consent of the
Borrower, the Guarantors or any Bank, the Agent may at any time or from time to
time transfer its functions as Agent hereunder to any of its offices wherever
located, provided that the Agent shall promptly notify the Borrower, the
Guarantors and the Banks thereof.
SECTION 7.13. Withholding Taxes. Each Bank represents that it is entitled
to receive any payments to be made to it hereunder without the withholding of
any tax and will furnish to the Agent such forms, certifications, statements and
other documents as the Agent may request from time to time to evidence such
Bank's exemption from the withholding of any tax imposed by any jurisdiction or
to enable the Agent to comply with any applicable laws or regulations relating
thereto. Without limiting the effect of the foregoing, if any Bank is not
created or organized under the laws of the United States of America or any state
thereof, in the event that the payment of interest by the Borrower is treated
for U.S. income tax purposes as derived in whole or in part from sources from
within the U.S., such Bank will furnish to the Agent Form 4224 or Form 1001 of
the Internal Revenue Service, or such other forms, certifications, statements or
documents, duly executed
- 67 -
and completed by such Bank as evidence of such Bank's exemption from the
withholding of U.S. tax with respect thereto. The Agent shall not be obligated
to make any payments hereunder to such Bank in respect of any Loan until such
Bank shall have furnished to the Agent the requested form, certification,
statement or document.
SECTION 7.14. Several Obligations and Rights of Banks. The failure of any
Bank to make any Loan to be made by it on the date specified therefor shall not
relieve any other Bank of its obligation to make its Loan on such date, but no
Bank shall be responsible for the failure of any other Bank to make a Loan to be
made by such other Bank.
SECTION 7.15. Pro Rata Treatment of Loans, Etc. Except to the extent
otherwise provided, each prepayment and payment of principal of or interest on
Loans of a particular type and a particular Interest Period shall be made to the
Agent for the account of the Banks holding Loans of such type and Interest
Period pro rata in accordance with the respective unpaid principal amounts of
such Loans of such Interest Period held by such Banks.
SECTION 7.16. Sharing of Payments Among Banks. If a Bank shall obtain
payment of any principal of or interest on any Loan made by it through the
exercise of any right of setoff, banker's lien, counterclaim, or by any other
means, it shall share such payment with the other Banks and the amount of such
payment shall be applied to reduce the Loans of all the Banks pro rata in
accordance with the unpaid principal on the Loans held by each of them, and make
such other adjustments from time to time as shall be equitable to the end that
all the Banks shall share the benefit of such payment (net of any expenses which
may be incurred by such Bank in obtaining or preserving such benefit) pro rata
in accordance with the unpaid principal and interest on the Loans held by each
of them. To such end the Banks shall make appropriate adjustments among
themselves if such payment is rescinded or must otherwise be restored. Nothing
contained herein shall require any Bank to exercise any such right or shall
affect the right of any Bank to exercise, and retain the benefits of exercising,
any such right with respect to any other indebtedness of the Borrower.
Notwithstanding the foregoing or any other provision of this Agreement, no right
or remedy of any Bank relating to any assets of the Borrower (including real
property, improvements or fixtures) not covered by this Agreement or the Loan
Documents shall in any way be affected by this Agreement or otherwise with
respect to any other indebtedness of the Borrower to any of the Banks.
