Exhibit 99.3
AMENDED AND RESTATED SECURITY AGREEMENT
dated as of April 5, 2000
by
PEAPOD, INC.
Debtor
to
BEW, Inc.
and
KONINKLIJKE AHOLD NV
each a Secured Party
TABLE OF CONTENTS
Page
----
Section 1. Definitions...................................................... 1
Section 2. Collateral....................................................... 5
2.1 Grant of Security Interest........................................... 5
2.2 Perfection and Protection of Security Interest....................... 6
2.3 Location of Offices and Collateral................................... 6
2.4 Title to, Liens on, and Sale and Use of Collateral................... 7
2.5 Appraisals........................................................... 7
2.6 Access and Examination; Confidentiality.............................. 7
2.7 Collateral Reporting................................................. 8
2.8 Accounts............................................................. 8
2.9 Collection of Accounts; Payments..................................... 9
2.10 Inventory........................................................... 9
2.11 Equipment........................................................... 10
2.12 Assigned Contracts.................................................. 10
2.13 Documents, Instruments, and Chattel Paper........................... 11
2.14 Right to Cure....................................................... 11
2.15 Power of Attorney................................................... 11
2.16 The Secured Party's Rights, Duties and Liabilities.................. 11
Section 3. Information and Notices.......................................... 12
3.1 Information.......................................................... 12
3.2 Notices to Secured Party............................................. 12
Section 4. Events of Default................................................ 13
Section 5. Remedies......................................................... 13
5.1 Remedies of Secured Party............................................ 13
5.2 Debtor's Waiver of Rights............................................ 14
Section 6. Representations and Warranties................................... 14
6.1 Due Organization..................................................... 14
6.2 Valid Execution; Binding Effect...................................... 14
6.3 No Violation......................................................... 14
6.4 No Consents.......................................................... 14
6.5 Liens................................................................ 15
Section 7. Miscellaneous.................................................... 15
7.1 Cumulative Remedies; No Prior Recourse to Collateral................. 15
7.2 Illegality, Etc...................................................... 15
7.3 GOVERNING LAW; CHOICE OF FORUM; SERVICE OF PROCESS................... 15
7.4 WAIVER OF JURY TRIAL................................................. 16
7.5 WAIVER OF CERTAIN CLAIMS............................................. 16
7.6 Survival of Representations and Warranties........................... 16
7.7 Other Security and Guaranties........................................ 16
7.8 Fees and Expenses; Interest.......................................... 16
7.9 Notices.............................................................. 17
7.10 Waiver of Notices................................................... 17
7.11 Binding Effect...................................................... 17
(i)
Page
----
7.12 Indemnity of the Secured Party by the Debtor...................... 17
7.13 Final Agreement; Amendments....................................... 17
7.14 Right of Setoff................................................... 18
7.15 Severability...................................................... 18
7.16 Section Headings.................................................. 18
7.17 Counterparts...................................................... 18
7.18 Release of Collateral............................................. 18
SCHEDULES
Schedule 1 Existing Permitted Liens
Schedule 2.3 Location of Offices and Collateral
(ii)
AMENDED AND RESTATED SECURITY AGREEMENT
AMENDED AND RESTATED SECURITY AGREEMENT dated as of April 5, 2000 by
PEAPOD, Inc., a Delaware corporation (the "Debtor"), to BEW, Inc., a Delaware
corporation ("BEW") and KONINKLIJKE AHOLD NV ("Ahold").
R E C I T A L S:
▇. ▇▇▇ has made, and may hereafter make, loans in the aggregate principal
amount of U.S. $3,000,000 (collectively the "Term Loan") to the Debtor, such
Term Loan being evidenced by a promissory note dated April 5, 2000 made by the
Debtor to the order of BEW in the principal amount of U.S. $3,000,000 (as from
time to time amended, reissued or renewed, and any promissory note issued in
substitution therefor, the "Term Note").
