EXHIBIT 4.27
LOAN AND SECURITY AGREEMENT
Dated July 3, 1997
by and between
BIG V SUPERMARKETS, INC.
as Borrower
▇▇-▇▇▇-▇▇▇▇
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(Federal Tax ID No. of Borrower)
and
FINOVA CAPITAL CORPORATION
as Lender
$5,000,000
Maximum Loan
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COMMERCIAL EQUIPMENT FINANCE
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LOAN AND SECURITY AGREEMENT
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AGREEMENT, dated as of July 3, 1997, by and between Big V SUPERMARKETS,
INC., a New York corporation ("Borrower"), having its principal place of
business at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇; and FINOVA CAPITAL
CORPORATION, a Delaware corporation ("Lender"), having a place of business at ▇▇
▇▇▇▇▇ ▇▇▇▇▇ ▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇.
WITNESSETH:
WHEREAS, Borrower has requested Lender to make a loan to Borrower and
Lender is willing to make such loan to Borrower upon the terms and conditions
hereinafter set forth.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants herein contained and intending to be legally bound hereby, the parties
hereto covenant and agree as follows:
ARTICLE 1. DEFINITIONS; CONSTRUCTION
1.1 Definitions.
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In addition to other words and terms defined elsewhere in this Agreement,
as used herein the following words and terms have the following meanings,
respectively, unless the context hereof otherwise clearly requires:
"ADVANCE" means any advance made hereunder by Lender to Borrower.
"AGREEMENT" means this Loan and Security Agreement as amended, modified or
supplemented from time to time.
"BUSINESS DAY" means any day other than a Saturday, Sunday or other day on
which banking institutions are authorized or obligated to close in New Jersey or
New York.
"CLOSING DATE" means the date on which the parties enter into this
Agreement and all conditions to the making of the initial Advance contained in
this Agreement and the other Loan Documents have been satisfied in Lender's sole
and absolute discretion.
"COLLATERAL" means all assets of Borrower in which Borrower has granted or
will ▇▇▇▇▇ ▇ ▇▇▇▇ to Lender, pursuant to this Agreement, including those assets
described and defined as Collateral in Section 3.1.
"CONSTITUENT DOCUMENTS" means the certificate of incorporation, agreement
of partnership or limited partnership, organizational agreement, operating
agreement, by-laws, or such other similar document pursuant to which Borrower
was organized or its affairs are governed.
"CREDIT FACILITY" means the loans made or to be made by the Bank Group (as
hereinafter defined) to Borrower, pursuant to the Bank Group Credit Facility
Loan Documents.
"CREDIT FACILITY LOAN DOCUMENTS" means the Amended and Restated Credit
Agreement dated as of December 28, 1990, amended and restated as of November 1,
1993, and further amended and restated as of December 17, 1993 (as heretofore or
hereafter amended, modified or supplemented from time to time, the "Bank Group
Credit Facility Loan Agreement") by and among Borrower, Big V Holding Corp., a
Delaware corporation, BV Holdings Corporation, a Delaware corporation, the
lenders named therein and signatory thereto, Union Bank of Switzerland, as co-
agent, and Bankers Trust Company, as agent (Bankers Trust Company, Union Bank of
Switzerland and such other lenders are collectively referred to as the "Bank
Group") , and all agreements, instruments and documents executed and/or
delivered or to be executed and/or delivered in connection with the Bank Group
Credit Facility, as the same have been or may from time to time hereafter be
amended, modified or supplemented.
"DEFAULT" means an event which with notice or lapse of time, or both,
would constitute an Event of Default.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"EVENT OF DEFAULT" means any of the Events of Default described in Section
7.1 hereof.
"EXECUTIVE OFFICER" means the President, the Chief Executive Officer, or
the Chief Financial Officer of Borrower elected from time to time.
"FF&E" means all furniture, fixtures and equipment listed on Schedule A
annexed hereto and all other furniture, fixtures and equipment, whether now
owned or hereafter acquired by Borrower and described in any Request for Advance
and financed (or refinanced by reimbursement to Borrower) with the proceeds of
the Loan or any Advance, and any and all accessions thereto, substitutions and
replacements of any of the foregoing, wherever located. Each item of FF&E is
hereinafter referred to as an "Item of FF&E".
"GAAP" means generally accepted accounting principles in the United States
of America (as such principles may change from time
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to time) applied on a consistent basis (except for changes in application in
which Borrower's independent certified public accountants concur), applied both
to classification of items and amounts.
"HOPEWELL STORE" means the Shop Rite Supermarket owned and operated by
Borrower, located at ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇ Junction, New York (a/k/a
▇▇▇▇▇▇▇, New York) 12533.
"INTERIM INTEREST RATE" means the rate of interest publicly announced by
Citibank, N.A. ("Citibank") in New York, New York, from time to time as its
Prime Rate plus one and one-half percent 1-1/2%) per annum. The Prime Rate is
not intended to be the lowest rate of interest charged by Citibank to its
borrowers.
"LAW" means any law (including common law), constitution, statute, treaty,
regulation, rule, ordinance, order, injunction, writ, decree or award of any
government or governmental agency.
"LEGAL REQUIREMENTS" means any and all present and future judicial, and
administrative rulings or decisions, and any and all present and future federal,
state, and local laws, ordinances, rules, regulations, permits and certificates,
in each case, in any way applicable to Borrower (or the ownership or use of the
Collateral or its other assets), the Collateral and/or this transaction.
"LIEN" means any mortgage, pledge, lien, security interest (including
without limitation any conditional sale or other title retention agreement),
grant of a leasehold, charge or other encumbrance of any nature whatsoever, and
also means the filing of or the agreement to give any financing statement or
analogous document under the UCC or analogous law of any jurisdiction.
"LOAN" means, as of any date of determination, the aggregate amount of all
Advances theretofore made hereunder. Each Store Tranche (as hereinafter defined)
constitutes a portion of the Loan.
"LOAN DOCUMENTS" means this Agreement, the Note, the Subordination
Agreements, the Insurance Letter, the Environmental Certificate with
Representations, Covenants and Warranties, the Requests for Advance and any
other agreements, instruments and documents required to be, or which are,
executed by Borrower in connection with this Agreement or the Loan (as the same
may from time to time be amended, modified or supplemented).
"MATURITY DATE" means, with respect to each such Store Tranche, the date
upon which the sixtieth (60th) consecutive monthly payment of principal and
interest with respect to such Store Tranche is scheduled to be due.
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"MAXIMUM LOAN" means the maximum aggregate amount to be loaned hereunder,
not to exceed the lesser of (a) $5,000,000 or (b) Borrower's cost to acquire
FF&E for each Store, which amount with respect to each such Store shall not
exceed the Maximum Store Advance applicable to such Store.
"MAXIMUM STORE ADVANCE" means the maximum aggregate amount to be loaned
hereunder to be used with respect to a Store, not to exceed the lesser of (a)
the amount set forth below opposite such Store or (b) Borrower's cost to acquire
FF&E for such Store:
Store Maximum Store Advance
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Hopewell Store $2,141,787.25
Peekskill Store $2,858,212.75
"NOTE" means the promissory note of Borrower executed and delivered by
Borrower under this Agreement, in substantially the form annexed hereto as
Exhibit A with the blanks appropriately filled in.
"OBLIGATIONS" means all of the indebtedness, liabilities and obligations of
every kind and nature of Borrower to Lender, whether now existing or hereafter
arising, under, in connection with or evidenced by this Agreement, the Note
and/or the other Loan Documents.
"OFFICE", when used in connection with Lender, means its office located at
▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, or such other office of
Lender as may be designated in writing from time to time by Lender to Borrower.
"OUTSIDE DATE" means July 31, 1997.
"PEEKSKILL STORE" means the Shop Rite Supermarket owned and operated by
Borrower, located at ▇▇▇▇▇ ▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ (a/k/a ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇) ▇▇▇▇▇.
"PERMITTED SUBORDINATE LIENS" means Liens covering the Collateral held,
respectively, by the landlords of the Premises and Bankers Trust Company, as
agent for the Bank Group, which Liens are subordinate to the Liens covering the
Collateral held by Lender pursuant to the respective Subordination Agreements.
"PERSON" means an individual, corporation, national banking association,
partnership, trust, unincorporated association, joint venture, joint-stock
company, government (including political subdivisions), governmental authority
or agency, or any other entity.
"PLAN" means any employee benefit plan which is covered by ERISA and which
is maintained by Borrower or, in the case of a
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plan to which more than one employer contributes, to which Borrower made
contributions at any time within the five plan years preceding the date of
termination.
"PREMISES" means, with respect to the Hopewell Store, ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ (a/k/a ▇▇▇▇▇▇▇, New York) 12533, and with respect to
the ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ (a/k/a East Main Street,
Cortland, New York) 10566, each more particularly described on Schedule B
annexed hereto.
"REQUEST FOR ADVANCE" means a Request for Advance in the form of Exhibit B
annexed hereto.
"STORE TRANCHE COMMENCEMENT DATE" means, with respect to the Hopewell
Store, the Closing Date, and with respect to the Peekskill Store, the earliest
of (i) the Outside Date, or (ii) the date all of the FF&E purchased for the
Peekskill Store has been delivered and installed at the Peekskill Store, and
unconditionally accepted in writing by Borrower, and the construction of the
Peekskill Store has been completed and the Peekskill Store is open for business,
or (iii) the date the aggregate Advances made with respect to the Peekskill
Store equals the applicable Maximum Store Advance, or (iv) the date the
aggregate Advances equal to the Maximum Loan have been made, or (v) the date
Lender and Borrower agree is the Peekskill Store's Store Tranche Commencement
Date.
"STORE TRANCHE INTEREST RATE" means ten and ninety-five hundredths percent
(10.95%), provided, however, that if on the first business day preceding each
applicable Store Tranche Commencement Date, the highest yield for Treasury Notes
with a maturity date on or closest to the applicable Maturity Date of such Store
Tranche, as published in The Wall Street Journal (the "Index"), is greater or
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less than 6.27% (the "Yield"), the applicable Store Tranche Interest Rate
provided herein shall be increased or decreased to reflect such increase or
decrease in the Yield. Interest shall be calculated on the basis of a year of
360 days and twelve months of thirty (30) days each and charged on a daily
basis.
"STORE(S)" means the Hopewell Store and/or the Peekskill Store.