SECTION 7.17. Nonreceipt of Funds by Agent. Unless the Agent shall have
received notice from a Bank prior to the date on which
- 68 -
such Bank is to provide funds to the Agent for a Loan to be made by such Bank
that such Bank will not make available to the Agent such funds, the Agent may
assume that such Bank has made such funds available to the Agent on the date of
such Loan, and the Agent in its sole discretion may, but shall not be obligated
to, in reliance upon such assumption, make available to the Borrower on such
date a corresponding amount. If and to the extent that such Bank shall not have
so made such funds available to the Agent, such Bank agrees to repay to the
Agent forthwith on demand such corresponding amount together with interest
thereon, for each day from the date such amount is made available to the
Borrower until the date such amount is repaid to the Agent, at the customary
rate set by the Agent for the correction of errors among banks for three
Business Days and thereafter at the Prime Rate. If such Bank shall repay to the
Agent such corresponding amount, such amount so repaid shall constitute such
Bank's Loan for purposes of this Agreement. If such Bank does not pay such
corresponding amount forthwith upon Agent's demand therefor, the Agent shall
promptly notify the Borrower, and the Borrower shall immediately pay such
corresponding amount to the Agent with interest thereon, for each day from the
date such amount is made available to the Borrower until the date such amount is
repaid to the Agent, at the rate of interest applicable at the time to such
proposed Loan.
Unless the Agent shall have received notice from the Borrower prior to the
date on which any payment is due to the Banks hereunder that the Borrower will
not make such payment in full, the Agent may assume that the Borrower has made
such payment in full to the Agent on such date and the Agent in its sole
discretion may, but shall not be obligated to, in reliance upon such assumption,
cause to be distributed to each Bank on such due date an amount equal to the
amount then due such Bank. If and to the extent the Borrower shall not have so
made such payment in full to the Agent, each Bank shall repay to the Agent
forthwith on demand such amount distributed to such Bank together with interest
thereon, for each day from the date such amount is distributed to such Bank
until the date such Bank repays such amount to the Agent, at the customary rate
set by the Agent for the correction of errors among banks for three Business
Days and thereafter at the Prime Rate.
- 69 -
ARTICLE VIII
MISCELLANEOUS
SECTION 8.01. Amendments. Etc. Except as otherwise expressly provided in
this Agreement, any provision of this Agreement may be amended or modified only
by an instrument in writing signed by the Borrower, the Guarantors, the Agent
and the Required Banks, and any provision of this Agreement may be waived by the
Borrower (if such provision requires performance by the Agent or the Banks) or
by the Agent acting with the consent of the Required Banks (if such provision
requires performance by the Borrower); provided that no amendment, modification
or waiver shall, unless by an instrument signed by all of the Banks or by the
Agent acting with the consent of all of the Banks: (a) increase or extend the
term of the Revolving Credit Commitment or the Total Commitment or the Loans,
(b) extend the date fixed for the payment of principal of or interest on any
Loan, (c) reduce the amount of any payment of principal thereof or the rate at
which interest is payable thereon or any fee payable hereunder, (d) alter the
terms of this Section 8.01, (e) amend the definition of the term "Required
Banks", (f) change the fees payable to any Bank except as otherwise provided
herein, (g) permit the Borrower to transfer or assign any of its obligations
hereunder or under the Loan Documents, (h) amend the provisions of Article 7
hereof, (i) release the Individual Guarantor from his Guaranty or amend any of
the provisions thereof, (j) release any Guarantor from its Guaranty or amend any
of the provisions thereof, (k) give any payment priority to any Person
(including any of the Banks) over amounts due in connection with the Loans, or
(l) release any Collateral (other than as permitted by the Security Agreement).
No failure on the part of the Agent or any Bank to exercise, and no delay in
exercising, any right hereunder shall operate as a waiver thereof or preclude
any other or further exercise thereof or the exercise of any other right. The
remedies herein provided are cumulative and not exclusive of any remedies
provided by law.
SECTION 8.02. Notices, Etc. All notices and other communications provided
for hereunder shall be in writing (including telegraphic communication) and
mailed via certified mail, telegraphed, sent by overnight mail delivery service,
sent by facsimile or delivered, if to the Borrower or any Guarantor, at the
address of the Borrower or Guarantor, as the case may be, set forth at the
beginning of this Agreement with a copy to Xxxxxx Bring, Esq. of Wolf, Block,
Xxxxxx and Xxxxx-Xxxxx, LLP, 000 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 and if to
the Agent or any Bank, at the address of the Agent or such Bank set forth at the
beginning of this Agreement to the attention of Gristede's Foods, Inc. Account
- 70 -
Officer, or, as to each party, at such other address as shall be designated by
such party in a written notice complying as to delivery with the terms of this
Section 8.02 to the other parties. All such notices and communications shall be
effective when mailed, telegraphed or delivered, except that notices to the Bank
shall not be effective until received by the Bank.