B. To secure the Term Loan the Debtor executed and delivered to BEW a
Security Agreement dated as of April 5, 2000 (the "Existing Security
Agreement") pursuant to which the Debtor granted to BEW a security interest on
the Debtor's rights, title and interest in the property described therein.
C. Ahold may hereafter make additional loans to the Debtor in an aggregate
principal amount not exceeding, together with the Term Loan, U.S. $20,000,000
pursuant to, and on the terms and conditions set forth in, a Credit Agreement
(the "Credit Agreement") proposed to be entered into by Ahold with the Debtor,
which loans will be used first to repay the Term Note and all other
indebtedness evidenced by the Term Note (the Term Loan and all loans
outstanding under the Credit Agreement hereinafter collectively referred to as
the "Loans").
D. To induce BEW and Ahold (collectively and individually hereinafter
referred to as the "Secured Party") to make the Loans, the Debtor has agreed
to amend and restate the Existing Security Agreement in its entirety pursuant
hereto.
E. The execution and delivery by the Debtor of this Agreement is one of the
conditions to the willingness of the Secured Party to make the balance of the
Loans to the Debtor.
ACCORDINGLY, in consideration of the foregoing and for other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, and to induce the Secured Party to make and maintain the Loans
to the Debtor, the Existing Security Agreement is hereby amended and restated
to read in its entirety as follows:
Section 1. Definitions. (a) Capitalized terms used but not defined herein
shall have the meanings given to such terms in the Term Note, the Collateral
Assignment or (upon the execution thereof) the Credit Agreement. In addition,
the following terms shall have the meanings specified for such terms below:
"Account Debtor" means each Person obligated in any way on or in connection
with an Account.
"Accounts" means all of the Debtor's now owned or hereafter acquired or
arising accounts (as such term is defined in the UCC), whether now existing or
hereafter arising, and any other rights to payment for the sale or lease of
goods or rendition of services, whether or not they have been earned by
performance.
"Assigned Contracts" means, collectively, all rights and remedies of the
Debtor, and all moneys and claims for money due or to become due to the
Debtor, under any contracts of the Debtor, and any amendments, supplements,
extensions, and renewals thereof, including without limitation all rights and
claims of the Debtor now or hereafter existing: (i) under any insurance,
indemnities, warranties, and guarantees provided for or arising out of or in
connection with any of the foregoing contracts; (ii) for any damages arising
out of or for breach or default under or in connection with any of the
foregoing contracts; (iii) to all other amounts from time to time paid or
payable under or in connection with any of the foregoing contracts; or (iv) to
exercise or enforce any and all covenants, remedies, powers and privileges
thereunder.
1
"Attorney Costs" means and includes all reasonable fees, out-of-pocket
expenses and disbursements of any law firm or other external counsel engaged
by the Secured Party, the reasonable allocated cost of internal legal counsel
of the Secured Party and all reasonable out-of-pocket expenses and
disbursements of internal counsel of the Secured Party.
"Collateral" has the meaning specified in section 2.1.
"Collateral Assignment" means that certain Collateral Assignment of
Intellectual Property Agreement of even date herewith by and between Debtor
and the Secured Party, as the same may be amended, restated, supplemented or
otherwise modified from time to time.
"Credit Documents" means the Credit Agreement (if executed by the Debtor
and Ahold), the Notes, the Collateral Assignment, this Agreement and all other
documents and instruments executed and delivered by the Debtor in connection
with, or to evidence or secure, the Obligations.
"Default" means an Event of Default or an event or circumstances which with
the giving of notice or lapse of time or both would be an Event of Default.
"Environmental Release" means a release, spill, emission, leaking, pumping,
injection, deposit, disposal, discharge, dispersal, leaching or migration of
Hazardous Materials into the indoor or outdoor environment or into or out of
any property, including the movement of Hazardous Materials through or in the
air, soil, surface water, ground water or other property.