"SUBORDINATION, AGREEMENT(S)" means (i) the subordination agreement entered
into between Lender and Bankers Trust Company, as agent for the Bank Group, and
(ii) the subordination agreements entered into between Lender and the landlord
of each Premises, pursuant to which, Bankers Trust Company and each such
landlord subordinate their respective interests in the Collateral to the Liens
held by Lender and otherwise in form and substance satisfactory to Lender.
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"TERM" means, with respect to each such Store Tranche, if the applicable
Store Tranche Commencement Date is not the first day of a month, the period
beginning on the first day of the month immediately succeeding such Store
Tranche Commencement Date and ending on the applicable Maturity Date, and, if
such Store Tranche Commencement Date is the first day of a month, the period
beginning on such Store Tranche Commencement Date and ending on the applicable
Maturity Date.
"UCC" means the Uniform Commercial Code as adopted in the State of New
York.
1.2 General Interpretive Principles.
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For purposes of this Agreement, except as otherwise expressly provided
herein or unless the context otherwise requires:
(i) any pronoun used shall be deemed to cover both gender
forms as well as the neuter form;
(ii) all references to the plural shall include the singular,
the singular the plural and the part the whole;
(iii) the word "or" has the inclusive meaning frequently
identified by the phrase "and/or";
(iv) accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with GAAP;
(v) the words "herein", "hereunder" and "hereof" and similar
terms in this Agreement refer to this Agreement as a whole and not to any
particular provision of this Agreement;
(vi) references herein to "Articles", "Sections",
"Subsections", "Paragraphs", and other subdivisions without reference to a
document are to designated Articles, Sections, Subsections, Paragraphs and other
subdivisions of this Agreement;
(vii) a reference to a Subsection without further reference to a
Section is a reference to such Subsection as contained in the same Section in
which the reference appears, and this rule shall also apply to Paragraphs and
other subdivisions;
(viii) the term "include" or "including" shall mean, without
limitation, by reason of enumeration; and
(ix) the term "satisfactory to Lender" or "satisfaction of
Lender" or "satisfactory to counsel" or
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"satisfaction of counsel" or other similar terms means reasonably satisfactory
to Lender or its counsel in its sole and absolute discretion.
ARTICLE 2. THE LOAN
2.1 The Loan.
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Subject to the terms and conditions and relying upon the representations
and warranties herein set forth, including, without limitation, the fulfillment
of each and every condition of lending, Lender agrees to make a Loan to Borrower
in the principal amount of up to the Maximum Loan, but not to exceed the Maximum
Store Advance applicable to each such Store.
2.2 Use of Proceeds.
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The proceeds of the Advances shall be used by Borrower solely for the
following purposes: (a) to reimburse Borrower for payments made by Borrower to
suppliers (each, a "Supplier" and collectively, the "Suppliers") for the
property listed on Schedule A annexed hereto, which was previously purchased by
Borrower and which has been delivered to and is located and installed at the
Hopewell Store, and (b) to pay Suppliers for the purchase and installation of
Items of FF&E acceptable to Lender in its reasonable discretion, which are
located and installed at the Peekskill Store (or to reimburse Borrower for the
payments made by Borrower to Suppliers for such Items of FF&E), all pursuant to
and in accordance with the terms of the purchase agreements between Borrower and
the Suppliers, provided that Items of FF&E which are substantially similar in
all respects (including, without limitation, quality and cost) to the property
listed on Schedule A annexed hereto will be acceptable to Lender.
2.3 The Note.
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The obligation of Borrower to repay the Loan (including all Tranches, as
hereinafter defined) and to pay interest thereon shall be evidenced by the Note.
The Note shall be dated the Closing Date and shall be executed by Borrower
delivered to Lender on the Closing Date.
2.4 Advances.
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Lender agrees, on the terms and subject to the conditions set forth herein,
to make Advances to Borrower from time to time on or prior to the Store Tranche
Commencement Date applicable to a Store, so long as the total Advances do not
exceed the Maximum Loan or the applicable Maximum Store Advance and no Event of
Default has occurred; and Borrower agrees, on the terms and subject to the
conditions set forth herein, to accept such Advances from Lender and apply them
in accordance with the terms
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of this Agreement; provided, however, that Lender shall not be obligated to make
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any Advance hereunder from and after the Outside Date.
2.5 Requests for Advances.
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Borrower shall, not later than the fifth Business Day next preceding the
date of any requested Advance, submit to Lender a Request for Advance, setting
forth (a) the date requested for such Advance, which date shall be a Business
Day, (b) the amount of the requested Advance, which amount shall not be less
than Two Hundred Thousand Dollars ($200,000.00), (c) the use of proceeds from
the Advance requested, (d) a description of the Items of FF&E and FF&E costs to
be paid with the Advance, (e) the Suppliers requested to be paid with the
proceeds of such Advance and their addresses, and (f) all other information set
forth on the Request for Advance. The submission of each Request for Advance
shall constitute Borrower's irrevocable commitment to borrow such amount. The
date each Advance is made is a "Disbursement Date". In addition, as a
precondition to making any Advance hereunder, Lender may, in its sole and
absolute discretion, require that each Request for Advance indicate the payee(s)
to be paid with the proceeds of such Advance and be accompanied by such
requisitions, certificates, releases and waivers of liens, approvals and
supporting invoices, copies of agreements with the Suppliers to be paid, bills
or other documents, in each case, in form and substance and from such Person or
Persons as are reasonably satisfactory to Lender.
2.6 Disbursement.
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Subject to the conditions set forth herein, Lender shall, on each
Disbursement Date, credit, by wire transfer, the amount of the Advance to be
made to the account of Borrower or the Supplier or Suppliers specified in
writing by Borrower pursuant to Section 2.5 hereof.
2.7 Loan Account.
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Lender shall maintain a loan account on its books in the name of Borrower
for the Loan in which will be recorded all Advances made by Lender, all payments
of principal thereof and all accruals and payments of interest thereon. The
entries in the loan account (in the absence of manifest error in the making
thereof) shall be conclusive evidence of the outstanding principal thereof and
accrued interest thereon from time to time. Lender shall provide Borrower with
statements of said account from time to time on request.
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2.8 Interest Rates.
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2.8.1 Interest Prior to Maturity. Prior to maturity (whether by
--------------------------
acceleration or otherwise), during the period between the making of an Advance
and the Store Tranche Commencement Date applicable to a Store, Advances shall
bear interest at the Interim Interest Rate. Thereafter, and prior to maturity
(whether by acceleration or otherwise), the unpaid principal amount of each such
Store Tranche shall bear interest at the applicable Store Tranche Interest Rate.
2.8.2 Interest After Maturity. Commencing with the day after the
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entire principal amount of the Loan shall have become due and payable by reason
of acceleration or commencing ten (10) days after any part of the Loan shall
otherwise be due and payable (without giving effect to any grace or cure period
other than as set forth herein), such part of the Loan or the entire Loan (as
the case may be) shall bear interest at the daily rate of two percent (2%) per
annum above the then applicable Interim Interest Rate or Store Tranche Interest
Rate (as the case may be) (the "Default Rate").
2.8.3 Maximum Rate. Lender and Borrower intend the Loan Documents to
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comply in all respects with all provisions of Law and not to violate, in any
way, any legal limitations on interest charges. Accordingly, if, for any reason,
Borrower is required to pay, or has paid, interest at a rate in excess of the
highest rate of interest which may be charged by Lender or which Borrower may
legally contract to pay under applicable law (the "Maximum Rate"), then the
Interim Interest Rate or the applicable Store Tranche Interest Rate (as the case
may be) shall be deemed to be reduced, automatically and immediately, to the
Maximum Rate, and interest payable hereunder shall be computed and paid at the
Maximum Rate and the portion of all prior payments of interest in excess of the
Maximum Rate shall be deemed to have been prepayments of the outstanding
principal of the Loan and applied to the installments in the inverse order of
their maturities, without prepayment premium or fee.
2.9 Payments.
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2.9.1 Time; Place; Manner. All payments to be made respect of
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principal, interest, or other amounts due from Borrower hereunder or under the
Note shall become due at 12:00 o'clock noon, New York City time, on the day when
due without presentment, demand, protest or notice of any kind, all of which are
hereby expressly waived. Such payments shall be made to Lender in lawful money
of the United States of America in immediately available funds.
2.9.2 Payments of Principal and Interest. Prior to the respective
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Store Tranche Commencement Date, Borrower shall
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pay interest only on the Advances, at the Interim Interest Rate, in arrears, on
the first day of each month. From and after the applicable Store Tranche
Commencement Date, provided there is no Default hereunder or under any of the
other Loan Documents and provided further that there has been no material
adverse change in the business, operations or financial condition of Borrower or
in the Collateral, the aggregate Advances made with respect to such Store
outstanding as of the applicable Store Tranche Commencement Date shall
automatically convert to a fixed term obligation (the fixed term obligations are
hereinafter referred to individually, as a "Store Tranche" and collectively, as
the "Store Tranches"). Each Store Tranche, together with interest thereon at
the applicable Store Tranche Interest Rate, shall be repaid in sixty (60) equal
consecutive monthly payments of principal and interest each in an amount which
will fully amortize such Store Tranche at the applicable Store Tranche Interest
Rate over the Term of such Store Tranche. The first such monthly payment of
principal and interest with respect to a Store Tranche shall be due and payable
on the first day of the second month succeeding the applicable Store Tranche
Commencement Date and the payments shall continue on a like day in each and
every month thereafter through and including the Maturity Date applicable to
such Store Tranche; provided that (i) if the applicable Store Tranche
Commencement Date is the first day of a month, the first such monthly payment of
principal and interest shall be due on the first day of the immediately
succeeding month, and (ii) if the applicable Store Tranche Commencement Date is
not the first day of the month, Borrower shall pay, on the first day of the
month immediately succeeding such Store Tranche Commencement Date, interest
only, at the applicable Store Tranche Interest Rate, from the applicable Store
Tranche Commencement Date to the last day of the month in which such Store
Tranche Commencement Date occurs. Lender shall compute the amount of each
payment and advise Borrower of such amount. The entire unpaid principal balance
of a Store Tranche which was not payable earlier, whether due to regularly
scheduled payments, acceleration or otherwise, together with any unpaid
interest, fees, costs and charges shall be due and payable on the applicable
Maturity Date. After the maturity of all or any part of the Loan (by
acceleration or otherwise), interest on the Loan or such part thereof shall be
due and payable at the Default Rate on demand.