SECTION 8.03. No Waiver, Remedies. No failure on the part of the Agent or
any Bank to exercise, and no delay in exercising, any right, power or remedy
under any Loan Document, shall operate as a waiver thereof; nor shall any single
or partial exercise of any right under any Loan Document preclude any other or
further exercise thereof or the exercise of any other right. The remedies
provided in the Loan Documents are cumulative and not exclusive of any remedies
provided by law.
SECTION 8.04. Costs, Expenses and Taxes. The Borrower agrees to pay on
demand all reasonable, out of pocket costs and expenses of the Agent in
connection with the preparation, execution, delivery and administration of this
Agreement, the Notes and any other Loan Documents, including, without
limitation, the reasonable fees and expenses of counsel for the Agent with
respect thereto and with respect to advising the Banks as to their respective
rights and responsibilities under this Agreement, and all costs and expenses, if
any (including reasonable counsel fees and expenses), in connection with the
enforcement of this Agreement, the Notes and any other Loan Documents. The
Borrower shall at all times protect, indemnify, defend and save harmless the
Agent and the Banks from and against any and all claims, actions, suits and
other legal proceedings, and liabilities, obligations, losses, damages,
penalties, judgments, costs, expenses or disbursements which the Agent or the
Banks may, at any time, sustain or incur by reason of or in consequence of or
arising out of the execution and delivery of this Agreement and the consummation
of the transactions contemplated hereby. The Borrower acknowledges that it is
the intention of the parties hereto that this Agreement shall be construed and
applied to protect and indemnify the Agent and the Banks against any and all
risks involved in the execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby, all of which risks are
hereby assumed by the Borrower, including, without limitation, any and all risks
of the acts or omissions, whether rightful or wrongful, of any present or future
de jure or de facto government or governmental authority, provided that the
Borrower shall not be liable for any portion of such liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements resulting from the Agent or any Bank's gross negligence or willful
misconduct. The provisions of
- 71 -
this Section 8.04 shall survive the payment of the Notes and the termination of
this Agreement.
SECTION 8.05. Right of Set-off. Upon (i) the occurrence and during the
continuance of any Event of Default and (ii) the declaration of the making of
the Notes due and payable pursuant to the provisions of Section 6.02, the Banks
each are hereby authorized at any time and from time to time, to the fullest
extent permitted by law, to set off and apply any and all deposits (general or
special, time or demand, provisional or final) at any time held and other
indebtedness at any time owing by the Banks to or for the credit or the account
of the Borrower or any Guarantor against any and all of the obligations of the
Borrower or any Guarantor now or hereafter existing under this Agreement and the
Notes, irrespective of whether or not the Agent or the Banks shall have made any
demand under this Agreement or the Term Loan Notes and although such obligations
may be unmatured. The rights of the Banks under this Section are in addition to
all other rights and remedies (including, without limitation, other rights of
set-off) which the Agent and the Banks may have.
SECTION 8.06. Binding Effect. This Agreement shall become effective when
it shall have been executed by the Borrower, the Guarantors, the Agent and the
Banks.
SECTION 8.07. Successors and Assigns. (a) The provisions of this Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns, except that the Borrower may not assign or
otherwise transfer any of its rights under this Agreement without the prior
written consent of all Banks.