"Equipment" means all of the Debtor's now owned and hereafter acquired
machinery, equipment, furniture, furnishings, fixtures, and other tangible
personal property (except Inventory), including without limitation motor
vehicles with respect to which a certificate of title has been issued, dies,
tools, jigs, and office equipment, as well as all of such types of property
leased by the Debtor and all of the Debtor's rights and interests with respect
thereto under such leases (including, without limitation, options to
purchase); together with all present and future additions and accessions
thereto, replacements therefor, component and auxiliary parts and supplies
used or to be used in connection therewith, and all substitutes for any of the
foregoing, and all manuals, drawings, instructions, warranties and rights with
respect thereto; wherever any of the foregoing is located.
"Financial Assets" means all of the Debtor's now owned or hereafter
acquired financial assets (as defined in the UCC).
"General Intangibles" means all of the Debtor's now owned or hereafter
acquired general intangibles (as defined in the UCC), including without
limitation the uniform resource locator, ▇▇▇.▇▇▇▇▇▇.▇▇▇, choses in action and
causes of action and all other intangible personal property of any Debtor of
every kind and nature (other than Accounts), including, without limitation,
all contract rights, corporate or other business records, Proprietary Rights,
inventions, designs, blueprints, plans, specifications, goodwill, computer
software, customer lists, registrations, licenses, franchises, tax refund
claims, any funds which may become due to the Debtor in connection with the
termination of any pension plan or other employee benefit plan or any rights
thereto and any other amounts payable to the Debtor from any pension plan or
other employee benefit plan, rights and claims against carriers and shippers,
rights to indemnification, business interruption insurance and proceeds
thereof, property, casualty or any similar type of insurance and any proceeds
thereof, proceeds of insurance covering the lives of key employees on which
the Debtor is beneficiary, and any letter of credit, guarantee, claim,
security interest or other security held by or granted to the Debtor.
"Governmental Authority" means any nation or government, any state or other
political subdivision thereof, any central bank (or similar monetary or
regulatory authority) thereof, any entity exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to
government, and any corporation or other entity owned or controlled, through
stock or capital ownership or otherwise, by any of the foregoing.
2
"Inventory" means all of the Debtor's now owned and hereafter acquired
inventory (as such term is defined in the UCC) and any other goods,
merchandise, and other personal property, wherever located, to be furnished
under any contract of service or held for sale or lease, all returned goods,
raw materials, other materials and supplies of any kind, nature or description
which are or might be consumed in the Debtor's business or used in connection
with the packing, shipping, advertising, selling or finishing of such goods,
merchandise and such other personal property, and all documents of title or
other documents representing them.
"Investment Property" means all of the Debtor's now owned or hereafter
acquired investment property (as defined in the UCC) and includes each
Debtor's now owned or hereafter acquired rights, title and interests in and to
any and all: (a) securities, whether certificated or uncertificated, (b)
security entitlements, (c) securities accounts, (d) commodity contracts and
(e) commodity accounts (as such terms are defined in the UCC).
"Lien" means: (a) any interest in property securing an obligation owed to,
or a claim by, a Person other than the owner of the property, whether such
interest is based on the common law, statute, or contract, and including,
without limitation, a security interest, charge, claim, lien (including any
lien or charge arising from a mortgage or deed of trust), encumbrance, pledge,
hypothecation, assignment, deposit arrangement, agreement, security agreement,
conditional sale or trust receipt or a lease, consignment or bailment for
security purposes; and (b) to the extent not included under clause (a), any
reservation, exception, encroachment, easement, right-of-way, covenant,
condition, restriction, lease or other title exception or encumbrance
affecting property.