2.9.3 Application of Payments. Each payment under this Agreement and
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the other Loan Documents shall be applied, first to fees, costs, expenses and
charges, if any, owing to Lender, then to interest as may be due hereunder, and
the balance of such payment shall be applied to the principal balance of the
Loan.
2.9.4 Net Payments. All payments hereunder and under the Note shall
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be made by Borrower to Lender without defense,
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set-off, claim or counterclaim and without deduction for any present or future
income, stamp or other taxes, levies, imposts, deductions, charges or
withholdings whatsoever imposed, assessed, levied or collected by or for the
benefit of any jurisdiction or taxing authority. In addition, Borrower shall
pay any and all taxes (stamp or otherwise) payable or determined to be payable
in connection with the execution and delivery of this Agreement, the Note and
the other Loan Documents and on all payments to be made by Borrower hereunder
and under the Note and the other Loan Documents (other than Lender's income or
franchise or similar taxes) and all taxes payable in connection with or related
to the Collateral.
2.10 Prepayments.
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Borrower may not prepay any Advances or Store Tranche, in whole or in part,
prior to the first regularly scheduled payment date occurring after the first
anniversary of the Store Tranche Commencement Date of the applicable Store
Tranche to be prepaid. Borrower shall have the right, upon not less than thirty
(30) days prior written notice to Lender, on any regularly scheduled payment
date occurring after the first anniversary of the Store Tranche Commencement
Date of the applicable Store Tranche, to prepay the outstanding principal
balance of such Store Tranche in whole, but not in part, provided that Borrower
shall pay to Lender, together with the principal balance of such Store Tranche,
(i) all accrued and unpaid interest on the amount prepaid through the date of
prepayment, (ii) all outstanding fees, charges and other amounts then due under
the Loan Documents, and (iii) a prepayment fee ("Prepayment Fee") in an amount
equal to the product of (A) the outstanding principal balance of such Store
Tranche at the time of prepayment, times (B) the applicable percentage set forth
opposite the year of the Term of such Store Tranche in which the prepayment is
made, as set forth below:
Year of Term of Store Tranche
Which Prepayment is Made Percentage
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2 2.5%
3 2.0%
4 1.5%
5 1.0%
Once given, the notice of prepayment shall be irrevocable. Any acceleration of
the Loan as a consequence of the occurrence of a willful Default shall be
presumed to be a mechanism to avoid the requirements of this provision and shall
be deemed a prepayment and subject to the appropriate prepayment premium set
forth above, in addition to all other amounts otherwise due under this
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Agreement and the other Loan Documents. If the Loan is accelerated prior to the
date upon which prepayment is permitted to be made hereunder, the applicable
percentage shall be 3%. Borrower shall not be obligated to pay a Prepayment Fee
if Borrower prepays the entire balance of a Store Tranche at any time during the
last ninety (90) days of its Term.
2.11 Administrative Costs.
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If Borrower shall fail to make any payment of principal or interest within
ten (10) days after the same is due, Borrower shall pay a late charge of five
percent (5%) of the unpaid amounts, but in no event greater than the maximum
rate permitted by law, and such amount shall be payable upon demand. Such
payment is not interest for the use of money, but is solely to cover Lender's
administrative costs occasioned by such delay.
ARTICLE 3. SECURITY
3.1 Security.
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As security for the full and timely payment and performance of all of the
Obligations of Borrower to Lender, Borrower hereby assigns, pledges, transfers
and sets over to Lender, and hereby agrees that Lender shall have, and hereby
grants to and creates in favor of Lender, a first security interest under the
UCC subject to no other Liens (other than Permitted Subordinate Liens), in and
to the following, in each case whether now existing or hereafter arising, now
owned or hereafter acquired, wherever located ("Collateral"):
3.1.1 All property listed on Schedule A annexed hereto and all other
furniture, fixtures and equipment and other FF&E described in every Request for
Advance delivered by Borrower pursuant to Section 2.5 of this Agreement and
financed (or refinanced by reimbursement to Borrower) with the proceeds of any
Advance; and
3.1.2 All accessions thereto, substitutions for, and all replacements
of, any and all of the foregoing, and all proceeds of the foregoing, cash and
non-cash, including insurance proceeds.
3.2 Lender Has Rights and Remedies of a Secured Party.
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In addition to all rights and remedies given to Lender by this Agreement,
Lender shall have all the rights and remedies of a secured party under the UCC.
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3.3 Additional Provisions Applicable to the Collateral.
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The parties agree that, at all times during the term of this Agreement, the
following provisions shall be applicable to the Collateral:
3.3.1 Borrower covenants and agrees that it will keep accurate and
complete books and records concerning the Collateral owned or acquired by it in
accordance with GAAP.
3.3.2 Lender shall have the right to review the books and records of
Borrower pertaining to the Collateral and to copy the same and to make excerpts
therefrom, all at such reasonable times upon reasonable notice and as often as
Lender may reasonably request, and, so long as there is no continuing Default or
Event of Default, the cost of performing the same shall be borne by Lender.
3.3.3 Borrower shall maintain and keep its principal place of
business and its chief executive office at the address set forth at the
beginning of this Agreement, and at no other location without giving Lender at
least thirty (30) days prior written notice of any move. Borrower shall
maintain and keep its records concerning the Collateral at such address and at
no other location without giving Lender at least thirty (30) days prior written
notice of any move. Borrower shall keep all Collateral only at the Premises
with respect to which the Advance was requested. Borrower may not move the
Collateral without the prior written consent of Lender.
3.3.4 Except for Liens granted to Lender and Permitted Subordinate
Liens covered by the Subordination Agreements, Borrower shall not sell, lease,
transfer or otherwise dispose of or encumber any of the Collateral.
3.3.5 Borrower shall cause the Collateral to be maintained and
preserved in the same condition, repair and working order as when new, ordinary
wear and tear excepted, and shall promptly make or cause to be made all repairs,
replacements and other improvements in connection therewith which are necessary
or desirable to that end.
3.4 Certain Covenants.
-----------------
Borrower covenants and agrees with Lender for the benefit of Lender that:
3.4.1 Borrower has and will have good and merchantable title to all
of its assets, including the Collateral, in each case as from time to time owned
or acquired by it, and shall keep the Collateral free and clear of all Liens,
other than Liens granted to Lender hereunder and Permitted Subordinate Liens
-13-
covered by the Subordination Agreements. Borrower will defend such title against
the claims and demands of all Persons whomsoever.
3.4.2 Borrower will faithfully preserve and protect Lender's Liens in
the Collateral and will, at its own cost and expense, cause said Liens to be
perfected and continued perfected, and for such purpose Borrower will from time
to time at the request of Lender and at the expense of Borrower, make, execute,
acknowledge and deliver, and file or record, or cause to be filed or recorded,
in the proper filing places, all such instruments, documents and notices,
including without limitation financing statements and continuation statements,
as Lender may deem necessary or advisable from time to time in order to perfect
and continue perfected said security interest. Borrower will do all such other
acts and things and make, execute, acknowledge and deliver all such other
instruments and documents, including without limitation further security
agreements, pledges, endorsements, assignments and notices, as Lender may deem
necessary or advisable from time to time in order to perfect and preserve the
priority of said Liens as a first Lien on and security interest in the
Collateral prior to the rights of all other Persons therein or thereto.
3.4.3 Borrower will not, without the prior written consent of Lender,
(i) borrow or permit any Person to borrow against the Collateral other than the
Loan to Borrower from Lender pursuant to this Agreement and the obligations
represented by the Permitted Subordinate Liens; (ii) create, incur, assume or
suffer to exist any Lien with respect to any of the Collateral (other than
Permitted Subordinate Liens covered by the Subordination Agreements); (iii)
permit any levy or attachment to be made against any of the Collateral except
any levy or attachment relating to this Agreement; or (iv) permit any financing
statement to be on file with respect to any of the Collateral, except financing
statements in favor of Lender and those relating to Permitted Subordinate Liens
covered by the Subordination Agreements.
3.4.4 Risk of loss of, damage to or destruction of the Collateral is
and shall remain upon Borrower. Borrower will insure the Collateral as provided
in Section 6.3 of this Agreement. If Borrower fails to effect and keep in full
force and effect such insurance or fails to pay the premiums thereon when due,
Lender may do so for the account of Borrower and add the cost thereof to the
Obligations and the same shall be payable to Lender on demand. Borrower hereby
assigns and sets over unto Lender for the benefit of Lender all moneys which may
become payable on account of such insurance, including without limitation any
return of unearned premiums which may be due upon cancellation of any such
insurance, and directs the insurers to pay Lender any amount so due. Lender,
its officers, employees
-14-
and authorized agents and its successors and assigns, are hereby appointed
attorneys-in-fact of Borrower, for the purpose of endorsing any draft or check
which may be payable to Borrower in order to collect the proceeds of such
insurance or any return of unearned premiums. Such appointment is irrevocable
and coupled with an interest. The proceeds of insurance shall be applied to
reduction of the Obligations in any order Lender may choose or, in Lender's sole
discretion, to the repair or replacement of the Collateral, or any part thereof,
in which case Lender may impose such conditions on the disbursement of the
proceeds as Lender in its sole discretion deems appropriate.
3.4.5 Upon the occurrence and during the continuation or existence of
any Event of Default, Borrower shall promptly upon demand by Lender assemble the
Collateral and make it available to Lender at the place or places to be
designated by Lender. The right of Lender to have the Collateral assembled and
made available to it is of the essence of this Agreement and Lender may, at its
election, enforce such right in equity for specific performance.
3.4.6 Lender shall have no duty as to the collection or protection of
the Collateral or any part thereof or any income thereon, or as to the
preservation of any rights pertaining thereto, beyond exercising reasonable care
in the custody of any Collateral actually in the possession of Lender. Lender
shall be deemed to have exercised reasonable care in the custody and
preservation of such of the Collateral as may be in its possession if it takes
such action for that purpose as Borrower shall request in writing, provided that
such requested action shall not, in the judgment of Lender, impair Lender's
security interest in the Collateral or its rights in, or the value of, the
Collateral, and provided further that such written request is received by Lender
in sufficient time to permit it to take the requested action.