(b) Any Bank may at any time grant to one or more banks or other
institutions (each a "Participant") participating interests in its Pro Rata
Share of the Commitment or any or all of its Loans. In the event of any such
grant by a Bank of a participating interest to a Participant, whether or not
upon notice to the Borrower and the Agent, such Bank shall remain responsible
for the performance of its obligations hereunder, and the Borrower and the Agent
shall continue to deal solely and directly with such Bank in connection with
such Bank's rights and obligations under this Agreement. Any agreement pursuant
to which any Bank may grant such a participating interest shall provide that
such Bank shall retain the sole right and responsibility to enforce the
obligations of the Borrower hereunder including, without limitation, the right
to approve any amendment, modification or waiver of any provision of this
Agreement. An assignment or other transfer which is not permitted by subsection
(c) or (d) below shall be given effect for
- 72 -
purposes of this Agreement only to the extent of a participating interest
granted in accordance with this subsection (b).
(c) (i) Any Bank may at any time assign to one or more banks or other
institutions (each an"Assignee") all, or a proportionate part (equivalent to an
initial Commitment of not less than $4,000,000) of all, of its rights and
obligations under this Agreement and the Notes, and such Assignee shall assume
such rights and obligations, pursuant to an Assignment and Assumption Agreement
in substantially the form of Exhibit D hereto executed by such Assignee and such
transferor Bank, with, so long as no Default or Event of Default has occurred
and is continuing, (and subject to) the subscribed consent of the Borrower,
which shall not be unreasonably withheld, and the Agent; provided that if an
Assignee is an affiliate of such transferor Bank, no such consent shall be
required. Upon execution and delivery of such instrument and payment by such
Assignee to such transferor Bank of an amount equal to the purchase price agreed
between such transferor bank and such Assignee, such Assignee shall be a Bank
party to this Agreement and shall have all the rights and obligations of a Bank
with a Commitment as set forth in such instrument of assumption, and the
transferor Bank shall be released from its obligations hereunder to a
corresponding extent, and no further consent or action by any party shall be
required.
(ii) Upon the consummation of any assignment pursuant to this
subsection (c), the transferor Bank, the Agent and the Borrower shall make
appropriate arrangements so that, if required, a new Note or Notes is issued to
the Assignee. In connection with any such assignment, the transferor Bank shall
pay to the Agent an administrative fee for processing such assignment in the
amount of $3,500.00. If the Assignee is not incorporated under the laws of the
United States of America or a state thereof, it shall deliver to the Borrower
and the Agent certification as to exemption from deduction or withholding of any
Unites States federal income taxes in accordance with Section 7.13.
(d) Any Bank may at any time assign all or any portion of its rights under
this Agreement and its Notes to a Federal Reserve Bank. No such assignment shall
release the transferor Bank from its obligations hereunder.
SECTION 8.08. Further Assurances. The Borrower and each Guarantor agree at
any time and from time to time at its expense, upon request of the Agent, the
Banks or their respective counsel, to promptly execute, deliver, or obtain or
cause to be executed, delivered or obtained any and all further instruments and
documents and to take or cause to be taken all such other action the Agent or
- 73 -
any Bank may reasonably deem desirable in obtaining the full benefits of this
Agreement.
SECTION 8.09. Section Headings, Severability, Entire Agreement. Section
and subsection headings have been inserted herein for convenience only and shall
not be construed as part of this Agreement. Every provision of this Agreement
and each Loan Document is intended to be severable; if any term or provision of
this Agreement, any Loan Document, or any other document delivered in connection
herewith shall be invalid, illegal or unenforceable for any reason whatsoever,
the validity, legality and enforceability of the remaining provisions hereof or
thereof shall not in any way be affected or impaired thereby. All exhibits and
schedules to this Agreement shall be annexed hereto and shall be deemed to be
part of this Agreement. This Agreement and the exhibits and schedules attached
hereto embody the entire Agreement and understanding between the Borrower, the
Guarantors, the Agent and the Banks and supersede all prior agreements and
understandings relating to the subject matter hereof provided, however, that to
the extent that the provisions of the Commitment Letter and/or the Fee Letter
are not inconsistent with the provisions of this Agreement and the other Loan
Documents but are cumulative with respect thereto, such provisions of the
Commitment Letter and the Fee Letter shall survive the execution and delivery of
this Agreement.