"Material Adverse Effect" means any change or effect (or any development
that, insofar as can reasonably be foreseen, is likely to result in any such
change or effect) or fact or condition (or any development that, insofar as
can reasonably be foreseen, is likely to result in any fact or condition) that
is (a) materially adverse to the business, properties, assets, financial
condition or results of operations of the Debtor taken as a whole, or Debtor
and its Subsidiaries taken as a whole, as the case may be, or (b) a material
adverse change in, or a material adverse effect upon the Collateral; provided,
however, that (i) any adverse change, effect or development that is caused by
or results from conditions affecting the United States economy generally or
the economy of any nation or region in which the Debtor or its Subsidiaries
conducts business that is material to the business of the Debtor and its
Subsidiaries, taken as a whole, shall not be taken into account in determining
whether there has been (or whether there could reasonably be foreseen) a
"Material Adverse Effect" with respect to the Debtor, (ii) any adverse change,
effect or development that is caused by or results from conditions generally
affecting the industries in which the Debtor conducts its business shall not
be taken into account in determining whether there has been (or whether there
could reasonably be foreseen) a "Material Adverse Effect" with respect to the
Debtor, and (iii) any adverse change, effect or development that is caused by
or results from the announcement or pendency of this Agreement, the other
Credit Documents, the merger between the Debtor (or any of its affiliates) and
the Secured Party (or any of its affiliates), or the transactions contemplated
hereby shall not be taken into account in determining whether there has been
(or whether there could reasonably be foreseen) a "Material Adverse Effect"
with respect to the Debtor.
"Notes" means the Term Note and each other promissory note evidencing any
Loan.
"Obligations" means all present and future liabilities, obligations,
covenants, duties, and debts owing by the Debtor to the Secured Party under or
pursuant to or in connection with the Loans, the Notes, the Credit Agreement
(if executed by the Debtor and Ahold), this Agreement or any other Credit
Documents, whether or not evidenced by any note, or other instrument or
document, whether arising from an extension of credit, loan, advance,
guaranty, indemnification or otherwise, whether direct or indirect, absolute
or contingent, due or to become due, primary or secondary, as principal or
guarantor, and including, without limitation, all principal, interest,
charges, out-of-pocket expenses, fees, Attorney Costs, filing fees and any
other sums chargeable to the Debtor hereunder or under any of the other Credit
Documents.
"Permitted Liens" means:
(i) the Secured Party's Liens;
3
(ii) Liens for taxes, provided that the payment of any such taxes which
are due and payable is being contested in good faith and by appropriate
proceedings diligently pursued, adequate financial reserves have been
established on the Debtor's books and records with respect thereto, and a
stay of enforcement of any such Lien is in effect;
(iii) Liens securing the claims or demands of materialmen, mechanics,
service providers, carriers, warehousemen, landlords and other like
Persons, provided that if any such Lien arises from the nonpayment of such
claims or demands when due, such claims or demands could not reasonably be
expected to have a Material Adverse Effect or are being contested in good
faith by appropriate proceedings diligently pursued, so long as adequate
financial reserves have been established on the Debtor's books with respect
thereto and a stay of enforcement of any such Lien is in effect;
(iv) reservations, exceptions, encroachments, easements, rights of way,
covenants, conditions, restrictions, leases, and other similar title
exceptions or encumbrances affecting any real estate of the Debtor;
provided that they do not in the aggregate materially detract from the
value of such real estate or materially interfere with its use in the
ordinary conduct of the Debtor's business;
(v) judgment, writs, warrants of attachment and other similar Liens
arising in connection with court proceedings, provided that any such
judgments, writs and warrants do not constitute an Event of Default under
the Term Note;
(vi) Liens described on Schedule 1 hereto;
(vii) Liens securing indebtedness that is incurred to pay or finance the
purchase price or cost of Equipment provided that (x) such Liens encumber
only the Equipment paid for or financed with the indebtedness so secured
and (y) such indebtedness does not exceed the acquisition cost of such
Equipment;
(viii) deposits made in the ordinary course of business in connection
with workers' compensation, unemployment insurance or other types of social
security benefits or to secure the performance of bids, tenders, sales,
contracts (other than for repayment of borrowed money), surety, appeal and
performance bonds; provided that the foregoing do not in the aggregate
materially detract from the value of the Debtor's assets or property taken
as a whole or materially impair the use thereof in the operation of the
businesses taken as a whole;
(ix) leases or subleases granted to others in the ordinary course of
business which do not interfere in any material respect with the business
of the Debtor taken as a whole; and
(x) any interest or title of the lessor in the property subject to any
operating lease entered into by the Debtor or any of its Subsidiaries in
the ordinary course of business.