ARTICLE 4. CONDITIONS OF CLOSING
The obligation of Lender to make the Loan and each Advance hereunder is
subject to the accuracy, as of the date hereof and each Disbursement Date, of
the representations and warranties herein contained, to the performance by
Borrower of its obligations to be performed hereunder on or before such
Disbursement Date and to the fulfillment (to the satisfaction of Lender and its
counsel) of the following further conditions. If all conditions contained herein
are not so satisfied by the Outside Date, Lender shall have no obligation
whatsoever to make any Advance and shall have no liability for its refusal to do
so.
-15-
4.1 Representations and Warranties.
------------------------------
The representations and warranties contained in Article 5 hereof shall be
true on the Closing Date and on and as of each Disbursement Date with the same
effect as if made on and as of such date.
4.2 Corporate Action.
----------------
On the Closing Date, Borrower shall deliver to Lender a certificate in form
and substance satisfactory to Lender, dated the Closing Date, signed by a duly
authorized officer of Borrower, certifying as to (a) true copies of the
Constituent Documents of Borrower, all as in effect on such date, (b) true
copies of all action taken by Borrower relative to this Agreement, the Note and
the other Loan Documents, and (c) the names, true signatures and incumbency of
the officer or officers of Borrower authorized to execute and deliver this
Agreement, the Note and the other Loan Documents on behalf of Borrower (and
Lender may conclusively rely on such certificate unless and until a later
certificate revising the prior certificate has been furnished to Lender).
Borrower shall also deliver to Lender good standing certificates for Borrower
issued by the Secretary of State of its State of incorporation and each state in
which it is required by Law to be qualified.
4.3 Opinion of Counsel.
------------------
On the Closing Date, Lender shall have received a favorable written opinion
of counsel for Borrower, dated the Closing Date and in form and substance
reasonably satisfactory to Lender and its counsel, ▇▇▇▇▇▇ & Rich, P.C.
4.4 No Change of Law or Facts.
-------------------------
No change shall have occurred after the date of execution and delivery of
this Agreement in applicable Law or regulations thereunder or interpretations
thereof by appropriate regulatory authorities which, in the opinion of Lender or
its counsel, would make it illegal for Lender to acquire the Note, make an
Advance or the Loan, or otherwise to participate in the Loan, nor shall any
facts come to the attention of Lender, concerning Borrower, its business or
financial condition which, in the opinion of Lender would increase the risk to
Lender of repayment of the Loan by Borrower.
4.5 Documents.
---------
The following documents shall have been duly authorized, executed and
delivered by the respective party or parties thereto, shall be in form and
substance satisfactory to Lender and its counsel and shall be in full force and
effect on the
-16-
Closing Date and on each Disbursement Date, and an executed counterpart of each
thereof shall have been delivered to Lender and its counsel:
4.5.1 this Agreement;
4.5.2 the Note;
4.5.3 a Request for Advance completed in accordance herewith;
4.5.4 insurance certificates or policies of insurance evidencing the
coverages required by Section 6.3 hereof;
4.5.5 an agreement with respect to certain environmental matters (the
"Environmental Certificate with Representations, Covenants and
Warranties"); and
4.5.6 other Loan Documents, if any.
4.6 Collateral.
----------
With each Request for Advance, Borrower shall provide to Lender a complete
description of each item of FF&E the cost of which will be paid with the
proceeds of the Advance (either by paying the Supplier or reimbursing Borrower
therefrom), together with all other agreements, instruments, documents and other
information required to be delivered pursuant to Section 2.5 hereof, including,
without limitation, evidence, in form and substance satisfactory to Lender in
its sole discretion, that Borrower owns legal title to the FF&E, free and clear
of all Liens, except for Permitted Subordinate Liens covered by the
Subordination Agreements. Lender may reject any such item of FF&E (other than
those items listed on Schedule A), in which case, Borrower may substitute other
FF&E acceptable to Lender or reduce the amount of the Advance requested, subject
to Section 2.5(b) hereof. Each Item of FF&E which is substantially similar in
all respects (including, without limitation, quality and cost) to the FF&E
located at the Hopewell Store shall likewise be acceptable to Lender.
4.7 Financing Statements.
--------------------
On the Closing Date and prior to each Advance, UCC financing statements
covering the security interest created by this Agreement in the Collateral and
all FF&E described in each Request for Advance shall have been duly filed in the
office of the Secretary of State of the State where the Collateral is located
(i.e. New York) and in all other places as, in the opinion of Lender, or its
counsel, are necessary or desirable to
-17-
perfect such Liens, and Lender shall have been granted a perfected first Lien
covering the Collateral.
4.8 Licenses and Permits.
--------------------
All appropriate action shall have been taken prior to the Closing Date in
order to permit consummation of the transactions contemplated herein and hereby
and enforcement of all of the terms hereof and thereof, and all licenses,
permits, waivers, exemptions, authorizations and approvals required (or, in the
opinion of Lender or its counsel, advisable) to be in effect on the Closing Date
shall have been issued and shall be in full force and effect on such date, and
copies thereof shall have been delivered to Lender.
4.9 Credit Facility Loan Documents.
------------------------------
Borrower shall have furnished Lender with a copy of all of the Credit
Facility Loan Documents, which shall be in form and substance satisfactory to
Lender and Borrower and its affiliates shall be in compliance with all of the
terms thereof.
4.10 Additional Conditions for Advance.
---------------------------------
Prior to Lender making any Advance to be used in connection with the
Peekskill Store, Borrower shall have furnished to Lender (i) the comparative
first quarter 1996 and 1997 financial statements for Borrower, and (ii) the
comparative current annual financial statement and interim operating results for
the Peekskill Store, all of which shall be satisfactory to Lender in form and
substance.
4.11 Subordination Agreements. Each of Bankers Trust Company and each
------------------------
landlord of the Premises shall have entered into a Subordination Agreement with
and in form and substance satisfactory to the Lender, which shall be in full
force and effect.
4.12 Additional Conditions.
---------------------
4.12.1 Lender shall have received all other agreements, instruments,
financing statements, certificates, waivers, searches, releases, terminations,
reports, confirmations, agreements with Suppliers and contractors, corporate or
other action, opinion letters, copies of acquisition documents, copies of all
leases, evidence of delivery and acceptance of the Collateral, evidence of
performance of work, evidence of payment of obligations, evidence of ownership
of the Collateral and other documents as Lender or its counsel shall have
reasonably requested (each in form and substance reasonably satisfactory to
Lender and its counsel), including, without limitation, certificates of
incorporation and by-laws, UCC-1
-18-
financing statements, lien waivers, credit references, consents, approvals,
authorization to date documents, casualty and liability insurance policies and
endorsements related to such insurance, satisfactory environmental audits and
other environmental information and certificates, appraisals, surveys and
financial statements and other financial information.
[4.12.2 Lender shall have completed its environmental due diligence.]
4.12.3 There shall have been no material adverse change in the
business, operations or financial condition of Borrower or in the Collateral.
4.12.4 Prior to and after giving effect to the requested Advance or
the Loan, there shall be no continuing Default or Event of Default hereunder or
under the other Loan Documents.
4.12.5 All legal matters incident to the Loan shall be satisfactory
to Lender and its counsel.
ARTICLE 5. REPRESENTATIONS AND WARRANTIES
Borrower represents and warrants to Lender that:
5.1 Organization and Qualification.
------------------------------
Borrower is duly organized, validly existing and in good standing as a
corporation under the Laws of the State of New York with full power and
authority to own its properties and to transact its business as now transacted
and as contemplated to be transacted. Borrower is qualified and in good
standing to transact business in each State where the ownership of its
properties or the transaction of its business requires such qualification.
5.2 Authority and Authorization.
---------------------------
Borrower has full power and authority to execute, deliver and carry out the
provisions of this Agreement, the Note and the other Loan Documents to which it
is a party, to borrow hereunder and under the other Loan Documents and to create
the Liens provided for herein, and to perform its obligations hereunder and
thereunder, and all such action has been duly and validly authorized by all
necessary proceedings on its part.
5.3 Execution and Binding Effect.
----------------------------
This Agreement, the Note and the other Loan Documents to which
Borrower is a party have been duly and validly executed and
-19-
delivered by Borrower and constitute the legal, valid and binding obligation of
Borrower enforceable in accordance with their respective terms.
5.4 Authorizations and Filings
--------------------------
Except for the filing of UCC financing statements, no authorization,
consent, approval, license, exemption or other action by, and no registration,
qualification, designation, declaration or filing with, any governmental
authority is or will be necessary or advisable in connection with the execution
and delivery of this Agreement, the Note, the other Loan Documents or the
consummation by Borrower of the transactions herein and therein contemplated, or
performance by Borrower of or compliance by Borrower with, the terms and
conditions hereof or thereof.
5.5 Absence of Conflicts.
--------------------
Neither the execution and delivery of this Agreement, the Note or the other
Loan Documents, nor consummation of the transactions herein or therein
contemplated nor performance of, or compliance with the terms and conditions
hereof or thereof will (a) result in any violation or breach of (i) the
provisions of Borrower's Constituent Documents, or (ii) any Law, or the order,
rule or regulation of any court or governmental agency or body having
jurisdiction over Borrower, or any of its properties, or (iii) any agreement,
bond, note, instrument or indenture to which Borrower is a party or pursuant to
which any of its properties are affected, or (b) result in the creation or
imposition of any Lien upon any property (now owned or hereafter acquired) of
Borrower, except for the Lien created by this Agreement.
5.6 Financial Statements.
--------------------
Borrower has heretofore furnished to Lender certain financial statements
and related financial information ("Financial Statements"). Such Financial
Statements (including the notes thereto) present fairly the financial condition
of Borrower as of the dates of the balance sheets contained therein, and the
results of its operations for the periods then ended, all in conformity with
GAAP on a basis consistent with that of Financial Statements for corresponding
prior periods. Except as disclosed therein, Borrower has no material contingent
liabilities (including liabilities for taxes), unusual forward or long-term
commitments or unrealized or anticipated losses from unfavorable commitments.
5.7 No Defaults.
-----------
There is no Default under the Loan Documents.
-20-
5.8 Litigation.
----------
There is no pending or threatened claim or proceeding by or before any
court or governmental agency against or affecting Borrower (including, without
limitation, the proceedings listed on Schedule 5.8 annexed hereto) which, if
adversely decided would have a material adverse effect on the business,
operations or financial condition of Borrower or on the ability of Borrower to
perform its obligations under this Agreement, the Note or the other Loan
Documents or on the Collateral.