SECTION 8.10. Governing Law. This Agreement, the Notes and all other Loan
Documents shall be governed by, and construed in accordance with, the laws of
the State of New York.
SECTION 8.11. Waiver of Jury Trial. The Borrower, each Guarantor, the
Agent and the Banks waive all rights to trial by jury on any cause of action
directly or indirectly involving the terms, covenants or conditions of this
Agreement or any Loan Document.
SECTION 8.12. Execution in Counterparts. This Agreement may be executed in
any number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed shall be deemed to be an original
and all of which taken together shall constitute one and the same agreement.
REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
- 74 -
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.
CITIBANK, N.A., as Agent
By:_____________________________________
Xxxxxx X. Xxxxxxxx
Vice President
CITIBANK, N.A.
By:_____________________________________
Xxxxxx X. Xxxxxxxx
Vice President
ISRAEL DISCOUNT BANK OF NEW YORK
By:_____________________________________
Name:
Title:
By:_____________________________________
Name:
Title:
BANK LEUMI USA
By:_____________________________________
Name:
Title:
By:_____________________________________
Name:
Title:
GRISTEDE'S FOODS, INC.
By:_____________________________________
Xxxx Xxxxxxxxxxxx
Chief Executive Officer
CITY PRODUCE OPERATING CORP.
By:_____________________________________
Xxxx Xxxxxxxxxxxx
President
- 75 -
NAMDOR INC.
By:_____________________________________
Xxxx Xxxxxxxxxxxx
President
- 76 -
SCHEDULE I
SUBSIDIARIES OF THE BORROWER
Namdor Inc.
City Produce Operating Corp.
- 77 -
SCHEDULE 1.01-A
Commitments of Each Bank
Citibank $15,000,000.00
Israel Discount $ 8,750,000.00
Leumi $ 8,750,000.00
- 78 -
Schedule 4.01(a)
STATE OF INCORPORATION IDENTITY AND
AND EACH STATE IN WHICH PERCENTAGE OF
SUBSIDIARY'S NAME IT IS QUALIFIED TO DO OWNERSHIP OF
AND ADDRESS BUSINESS EACH SHAREHOLDER
--------------------------- ----------------------- -----------------
Namdor, Inc. New York 100% owned by Gristedes
000 Xxxxxxxx Xxxxxx Foods, Inc.
Xxx Xxxx, XX 00000
City Produce Operating Corp. New York 100% owned by Gristedes
000 Xxxxxxxx Xxxxxx Foods, Inc.
Xxx Xxxx, XX 00000
- 79 -
Schedule 4.01(f)
Increases in Liabilities
Creditor Nature of Liability Amount of Liability
-------- ------------------- -------------------
None.
- 80 -
Schedule 4.01(g)
Description of Litigation
None.
- 81 -
Schedule 4.01(h)
Taxes
None.
- 82 -
Schedule 4.01(t)
Nature of Amount of Liens Securing
Creditor Agreement Credit Credit
-------- --------- --------- --------------
None, except as described in the financial statements comprising a part of the
SEC Documents.
- 83 -
Schedule 5.02(a)
Creditor Amount Property Subject to Lien
------------------------------------------------------------
None, except those Capital Leases for which the Company requested that the
Agent, and as a result of such request, the Agent did subordinate or release its
lien with respect to such Capital Leases.
- 84 -
Schedule 5.02(b)
None, except as disclosed in the SEC Documents.
- 85 -
SCHEDULE 5.02(i)
Description of All Guaranties:
None
- 86 -
EXHIBIT A
REVOLVING CREDIT NOTE
$_________________ New York, New York
October 31, 2001
FOR VALUE RECEIVED, on the Revolving Credit Maturity Date, GRISTEDE'S
FOODS, INC., a Delaware corporation, having its principal place of business at
000 Xxxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 ("Borrower"), promises to pay to
the order of __________________ ("Bank") at the office of Citibank, N.A., as
Agent, located at 000 Xxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, the principal
sum of the lesser of: (a) ________________ ($___________) DOLLARS; or (b) the
aggregate unpaid principal amount of all Revolving Credit Loans made by Bank to
Borrower pursuant to the Agreement (as defined below).