"Person" means any individual, sole proprietorship, partnership, joint
venture, trust, unincorporated organization, association, corporation, limited
liability company or other entity of kind or any governmental authority or
political subdivision, agency, department or instrumentality thereof.
"Premises" means all land, together with all buildings, improvements and
fixtures thereon and all tenements, hereditaments and appurtenances belonging
or in any way appertaining thereto now owned or leased or hereafter acquired
or leased by the Debtor including, without limitation, any interest arising
from an option to purchase or lease any Premises or any portion thereof.
"Proprietary Rights" means all of the Debtor's now owned and hereafter
arising or acquired: licenses, franchises, permits, patents, patent rights,
copyrights and copyrights applications (including without limitation all
software and related documentation), works which are the subject matter of
copyrights, trademarks, service marks, trade names, trade styles, corporate
names, brand names, slogans, patent, trademark and service ▇▇▇▇ applications,
trade secrets and inventions, and all licenses and rights related to any of
the foregoing, and all other rights under any of the foregoing, all
extensions, renewals, reissues, divisions, continuations, and continuations-
in-part of any of the foregoing, all goodwill associated with the foregoing
and all rights to ▇▇▇ for past, present and future infringement of any of the
foregoing.
4
"Secured Party's Liens" means any Lien granted to the Secured Party
pursuant to this Agreement or any other Credit Document or under applicable
law and which secures the Obligations.
"UCC" means the Uniform Commercial Code (or any successor statute) as in
effect from time to time in the State of New York or in any other state the
laws of which are required to be applied with respect to the creation,
validity, attachment, perfection or priority of the Secured Party's Liens.
(b) References herein to any party hereto shall include its successors and
permitted assigns; references herein to any statute shall include all
amendments thereto and all successors statute; and reference herein to
Sections or Schedules are to Sections of or Schedules to this Agreement unless
otherwise specified.
Section 2. Collateral.
2.1 Grant of Security Interest. (a) As security for all present and future
Obligations, the Debtor hereby grants to the Secured Party a continuing
security interest in, lien on, and right of set-off against, all personal
property and fixtures of the Debtor, including without limitation all of the
following property of the Debtor, whether now owned or existing or hereafter
acquired or arising, regardless of where located:
(i) all Accounts of the Debtor (including all credit enhancements
therefor);
(ii) all Inventory of the Debtor;
(iii) all Equipment of the Debtor (provided that (x) the Debtor shall
not be required to record the Secured Party's Lien on any certificate of
title relating to any motor vehicle unless requested to do so by the
Secured Party and (y) no such security interest shall extend to any item of
Equipment to the extent that such Equipment is subject to a Permitted Lien
to which the Secured Party's Liens thereon would be subordinate and which
prohibits the grant of such security interest to the Secured Party);
(iv) all Assigned Contracts, letter of credit, chattel paper, promissory
notes, instruments and documents of title of the Debtor; provided, that the
Collateral shall not include any Assigned Contract in respect of which the
grant of the security contemplated by this Agreement shall be prohibited by
its terms; provided, however, that upon the termination of such
prohibitions for any reason whatsoever, the provisions of this Section 2.1
shall be deemed to apply thereto automatically;
(v) all General Intangibles of the Debtor, including all Proprietary
Rights of the Debtor; provided, that the Collateral shall not include any
General Intangible in respect of which the grant of the security
contemplated by this Agreement shall be prohibited by its terms; provided,
however, that upon the termination of such prohibitions for any reason
whatsoever, the provisions of this Section 2.1 shall be deemed to apply
thereto automatically;
(vi) all Investment Property and Financial Assets of the Debtor;
(vii) to the extent not included in the foregoing, all claims which the
Debtor has against any other Person, including all amounts owing to the
Debtor by any Person for loans and advances made by the Debtor to such
Person;
(viii) all money, cash, cash equivalents, securities and other property
of any kind of the Debtor held directly or indirectly by, or under the
control of, the Secured Party or any affiliates thereof or by a bailee
thereof;
(ix) all deposit accounts, credits and balances of the Debtor with, and
other claims of the Debtor against, the Secured Party or any of its
affiliates;
(x) all books, records and other property related to or referring to any
of the foregoing, including, without limitation, books, records, account
ledgers, data processing records, computer software and other property at
any time evidencing or relating to any of the foregoing; and
(xi) all accessions to, substitutions for and replacements, products and
proceeds of any of the foregoing, including, but not limited to, proceeds
of any insurance policies, claims against third parties, and condemnation
or requisition payments with respect to all or any of the foregoing.