5.9 Title to FF&E. Borrower has good title to all property listed on
-------------
Schedule A annexed hereto subject to no Lien other than the Liens held by Lender
which will be first perfect Liens covering such property and the Permitted
Subordinate Liens covered by the Subordination Agreements. At the time each
Advance is made, Borrower will have good title to the FF&E described on the
applicable Request for Advance, or will acquire good title thereto upon the
disbursement of the proceeds of the Advance, subject to no Lien covering the
FF&E other than the Liens held by Lender which will be first perfected Liens
covering the FF&E and the Permitted Subordinate Liens covered by the
Subordination Agreements.
5.10 Title to Other Collateral.
-------------------------
Borrower has good title to all of its assets, including, without
limitation, the Collateral and all assets reflected in the most recent balance
sheet referred to in Section 5.6 hereof, free and clear of all Liens covering
the Collateral, other than the Liens granted hereunder to Lender covering the
Collateral, which are and will at all times be perfected first Liens covering
the Collateral and Permitted Subordinate Liens covered by the Subordination
Agreements.
5.11 Taxes.
-----
All tax returns required to be filed by Borrower have been properly
prepared, executed and filed. All taxes, assessments, fees and other
governmental charges upon Borrower or upon any of its properties, incomes, sales
or franchises which are due and payable have been paid.
5.12 Financial Accounting Practices.
------------------------------
Borrower makes and keeps books, records and accounts which, in reasonable
detail, accurately and fairly reflect Borrower's transactions and dispositions
of its assets.
-21-
5.13 Power To Carry On Business.
--------------------------
Borrower has all requisite power and authority to own and operate its
properties and to carry on its business as now conducted and as presently
planned to be conducted.
5.14 No Material Adverse Change.
--------------------------
Since the date of the Financial Statements referred to in Section 5.6,
there has been no material adverse change in the business, operations or
financial condition of Borrower.
5.15 Compliance with Laws.
--------------------
Borrower is not in violation of any Law, except for violations which in the
aggregate do not have a material adverse effect on the business, operations or
financial condition of Borrower or on the Collateral.
5.16 Compliance with Agreements.
-------------------------
Borrower is not in default under any agreement, bond, note, indenture or
contract (including, without limitation, the Credit Facility Loan Documents),
except for defaults which in the aggregate do not have a material adverse effect
on the business, operation or financial condition of Borrower or on the
Collateral.
5.17 Bankruptcy.
----------
Borrower has not made or contemplated an assignment for the benefit of
creditors. No application or petition has been filed for the appointment of a
custodian, trustee, receiver or agent to take possession of the Collateral, or
to take possession of any of the other properties or assets of Borrower.
Borrower is generally paying its debts as such debts become due. Borrower is
not "insolvent" as that term is defined in Section 101(26) of the "Bankruptcy
Code" (Title 11 of the United States Code, 11 U.S.C. Section 101, et seq.) or
would be insolvent after giving effect to the Loan and the transactions
contemplated by the Loan Documents. Borrower has not filed a petition with the
Bankruptcy Court under the Bankruptcy Code, or commenced any proceeding relating
to Borrower under any bankruptcy or reorganization statute or under any
arrangement, insolvency, readjustment of debt, dissolution or liquidation law of
any jurisdiction. No petition or application of the type described above has
been filed or commenced against Borrower, in which (i) Borrower, by any act, has
indicated or intends to indicate its approval thereof, consent thereto, or
acquiescence therein; (ii) an order has been or is expected to be entered
appointing any such custodian, trustee, receiver or agent, adjudicating Borrower
bankrupt or insolvent, or approving such petition or application
-22-
in any such proceeding; (iii) the Bankruptcy Court has ordered or is expected to
order relief against Borrower under the Bankruptcy Code; or (iv) such petition
or application was not dismissed within ninety (90) days of such filing or
commencement.
5.18 Accurate and Complete Disclosure.
--------------------------------
No representation or warranty made by Borrower in this Agreement and no
statement made by Borrower in the Financial Statements furnished pursuant to
Section 5.6 hereof or otherwise, or any certificate, report, exhibit or document
furnished by Borrower to Lender pursuant to or in connection with this Agreement
or the Loan is false or misleading in any material respect (including by
omission of material information necessary to make such representation, warranty
or statement not misleading).
5.19 Regulations G and U.
-------------------
Borrower is not engaged in the business of extending credit for the purpose
of purchasing or carrying "margin stock", as such term is used in Regulations G
or U promulgated by the Board of Governors of the Federal Reserve System as
amended from time to time. No part of the proceeds of the 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". Borrower does not own any "margin
stock".
5.20 Perfection.
----------
Except for the filings under Article 9 of the UCC specified in Sections 4.6
and 4.7 hereof (and continuation statements at periodic intervals), no further
filing or recording is necessary under the UCC or under any other Laws of any
jurisdiction, in order to perfect in all applicable jurisdictions the Liens of
Lender in the Collateral. Upon such filings, Lender will be granted a perfected
first Lien covering the Collateral. There are no other Liens covering the
Collateral, except for Permitted Subordinate Liens covered by the Subordination
Agreements.
5.21 Place of Business
-----------------
Both the place of business (or chief executive office if there is more
than one place of business) of Borrower and the place where it keeps its
corporate records concerning the Collateral and all of its interest in, to and
under this Agreement are located at the address set forth at the beginning of
this Agreement, but can be changed pursuant to Section 6.9 hereof.
-23-
5.22 Location of Collateral.
----------------------
For all purposes, including, without limitation, perfection of security
interests therein under Article 9 of the UCC, the Collateral is deemed located
and at all times shall be located at the Premises with respect to which the
Advance was requested.
5.23 Name Changes, Mergers, Acquisitions. Borrower has not within the
-----------------------------------
six-year period immediately preceding the Closing Date, changed its name, been
the surviving entity of a merger or consolidation, or acquired all or
substantially all of the assets of any Person.
ARTICLE 6. COVENANTS
Borrower covenants that from and after the date hereof and until payment in
full of the Note and interest thereon and all other amounts due from Borrower
hereunder or under the Note or the other Loan Documents, unless Lender shall
otherwise consent in writing:
6.1 Reporting and Information Requirements.
--------------------------------------
6.1.1 Annual Financial Statements. As soon as practicable, and in
---------------------------
any event within one hundred twenty (120) days after the close of each fiscal
year of Borrower, Borrower shall furnish to Lender its annual audit reports for
such year for Borrower, including audited statements of income, retained
earnings and changes in financial position of Borrower for such fiscal year and
audited balance sheets of Borrower as of the close of such fiscal year, and
notes to each, all in reasonable detail, setting forth in comparative form the
corresponding figures for the preceding fiscal year where such presentation is
appropriate under GAAP, certified without qualification by independent certified
public accountants of recognized standing selected by Borrower and satisfactory
to Lender, together with (or included in such certification) a written statement
of such accountants substantially to the effect that (i) such accountants
examined such financial statements in accordance with generally accepted
auditing standards and accordingly made such tests of accounting records and
such other auditing procedures as they considered necessary in the circumstances
and (ii) in the opinion of such accountants such financial statements present
fairly the financial position of Borrower as of the end of such fiscal year and
the results of its operations and the changes in its financial position for the
fiscal year then ended, in conformity with GAAP applied on a basis consistent
with that of the preceding fiscal year (except for changes in application in
which such accountants concur). Borrower shall also furnish to Lender its
annual 10K within one hundred twenty (120) days after the close of each fiscal
year of Borrower.
-24-
6.l.2 Quarterly Financial Statements. Within ninety (90) days after
------------------------------
the end of each of the first three fiscal quarters of each fiscal year, Borrower
shall furnish to Lender a copy of its interim financial statements of the type
described in Section 6.l.l above, certified by an Executive Officer of Borrower
or if Borrower chooses, audited, as set forth in Section 6.1.1 above, and
certified by an Executive Officer of Borrower. Borrower shall also furnish to
Lender its quarterly l0Q within ninety (90) days after the close of each of the
first three fiscal quarters of each fiscal year of Borrower.
6.1.3 Further Requests. Borrower will promptly furnish to Lender
----------------
such other information (financial or otherwise) concerning Borrower, its assets
or the Collateral in such form as Lender may reasonably request.
6.1.4 Compliance Certificates. At the same time Borrower delivers
-----------------------
the financial statements required under the provisions of Sections 6.l.l and
6.1.2, Borrower shall furnish to Lender a certificate of an Executive Officer to
the effect that no Default or Event of Default exists, or, if such cannot be so
certified, specifying in reasonable detail the exceptions, if any, to such
statement.
6.1.5 Notice of Event of Default. Promptly upon becoming aware of
--------------------------
any Default or Event of Default, Borrower shall give Lender notice thereof,
together with a written statement of a Chief Executive Officer of Borrower
setting forth the details thereof and any action with respect thereto taken or
contemplated to be taken by Borrower.
6.1.6 Notice of Material Adverse Change. Promptly upon becoming
---------------------------------
aware thereof, Borrower shall give Lender written notice about any material
adverse change in the business, operations or financial condition of Borrower or
on the Collateral or on the ability of Borrower to perform its obligations under
this Agreement, the Note or the other Loan Documents.
6.l.7 Notice of Material Proceedings. Promptly upon becoming aware
------------------------------
thereof Borrower shall give Lender written notice of the commencement, existence
or threat of any proceeding by or before any court or administrative agency
against or affecting Borrower or the Collateral which, if adversely decided,
would have a material adverse effect on the business, operations or financial
condition of Borrower or on the ability of Borrower to perform its obligations
under this Agreement, the Note, the other Loan Documents or on the Collateral.
6.l.8 Visitation. Borrower shall permit such persons as Lender may
----------
designate to visit and inspect the Collateral and to examine the books and
records of Borrower and take copies and extracts therefrom, and to discuss its
affairs with officers of
-25-
Borrower and its independent accountants, at such reasonable times and as often
as Lender may reasonably request, and, so long as there is no continuing Default
or Event of Default, the cost of performing the above shall be borne by Lender.
6.1.9 Other Deliveries. Promptly upon their becoming available,
----------------
Borrower shall furnish to Lender, copies of all registration statements and any
amendments and supplements thereto and any regular and periodic reports filed by
Borrower (or any affiliate of Borrower) with any securities exchange or with the
Securities and Exchange Commission or any governmental authority succeeding to
any or all of the functions of said commissions and all letters of comment or
correspondence sent to Borrower or any affiliate of Borrower from such exchanges
or to such exchanges from or relating to Borrower.