Borrower shall pay interest on the unpaid principal balance of this Note
from time to time outstanding, at said office, at the rates of interest, at the
times and for the periods set forth in the Agreement.
All payments including prepayments on this Note shall be made in lawful
money of the United States of America in immediately available funds. Except as
otherwise provided in the Agreement, if a payment becomes due and payable on a
day other than a Business Day, the maturity thereof shall be extended to the
next succeeding Business Day, and interest shall be payable thereon at the rate
herein specified during such extension.
Borrower hereby authorizes Bank to enter from time to time the amount of
each Loan to Borrower and the amount of each payment on a Loan on the schedule
annexed hereto and made a part hereof. Failure of Bank to record such
information on such schedule shall not in any way effect the obligation of
Borrower to pay any amount due under this Note.
This Note is one of the Revolving Credit Notes referred to in that certain
Loan Agreement among Borrower, certain Guarantors, Citibank, N.A., as Agent,
Citibank, N.A., Israel Discount Bank of New York and Bank Leumi USA of even date
herewith (the "Agreement"), as such Agreement may be amended from time to time,
and is subject to prepayment and its maturity is subject to acceleration upon
the terms contained in said Agreement. All capitalized terms used in this Note
and not defined herein shall have the meanings given them in the Agreement.
If any action or proceeding be commenced to collect this Note or enforce
any of its provisions, Borrower further agrees to pay
- 87 -
all costs and expenses of such action or proceeding and attorneys' fees and
expenses and further expressly waives any and every right to interpose any
counterclaim in any such action or proceeding. Borrower hereby submits to the
jurisdiction of the Supreme Court of the State of New York and agrees with Bank
that personal jurisdiction over Borrower shall rest with the Supreme Court of
the State of New York for purposes of any action on or related to this Note, the
liabilities, or the enforcement of either or all of the same. Borrower hereby
waives personal service by manual delivery and agrees that service of process
may be made by post-paid certified mail directed to the Borrower at the
Borrower's address set forth above or at such other address as may be designated
in writing by the Borrower to Bank in accordance with Section 8.02 of the
Agreement, and that upon mailing of such process such service be effective with
the same effect as though personally served. Borrower hereby expressly waives
any and every right to a trial by jury in any action on or related to this Note,
the liabilities or the enforcement of either or all of the same. Subject to the
provisions of the Agreement, Bank may transfer this Note and may deliver the
security or any part thereof to the transferee or transferees, who shall
thereupon become vested with all the powers and rights above given to Bank in
respect thereto, and Bank shall thereafter be forever relieved and fully
discharged from any liability or responsibility in the matter. The failure of
any holder of this Note to insist upon strict performance of each and/or all of
the terms and conditions hereof shall not be construed or deemed to be a waiver
of any such term or condition.
Borrower and all endorsers and guarantors hereof waive presentment and
demand for payment, notice of non-payment, protest, and notice of protest.
This Note shall be construed in accordance with and governed by the laws
of the State of New York.
GRISTEDE'S FOODS, INC.