5
All of the foregoing, and all other property of the Debtor in which the
Secured Party may at any time be granted a Lien to secure the Obligations, is
herein collectively referred to as the "Collateral."
(b) All of the Obligations shall be secured by all of the Collateral. The
Secured Party may in its sole discretion, (i) exchange, waive or release any
of the Collateral, and (ii) when any payment Event of Default exists (x) apply
Collateral and direct the order or manner of sale thereof as the Secured Party
may determine, and (y) settle, compromise, collect, or otherwise liquidate any
Collateral in any manner, all without affecting the Obligations or the Secured
Party's right to take any other action with respect to any other Collateral.
2.2 Perfection and Protection of Security Interest. (a) The Debtor shall,
at its expense, perform all steps requested by the Secured Party in writing at
any time to perfect, maintain, protect, and enforce the Secured Party's Liens,
including, without limitation: (i) executing and filing financing or
continuation statements, and amendments thereof, in form and substance
satisfactory to the Secured Party; (ii) delivering to the Secured Party the
originals of all instruments, documents, and chattel paper, and all other
Collateral of which the Secured Party determines it should have physical
possession in order to perfect and protect the Secured Party's security
interest therein, duly pledged, endorsed or assigned to the Secured Party
without restriction; provided, however, that if no Event of Default exists the
Secured Party will at the Debtor's request promptly, and in any event, within
5 days following receipt of request therefor, redeliver any such promissory
notes and instruments to the Debtor as the Debtor may reasonably require in
order to enforce its rights thereunder in the ordinary course of business;
(iii) delivering to the Secured Party warehouse receipts covering any portion
of the Collateral located in warehouses and for which warehouse receipts are
issued; (iv) placing notations on the Debtor's books of account to disclose
the Secured Party's security interest; (v) delivering to the Secured Party all
letters of credit on which the Debtor is named beneficiary and which provide
for or relates to payment of any Account; and (vi) taking such other steps as
are deemed reasonably necessary or desirable by the Secured Party to maintain
and protect the Secured Party's Liens. To the extent permitted by applicable
law, the Secured Party may file, without the Debtor's signature, one or more
financing statements disclosing the Secured Party's Liens or may sign any such
financing statements in the name of the Debtor. The Debtor agrees that a
carbon, photographic, photostatic, or other reproduction of this Agreement or
of a financing statement is sufficient as a financing statement.
(b) If any Collateral is at any time in the possession or control of any
warehouseman, bailee or the Debtor's agents or processors, then the Debtor
shall notify the Secured Party thereof and, if so requested by the Secured
Party, shall notify such Person of the Secured Party's security interest in
such Collateral and, during the existence of a Default upon the Secured
Party's request in writing, instruct such Person to hold all such Collateral
for the Secured Party's account subject to the Secured Party's instructions.