6.2 Preservation of Existence and Franchises.
----------------------------------------
6.2.1 Borrower shall not enter into any merger, reorganization or
consolidation, or wind up, liquidate or dissolve, nor agree to do any of the
foregoing; provided, however, that Borrower may merge or consolidate with or
into another entity or another entity may merge or consolidate with or into
Borrower, so long as (a) Borrower shall give Lender not less than thirty (30)
days prior written notice of any proposed merger or consolidation, (b) on the
date of receipt of the notice by Lender and on the date of the proposed merger
or consolidation, there is then no Default or Event of Default, (c) after giving
effect to any proposed merger or consolidation, the Tangible Net Worth (as
hereinafter defined) of the merged or consolidated entity is not less than the
Tangible Net Worth of Borrower immediately preceding such merger or
consolidation, and (d) Borrower shall have delivered to Lender such financial
and other information with respect to the merger or consolidation and the
parties thereto as Lender shall have reasonably requested. "Tangible Net Worth"
as at a particular date, means (a) the total assets of such entity, excluding
intangible assets, such as goodwill, patents, copyrights and trademarks, minus
(b) the total liabilities of such entity, all as determined in accordance with
GAAP consistently applied. In the event that Borrower fails to comply with the
provisions of this Section 6.2 or Lender does not consent to any such merger or
consolidation, Borrower may prepay the outstanding principal balance of the Loan
and all other Obligations without any prepayment premium, including the
Prepayment Fee.
6.2.2 Borrower will qualify to do business and will remain in good
standing under the laws of each jurisdiction in which it is required to be
qualified by reason of the location of the Premises owned or leased by it or the
conduct of its business at the Premises.
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6.2.3 Borrower shall do, or cause to be done, all things reasonably
necessary to preserve and keep in full force and effect its corporate existence
and all material permits, licenses, rights and privileges necessary or
appropriate for the conducting of its business as now and hereafter conducted.
Borrower shall not change its name, except upon fifteen (15) days prior written
notice to Lender.
6.2.4 Borrower shall continue to engage in substantially the same
kind of business and shall not make any material change in its business or in
the nature of its operations or engage in any substantially unrelated line of
business. In the event that Borrower fails to comply with the provisions of
this Section 6.2.4 or Lender does not consent to any such change in Borrower's
business, Borrower may prepay the outstanding principal balance of the Loan and
all other Obligations, without any prepayment premium, including the Prepayment
Fee.
6.2.5 Borrower will comply with all Laws relative to the conduct of
its business or the location of the properties owned or leased by it, the non-
compliance with which could have a material adverse effect on the business,
operations, assets or financial or other condition of Borrower, as contemplated
hereby, or the ability of Borrower to perform its Obligations under this
Agreement, the Note or the other Loan Documents and will obtain or cause to be
obtained as promptly as possible any material permit, license, consent,
privilege or approval of any governmental authority and make any filing or
registration therewith which at the time shall be required with respect to the
performance of its Obligations under this Agreement, the Note or the other Loan
Documents or for the operation of its business as presently conducted or as
contemplated by it.
6.2.6 Borrower shall not (a) convey, assign, sell, mortgage,
encumber, pledge, hypothecate, grant a security interest in, grant options with
respect to, lease or otherwise dispose of all or any part of any legal or
beneficial interest in any part or all of the Collateral or any interest
therein, except as permitted herein and for Permitted Subordinate Liens covered
by the Subordination Agreements; or (b) except as otherwise permitted herein,
convey, assign, transfer or otherwise dispose of all or substantially all of its
assets (other than the Collateral, the prohibition on transfer of which is
governed by subparagraph (a) above). In the event Borrower fails to comply with
the provisions of this Secton 6.2.6(b) or Lender does not consent to any such
disposition, Borrower may prepay the outstanding principal balance of the Loan
and all other Obligations without any prepayment premium, including the
Prepayment Fee.
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6.3 Insurance.
---------
Borrower shall, at its own expense, maintain and deliver evidence to Lender
of such insurance required by Lender, written by insurers and in amounts
satisfactory to Lender.
6.4 Payment of Taxes and Other Potential Charges.
--------------------------------------------
Borrower shall pay or discharge
6.4.1 all taxes, assessments and other governmental charges or levies
imposed upon it or any of its properties, including the Collateral, or income
(including such as may arise under ERISA or any similar provision of law), on or
prior to the date on which penalties attach thereto; and
6.4.2 all lawful claims of materialmen, mechanics, carriers,
warehousemen, landlords and other like Persons which, if unpaid, might result in
the creation of a Lien upon any such property, on or prior to the date when due;
provided, that unless and until foreclosure, distraint, levy, sale or similar
--------
proceedings shall have been commenced and judgment against Borrower or its
properties shall have been entered, Borrower need not pay or discharge any such
tax, assessment, charge, levy, claim or current liability so long as (i) the
validity thereof is contested in good faith and by appropriate proceedings
diligently pursued, (ii) in Lender's sole judgment there is no reasonably
foreseeable risk of forfeiture of the Collateral, and (iii) such reserves or
other appropriate provisions as may be required by GAAP shall have been made
therefor, and so long as such failure to pay or discharge does not have a
material adverse effect on the business, operations or financial condition of
Borrower or the Collateral.
6.5 Financial Accounting Practices.
------------------------------
Borrower shall make and keep books, records and accounts which, in
reasonable detail, accurately and fairly reflect its business, including all
transactions and dispositions of its assets, all prepared in accordance with
GAAP. Lender and/or its agents shall have the right to review the books and
records of Borrower and to photocopy the same and to make excerpts therefrom, at
all reasonable times and upon reasonable notice and as often as Lender may
reasonably request, and, so long as there is no continuing Default or Event of
Default, the cost of performing the same shall be borne by Lender.
6.6 Compliance with Laws.
--------------------
Borrower shall comply with all applicable Laws in all respects, provided,
--------
that Borrower shall not be deemed to be in
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violation of this Section 6.6 as a result of any failures to comply which would
not result in fines, penalties, injunctive relief or other civil or criminal
liabilities which, in the aggregate, would not materially affect the business or
operations of Borrower or the ability of Borrower to perform its obligations
under this Agreement, the Note or the other Loan Documents or the Collateral.
6.7 Material Obligations.
--------------------
Borrower shall pay and satisfy, when due, all material liabilities and
obligations with respect to the Premises and the Stores, including, without
limitation, all obligations under all leases for the Premises; provided, that
--------
unless and until proceedings shall have been commenced with respect thereto and
judgment against Borrower or its properties shall have been entered in
connection therewith, Borrower need not pay any such liability or obligation so
long as (i) the validity thereof is contested in good faith and by appropriate
proceedings diligently pursued, (ii) in Lender's sole judgment there is no
reasonably foreseeable risk of forfeiture of the Collateral, and (iii) such
reserves or other appropriate provisions as may be required by GAAP shall have
been made therefor, and so long as such failure to pay does not have a material
adverse effect on the business, operations or financial condition of Borrower or
the Collateral.
6.8 Maintenance of Collateral.
-------------------------
Borrower will maintain and preserve the Collateral in good condition,
repair and working order, promptly repairing, replacing or rebuilding any part
of the Collateral which may be destroyed by any casualty, or become damaged,
worn or dilapidated.
6.9 Maintenance of Principal Place of Business.
------------------------------------------
Borrower shall maintain and keep its principal place of business and chief
executive office at the address set forth at the beginning of this Agreement,
and at no other location without giving Lender at least thirty (30) days prior
written notice of any move. Borrower shall maintain and keep its records at
such address and at no other location without giving Lender at least thirty (30)
days prior written notice of any move.
6.10 Amendment to Constituent Documents.
----------------------------------
Borrower shall not amend or modify any of its Constituent Documents in any
respect which could have a material adverse effect on the Collateral or
Borrower's ability to satisfy the Obligations.
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6.11 Satisfaction of Certain Obligations.
-----------------------------------
In the event Borrower fails to make any payment or do any act as herein
provided (including, but not limited to, maintaining any insurance required to
be maintained under the Loan Documents or paying all taxes in accordance with
the terms hereof) or there shall be a claim or Lien asserted or filed against
the Collateral (other than the Permitted Subordinate Liens), Lender may, but
shall not be obligated to (and without releasing Borrower from any obligation
hereunder), make all such payments and perform all such acts or otherwise
satisfy such obligations. All sums paid by Lender in respect thereof and all
costs, fees and expenses, including reasonable attorneys' fees, court costs,
expenses and other charges relating thereto, which are incurred by Lender on
account thereof, shall bear interest at the Default Rate, shall be payable on
demand by Borrower to Lender, and shall be additional Obligations hereunder
secured by the Collateral.
6.12 Further Assurances
------------------
Borrower shall cause to be done, executed, acknowledged and delivered all
and every such further act, conveyance and assurance as Lender shall reasonably
require for accomplishing the purposes of this Agreement, the Note and the other
Loan Documents. Borrower will defend and protect its title with respect to the
Collateral and will indemnify Lender with respect thereto. Any payment in
respect of such indemnity shall be made directly to Lender on demand in
immediately available funds. Forthwith after notice from Lender, Borrower shall
promptly, without further consideration, execute, acknowledge and deliver such
further instruments and documents and will take such other actions as Lender may
deem necessary or advisable from time to time to ensure the enforceability or
priority of the Liens granted hereby, or otherwise to confirm and carry out the
intent and purpose of this Agreement.