By
Name:
Title:
- 88 -
Schedule of Revolving Credit Loans
Amount of
Principal Unpaid Name of
Making Amount of Type of Paid or Principal Person Making
Date Loan Loan Prepaid Balance Notation
---- ---- ---- ------- ------- --------
- 00 -
XXXXXXX X
XXXX XXXX XXXX
Xxx Xxxx, Xxx Xxxx
$_______________ October 31, 2001
FOR VALUE RECEIVED, GRISTEDE'S FOODS, INC., a Delaware corporation,
having its principal place of business at 000 Xxxxxxxx Xxxxxx, Xxx Xxxx, Xxx
Xxxx 00000 ("Borrower") promises to pay to the order of _____________ ("Bank")
at the office of Citibank, N.A., as Agent, located at 000 Xxxxxxx Xxxxxx, Xxx
Xxxx, Xxx Xxxx 00000, the principal sum of _____________ ($___________) DOLLARS
in sixty (60) monthly principal installments sixty (60) monthly installments of
principal, each due on the first Business Day of each month, beginning on
December 1, 2001 and continuing on each such day thereafter, as follows:
Period Monthly Principal Payment
------ -------------------------
December 1, 2001 - November 1, 2002 $___________
December 1, 2002 - November 1, 2003 $___________
December 1, 2003 - November 1, 2004 $___________
December 1, 2004 - November 1, 2005 $___________
December 1, 2005 - November 1, 2006 $___________
The final monthly principal installment shall be in an amount equal
to the then aggregate outstanding principal balance of this Term Loan Note.
Borrower shall pay interest on the unpaid balance of this Note from
time to time outstanding at said office, at the rates of interest, at the times
and for the periods as set forth in the Agreement (as defined below).
All payments including prepayments on this Term Loan Note shall be
made in lawful money of the United States of America in immediately available
funds. Except as otherwise provided in the Agreement, if a payment becomes due
and payable on a day other than a Business Day, the maturity thereof shall be
extended to the next succeeding Business Day, and interest shall be payable
thereon at the rate herein specified during such extension.
This Term Loan Note is one of the Term Loan Notes referred to in
that certain Loan Agreement among Borrower, certain Guarantors, Citibank, N.A.,
as Agent, Citibank, N.A., Israel Discount Bank of New York and Bank Leumi USA of
even date herewith (the "Agreement"), as such Agreement may be amended from time
to time, and is subject to prepayment and its maturity is subject to
acceleration upon the terms contained in said Agreement. All
- 90 -
capitalized terms used in this Term Loan Note and not defined herein shall have
the meanings given them in the Agreement.
If any action or proceeding be commenced to collect this Term Loan
Note or enforce any of its provisions, Borrower further agrees to pay all costs
and expenses of such action or proceeding and attorneys' fees and expenses and
further expressly waives any and every right to interpose any counterclaim in
any such action or proceeding. Borrower hereby submits to the jurisdiction of
the Supreme Court of the State of New York and agrees with Bank that personal
jurisdiction over Borrower shall rest with the Supreme Court of the State of New
York for purposes of any action on or related to this Term Loan Note, the
liabilities, or the enforcement of either or all of the same. Borrower hereby
waives personal service by manual delivery and agrees that service of process
may be made by post-paid certified mail directed to Borrower at Borrower's
address designated in the Agreement or at such other address as may be
designated in writing by Borrower to Bank in accordance with Section 8.02 of the
Agreement, and that upon mailing of such process such service be effective with
the same effect as though personally served. Borrower hereby expressly waives
any and every right to a trial by jury in any action on or related to this Term
Loan Note, the liabilities or the enforcement of either or all of the same.
Subject to the provisions of the Agreement, Bank may transfer this
Term Loan Note and may deliver the security or any part thereof to the
transferee or transferees, who shall thereupon become vested with all the powers
and rights above given to Bank in respect thereto, and Bank shall thereafter be
forever relieved and fully discharged from any liability or responsibility in
the matter. The failure of any holder of this Term Loan Note to insist upon
strict performance of each and/or all of the terms and conditions hereof shall
not be construed or deemed to be a waiver of any such term or condition.
Borrower and all endorsers and Guarantors hereof waive presentment
and demand for payment, notice of non-payment, protest, and notice of protest.
This Term Loan Note shall be construed in accordance with and
governed by the laws of the State of New York.
GRISTEDE'S FOODS, INC.
By:___________________________
Name:
Title:
- 91 -