ARTICLE 7. DEFAULTS AND REMEDIES
7.1 Events of Default.
-----------------
The occurrence of one or more of the following described events is an Event
of Default:
7.1.1 Borrower fails to make any payment of principal of or interest
on the Note, within ten (10) days after such payment is or shall become due; or
7.1.2 Borrower fails to perform or observe any of its covenants or
agreements contained herein or in any other Loan Documents which cannot be
cured; or
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7.1.3 Borrower fails to perform or observe any other covenant or
agreement to be performed or observed by it hereunder or under the other Loan
Documents and such failure continues unremedied for a period of thirty (30) days
after notice thereof shall have been given to Borrower by Lender; or
7.1.4 Borrower voluntarily creates, suffers to exist, incurs or
assumes any Lien, security interest, charge or encumbrance on, or with respect
to, any part of or all the Collateral (other than Liens permitted under this
Agreement), or the Liens held by Lender in and to the Collateral shall cease to
be the first perfected Lien in and to the Collateral; or
7.1.5 Borrower sells, assigns, leases, or otherwise disposes of or
relinquishes possession of, any Collateral, unless replaced in accordance with
Section 6.8 hereof or assigned to a Permitted Assignee pursuant to Section 9.15
hereof or as otherwise permitted in Sections 6.2.1 and 6.2.6 hereof; or
7.1.6 any representation or warranty made by Borrower herein or in
any other Loan Document or in any document or certificate furnished by Borrower
to Lender in connection herewith or therewith at any time proves to have been
incorrect in any material respect when made; or
7.1.7 this Agreement or any Loan Document at any time for any reason
ceases to be in full force and effect or is declared by a court or governmental
agency of competent jurisdiction to be null and void; or
7.1.8 there shall be an event of default which is continuing under
the terms of any agreement, instrument or document with or for the benefit of
Lender which is not a Loan Document or under any other loan, credit facility or
other financial accommodation made by Lender to Borrower, including, without
limitation, all promissory notes, guarantees, equipment leases, security
agreements, mortgages and deeds of trust; or
7.1.9 Borrower is indicted by a governmental authority under any
criminal statute or there is commenced against Borrower a criminal or civil
proceeding pursuant to which the proceedings, penalties or remedies obtained
include forfeiture of any of the Collateral or a material portion of the assets
of Borrower; or
7.1.10 there is a material adverse change in the business, operations
or financial condition of Borrower or in the Collateral; or
7.1.11 a proceeding is instituted seeking a decree or order for
relief in respect of Borrower in an involuntary case under any applicable
bankruptcy, insolvency or other similar law now or hereafter in effect or for
the appointment of a receiver,
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liquidator, assignee, custodian, trustee, sequestrator (or other similar
official) of Borrower, or for any substantial part of its properties or for the
dissolution, winding-up or liquidation of its affairs or any substantial part of
any of its properties and such proceeding remains undismissed or unstayed for a
period of sixty (60) consecutive days or such court enters a decree or order
granting the relief sought in such proceeding; or
7.1.12 Borrower voluntarily suspends transaction of its business,
commences a voluntary case under any applicable bankruptcy, insolvency or other
similar law now or hereafter in effect, consents to the entry of an order for
relief in an involuntary case under any such law or consents to the appointment
of or taking possession by a receiver, liquidator, assignee, trustee, custodian,
sequestrator (or other similar official) of Borrower for any substantial part of
any of its properties, or makes a general assignment for the benefit of
creditors, or takes any action in furtherance of any of the foregoing; or
7.1.13 there shall be a judgment or judgments against Borrower, which
is not covered by insurance, for any amount in excess of $500,000 in the
aggregate, which shall remain unpaid, unstayed on appeal, undischarged, unbonded
or undismissed for a period of thirty (30) days or more; or
7.1.14 Borrower fails, by the Store Tranche Commencement Date, to
execute and deliver to Lender delivery and acceptance receipts in form and
substance reasonably satisfactory to Lender, for all FF&E financed by Lender
with respect thereto; or
7.1.15 Borrower fails to perform or observe any of its covenants or
agreements contained in Section 6.3 hereof or in the letter regarding insurance
requirements delivered by Borrower in connection with the Loan or the Loan
Documents (the "Insurance Letter") or any such insurance shall at any time cease
to be in full force and effect; or
7.1.16 there shall be an "Event of Default" which is continuing under
and as defined in any of the Credit Facility Loan Documents; or
7.1.17 Borrower ceases to operate its business at any of the
Premises.
7.2 Consequences of Event of Default.
--------------------------------
7.2.1 If an Event of Default occurs and is continuing, Lender may, by
notice to Borrower, declare the unpaid principal amount of the Note and interest
accrued thereon and all other Obligations and liabilities of Borrower hereunder
or under the
-32-
Note or the Loan Documents to be immediately due and payable and the same shall
thereupon become and be immediately due and payable without presentment, demand,
protest or other notice of any kind, all of which are hereby expressly waived,
and an action therefor shall immediately accrue. In addition, if an Event of
Default occurs and is continuing prior to a Store Tranche Commencement Date,
Lender may, at its option, terminate and cancel its agreement to make Advances.
7.2.2 In addition, if an Event of Default occurs and is continuing,
Lender shall have all rights and remedies granted herein and in the other Loan
Documents and all rights or remedies available at law (including, without
limitation, the UCC) or equity, whether as a secured party or otherwise
(including specifically those granted by the Uniform Commercial Code as in
effect in the jurisdiction or jurisdictions where the Collateral is located)
and, except as limited by Law, all remedies of Lender (i) shall be cumulative
and concurrent; (ii) may be pursued separately, successively or concurrently
against Borrower or against all or any portion of the Collateral, at the sole
discretion of Lender; (iii) may be exercised as often as occasion therefor shall
arise, it being agreed by Borrower that the exercise or failure to exercise any
rights or remedies shall in no event be construed as a waiver or release thereof
or of any other right, remedy or recourse; and (iv) are intended to be, and
shall be, nonexclusive. To the fullest extent permitted by applicable Law,
Lender may resort to the rights, remedies and recourses set forth herein and any
other security therefor in such order and manner as Lender may elect.
7.2.3 Without limiting any of the foregoing, Borrower agrees that
upon the occurrence and during the continuance of an Event of Default (i) Lender
may, with or without notice and without legal process, enter upon any property
owned, leased or otherwise under the real or apparent control of Borrower or any
agent thereof or any other location where the Collateral may be located and
disassemble, disconnect, render unusable or repossess all or any item of the
Collateral; (ii) written notice mailed to Borrower, as provided in this
Agreement for the giving of notice, shall be reasonable if given ten (10) days
prior to (a) any public sale or (b) the date after which a private sale may be
made; (iii) a sale of the Collateral may be made as a unit or in parcels and for
cash and upon terms; (iv) Lender may buy the Collateral at any public sale and
at any private sale as permitted by the UCC; and (v) such public or private sale
or sales may be held or adjourned from time to time, and Lender shall have the
right to conduct such sale or sales on Borrower's premises (including, without
limitation, the Premises) or elsewhere where the Collateral is located, and
shall have the right to use Borrower's premises without charge for such sale or
sales for such time or times as Lender may determine.
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ARTICLE 8. EXPENSES AND INDEMNITIES
8.1 Expenses.
--------
Borrower shall promptly reimburse Lender for all reasonable fees, costs
and expenses incurred by Lender in connection with the negotiation, preparation,
execution, delivery, administration, operation and enforcement of each of the
Loan Documents, including, but not limited to, the reasonable attorneys' and
paralegals' fees of in-house and outside counsel, expert witness fees, lien,
title search and insurance fees, appraisal fees, all charges and expenses
incurred in connection with any and all environmental reports and environmental
remediation activities, and all other costs, expenses, taxes and filing or
recording fees payable in connection with the transactions contemplated by this
Agreement, including, without limitation, all such reasonable fees, costs and
expenses as Lender shall incur or for which Lender shall become obligated in
connection with (i) any inspection or verification of the Collateral, (ii) any
proceeding relating to the Loan Documents or the Collateral, (iii) actions taken
with respect to the Collateral and Lender's security interest therein,
including, without limitation, the defense or prosecution of any action
involving Lender and Borrower or any third party, except actions taken by or
against Lender resulting from or arising out of Lender's willful misconduct or
gross negligence, (iv) enforcement of any of Lender's rights and remedies with
respect to the Obligations or Collateral, (v) consultation with Lender's
attorneys and participation in any workout, bankruptcy or other insolvency or
other proceeding involving any Borrower or any affiliate, whether or not suit is
filed, and (vi) any other matters relating to or arising out of the Loan and/or
the Loan Documents.
ARTICLE 9. MISCELLANEOUS
9.1 Further Assurances.
------------------
Borrower shall at any time and from time to time upon the written request
of Lender, execute and deliver such further agreements, instruments and
documents and do such further acts and things as Lender may reasonably request
in order to effect the purposes of this Agreement.
9.2 General Indemnity.
-----------------
Borrower shall indemnify, defend and hold harmless Lender from and
against, and, upon demand, reimburse Lender for, all claims, demands,
liabilities, losses, damages, judgments, penalties, costs and expenses,
including, without limitation, reasonable attorneys' fees and disbursements,
which may be imposed upon, asserted against or incurred or paid by Lender, on
-34-
account of any act performed or omitted to be performed under this Agreement,
the Note or the other Loan Documents or on account of any transaction arising
out of or in any way connected with the Collateral or this Agreement, the Note
or the other Loan Documents (including, without limitation, any litigation
matter involving claims or alleged claims by or disputes with third parties),
except as a result of the willful misconduct or gross negligence of Lender.
9.3 No Implied Waiver; Cumulative Remedies.
--------------------------------------
No course of dealing and no delay or failure of Lender in exercising any
right, power or privilege under this Agreement, the Note or any of the other
Loan Documents shall affect such right, power or privilege except as and to the
extent that the assertion of any such right, power or privilege shall be barred
by an applicable statute of limitations; nor shall any single or partial
exercise thereof or any abandonment or discontinuance of steps to enforce such a
right, power or privilege preclude any further exercise thereof or of any other
right, power or privilege. The rights and remedies of Lender under this
Agreement, the Note or the other Loan Documents are cumulative and not exclusive
of any rights or remedies which Lender would otherwise have.
9.4 Taxes.
-----
Borrower agrees to pay or reimburse Lender for any and all stamp, document,
transfer, recording or filing taxes or fees and all similar impositions payable
or hereafter determined by Lender to be payable in connection with this
Agreement, the Note or the other Loan Documents (including but not limited to
those necessary or advisable to record or to ensure the enforceability or
priority of this Agreement, the Note or the other Loan Documents), as determined
by Lender in its sole discretion from time to time, and any other documents,
instruments or transactions pursuant to or in connection herewith, and Borrower
agrees to save Lender harmless from and against any and all present or future
claims or liabilities with respect to or resulting from any delay in paying or
omission to pay any such taxes, fees or similar impositions.
9.5 Time of Essence.
---------------
Time is of the essence for the performance by Borrower of the Obligations
set forth in this Agreement and the other Loan Documents.
9.6 Modifications, Amendments or Waivers.
------------------------------------
Lender and Borrower may from time to time enter into written agreements
amending, modifying or supplementing this Agreement,
-35-
the Note or the other Loan Documents or changing the rights of Lender or
Borrower hereunder or thereunder, and Lender may from time to time grant waivers
or consents to a departure from the due performance of the obligations of
Borrower thereunder. Any such agreement, waiver or consent must be in writing
and shall be effective only to the extent set forth in such writing. In the
case of any such waiver or consent, any Event of Default so waived or consented
to shall be deemed to be cured and not continuing, but no such waiver or consent
shall extend to any subsequent or other Event of Default or impair any right
consequent thereto.
9.7 Holidays.
--------
Except as otherwise provided herein, whenever any payment or action to be
made or taken hereunder or the Note or any other Loan Document shall be stated
to be due on a day which is not a Business Day, such payment or action shall be
made or taken on the next following Business Day (and such day shall be included
in the calculation of interest due), unless such next succeeding Business Day
falls in a different calendar month, in which case payment or action shall be
made or taken on the next preceding Business Day.
9.8 Notices.
-------
9.8.1 Except as otherwise provided herein, all notices and other
communications required under the terms and provisions of this Agreement, the
Note or the other Loan Documents shall be in writing and shall become effective
when delivered by hand or received by overnight courier, telex, facsimile,
telegram or registered first class mail, postage prepaid, addressed as follows:
If to Lender, at:
FINOVA Capital Corporation
▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile No. ▇▇▇-▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Vice President
with a copy to: Winick & Rich, P.C.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Facsimile No. ▇▇▇-▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
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If to Borrower, at:
Big V Supermarkets, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Facsimile No. ▇▇▇-▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Vice President - Real Estate
with a copy to: Cole, Schotz, Meisel, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇
▇▇▇▇▇ Plaza North
▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Facsimile No. (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
or at such other address as either party may, from time to time, designate in
writing to the other party hereto.
9.8.2 If any notice is given by telex, facsimile transmission, or
telegram, the party giving such notice shall confirm such notice by a writing
delivered by hand or overnight courier; provided, however, that for all purposes
--------- -------
hereunder, notice shall be deemed effective and received at the time given by
telex, telecopier or telegram or three (3) days after depositing such notice
with the U.S. mail or on the Business Day immediately following delivery of such
notice to an overnight courier.
9.9 Governing Law.
-------------
THIS AGREEMENT, THE NOTE, THE OTHER LOAN DOCUMENTS AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES HERETO AND THERETO SHALL BE GOVERNED BY AND CONSTRUED
AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
9.10 Personal Jurisdiction and Service of Process.
--------------------------------------------
BORROWER IRREVOCABLY CONSENTS THAT ANY LEGAL ACTION OR PROCEEDING AGAINST
BORROWER UNDER, ARISING OUT OF, OR IN ANY MANNER RELATING TO THIS AGREEMENT, THE
NOTE OR THE OTHER LOAN DOCUMENTS MAY BE BROUGHT IN ANY ▇▇▇▇▇ ▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇
▇▇ ▇▇▇ ▇▇▇▇ LOCATED NEW YORK COUNTY OR IN THE UNITED STATES DISTRICT COURT FOR
THE SOUTHERN DISTRICT OF NEW YORK. BORROWER, BY ITS EXECUTION AND DELIVERY OF
THIS AGREEMENT, EXPRESSLY AND IRREVOCABLY CONSENTS AND SUBMITS TO THE PERSONAL
JURISDICTION OF ANY OF SUCH COURTS IN ANY SUCH ACTION OR PROCEEDING. BORROWER
FURTHER AGREES THAT ANY LEGAL ACTION OR PROCEEDING BORROWER MAY BRING, ARISING
OUT OF OR IN ANY MANNER RELATING TO THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS,
SHALL ONLY BE BROUGHT IN ANY ▇▇▇▇▇ ▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇ LOCATED IN NEW
YORK COUNTY OR IN
-▇▇-
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ FOR THE SOUTHERN DISTRICT OF NEW YORK. BORROWER
ALSO IRREVOCABLY CONSENTS TO THE SERVICE OF ANY COMPLAINT, SUMMONS, NOTICE OR
OTHER PROCESS RELATING TO SUCH ACTION OR PROCEEDING BY DELIVERY THEREOF TO
BORROWER IN THE MANNER PROVIDED FOR NOTICES IN THIS AGREEMENT. BORROWER HEREBY
EXPRESSLY AND IRREVOCABLY WAIVES ANY CLAIM OR DEFENSE IN ANY SUCH ACTION OR
PROCEEDING BASED ON ANY ALLEGED LACK OF PERSONAL JURISDICTION, IMPROPER VENUE OR
FORUM NON CONVENIENS OR ANY SIMILAR BASIS. BORROWER SHALL NOT BE ENTITLED IN
----- --- ----------
ANY SUCH ACTION OR PROCEEDING TO ASSERT ANY DEFENSE GIVEN OR ALLOWED UNDER THE
LAWS OF ANY STATE OTHER THAN THE STATE OF NEW YORK, UNLESS SUCH DEFENSE IS ALSO
GIVEN OR ALLOWED BY THE LAWS OF THE STATE OF NEW YORK. NOTHING HEREIN SHALL
AFFECT OR IMPAIR IN ANY MANNER OR TO ANY EXTENT THE RIGHT OF LENDER TO COMMENCE
LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST BORROWER IN ANY OTHER
JURISDICTION OR TO SERVE PROCESS IN ANY MANNER PERMITTED BY LAW.
9.11 Waiver of Jury Trial.
--------------------
BORROWER AND LENDER HEREBY WAIVE ANY RIGHT TO TRIAL BY JURY WITH RESPECT TO
ANY ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY AGREEMENT, INSTRUMENT
OR DOCUMENT EXECUTED AND DELIVERED IN CONNECTION HEREWITH OR THEREWITH,
INCLUDING THE LOAN DOCUMENTS.
9.12 Severability.
------------
The provisions of this Agreement, the Note and any other Loan Document are
intended to be severable. If any such provision is held invalid or
unenforceable in whole or in part in any jurisdiction, such provision shall, as
to such jurisdiction, be ineffective to the extent of such invalidity or
unenforceability without in any manner affecting the validity or enforceability
thereof in any other jurisdiction or the remaining provisions hereof in any
jurisdiction.
9.13 Prior Understandings.
--------------------
This Agreement and the other Loan Documents supersede all prior
understandings and agreements, whether written or oral, between the parties
hereto relating to the transactions provided for herein or therein.
9.14 Survival.
--------
All representations and warranties of Borrower contained in this Agreement
or any other Loan Document or made in writing in connection herewith or
therewith shall survive the execution and delivery of this Agreement, the Note
and the other Loan Documents, any investigation or inspection by Lender, the
making of the Loan hereunder, the payment of the Note or the expiration of this
Agreement. All covenants and agreements of Borrower
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contained herein shall continue in full force until payment in full of the
Obligations. Borrower's obligation to pay the principal of and interest on the
Note and all such other Obligations shall be absolute and unconditional under
any and all circumstances.
9.15 Successors and Assigns.
----------------------
This Agreement shall be binding upon and shall inure to the benefit of
Lender and Borrower and their respective successors and permitted assigns,
except that Borrower may not assign, delegate or transfer any of its rights or
obligations hereunder or any interest herein without the written consent of
Lender which Lender may withhold in its absolute discretion. Any actual or
attempted assignment by Borrower without Lender's consent shall be null, void
and of no effect whatsoever. Lender may assign or otherwise transfer any or all
of its rights, title, interests and obligations hereunder and under the Note and
the other Loan Documents in whole or in part. No such assignment shall relieve
Lender of its obligations to make the Loan provided in this Agreement. If Lender
makes such an assignment, the assignee shall have all of the rights of the
Lender and Borrower shall not assert against the assignee any defense,
counterclaims or setoff which Borrower may have against Lender. Except to the
extent otherwise required by its context, the word "Lender" where used in this
Agreement shall mean and include the holder of the Note originally issued to
Lender, and the holder of such Note shall be bound by and have the benefits of
this Agreement to the same extent as if such holder had been a signatory hereto,
except that no assignee shall be deemed to assume any obligation or duty imposed
upon Lender hereunder or the other Loan Documents and Borrower shall look only
to Lender for performance thereof. As used in this Section 9.15, "assign" shall
be deemed to include a pledge, sale of, or grant of a mortgage on, or a security
interest in, any of the Collateral or this Agreement or the other Loan Documents
by Lender and the term "assignee" shall be deemed to refer to the recipient of
such pledge, sale, mortgage or security interest. Notwithstanding anything to
the contrary contained in this Section 9.15, Borrower shall have the right to
assign any Store Tranche to any Permitted Assignee (as hereinafter defined), if
and only if, there is a merger or consolidation which complies with the
provisions of Section 6.2.1 hereof or (a) there is then no Default under the
Loan Documents, (b) Lender has completed its standard due diligence as to the
condition of the Permitted Assignee and its assets and is reasonably satisfied
with such condition, financial, environmental and otherwise, (c) the Permitted
Assignee has agreed to be the "Borrower" under and with respect to the assigned
Store Tranche and to assume Borrower's obligations under the assigned Store
Tranche and the covenants under the Loan Documents and has executed Loan
Documents reasonably satisfactory to Lender, and (d) after giving effect to any
assignment,
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Borrower's financial condition is not materially adversely changed. "Permitted
Assignee" shall mean any of the following: (i) The Wakefern Food Cooperative;
(ii) any entity arising from Borrower being restructured as a publicly held
company; or (iii) any entity controlling, controlled by or under common control
with Borrower ("control" meaning direct or indirect ownership of at least fifty
percent (50%) of the aggregate issued and outstanding beneficial interest in the
controlled entity).
9.16 Counterparts.
------------
This Agreement may be executed in any number of counterparts and by the
different parties hereto on separate counterparts each of which, when so
executed and delivered by the parties, constituting an original but all such
counterparts together constituting but one and the same instrument.
9.17 Publicity.
---------
Lender is hereby authorized to issue appropriate press releases and to
cause a tombstone to be published announcing the consummation of the
transactions contemplated in this Agreement, including the aggregate amount of
the Loan.
IN WITNESS WHEREOF, the parties hereto, by their officers thereunto duly
authorized, have executed and delivered this Agreement effective as of the day
and year first above written.
BIG V SUPERMARKETS, INC.
By: /s/ ▇▇▇▇▇▇▇ Hitman
-----------------------------------
Title: /S/ ▇▇▇▇▇▇▇ HITMAN
--------------------------------
VICE PRESIDENT - REAL ESTATE
FINOVA CAPITAL CORPORATION
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
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Title: Director, Contract Administrator
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