If at any time any Collateral is located on any facility of the Debtor which
is not owned by the Debtor, then the Debtor shall, at the written request of
the Secured Party, use commercially reasonable efforts (including without
limitation enforcing lease obligations) to obtain written waivers, in form and
substance satisfactory to the Secured Party, of all present and future Liens
to which the owner or lessor of such premises may be entitled to assert
against the Collateral.
(c) From time to time, the Debtor shall, upon the Secured Party's written
request, execute and deliver confirmatory written instruments pledging to the
Secured Party, the Debtor's interest in any item of Collateral, but the
Debtor's failure to do so shall not affect or limit the Secured Party's
security interest or the Secured Party's other rights in and to any
Collateral. So long as this Agreement is in effect and until all Obligations
have been fully satisfied, the Secured Party's Liens shall continue in full
force and effect in all Collateral.
2.3 Location of Offices and Collateral. The Debtor represents and warrants
to the Secured Party that: (a) as of the date hereof Schedule 2.3 is a correct
and complete list of the Debtor's chief executive office, the location of its
books and records, the locations of the Collateral, and the locations of all
of its other places of business of the Debtor; and (b) Schedule 2.3 correctly
identifies any of such facilities and locations that are not owned by the
Debtor. The Debtor covenants and agrees that it will not (i) maintain any
Collateral at any location other than those locations listed for the Debtor on
Schedule 2.3 or in transit to such locations, (ii) otherwise change or add to
any of such locations, or (iii) change the location of its chief executive
office from the location identified
6
in Schedule 2.3, unless it gives the Secured Party at least thirty (30) days'
prior written notice thereof and executes any and all financing statements and
other documents that the Secured Party reasonably requests in writing in
connection therewith. The Debtor shall not in any event change its chief
executive office to a location outside the United States.
2.4 Title to, Liens on, and Sale and Use of Collateral. The Debtor
represents and warrants to the Secured Party and agrees with the Secured Party
that: (a) all of the Collateral is and will continue to be owned by the Debtor
free and clear of all Liens whatsoever, except for Permitted Liens; (b) the
Secured Party's Liens in the Collateral of the Debtor will not be subject to
any prior Lien, except Permitted Liens; (c) the Debtor will use, store, and
maintain the Collateral with all reasonable care and will use such Collateral
for lawful purposes only; and (d) the Debtor will not, without the Secured
Party's prior written approval, sell, or dispose of or permit the sale or
disposition of any of the Collateral except for sales of Inventory in the
ordinary course of business and sales of Equipment as permitted by Section
2.11(c). The inclusion of proceeds in the Collateral shall not be deemed to
constitute the Secured Party's consent to any sale or other disposition of the
Collateral except as expressly permitted herein.
2.5 Appraisals. [Intentionally Omitted]
2.6 Access and Examination; Confidentiality. (a) No more than once every
four (4) months (and at any time when a Default exists), the Secured Party may
at all reasonable times and upon reasonable notice, have access to, examine,
audit, make extracts from or copies of and inspect any or all of the Debtor's
records, files, and books of account and the Collateral, and discuss the
Debtor's affairs with the Debtor's officers, management and internal and
external auditors and accountants. The Debtor will deliver to the Secured
Party any instrument necessary for the Secured Party to obtain records from
any service bureau maintaining records for the Debtor. The Secured Party may,
at any time when a Default exists, and at the Debtor's expense, make copies of
all of the Debtor's books and records, or require the Debtor to deliver such
copies to the Secured Party. The Secured Party may, without expense to the
Secured Party, but (unless an Event of Default exists) without materially
disrupting the Debtor's business, use such of the Debtor's personnel,
supplies, and premises as may be reasonably necessary for maintaining or
enforcing the Secured Party's Liens. The Secured Party shall have the right,
at any time, in the Secured Party's name or in the name of a nominee of the
Secured Party, to verify with commercially reasonable frequency the validity,
amount or any other matter relating to the Accounts, Inventory or other
Collateral, by mail, telephone or otherwise.
(b) The Secured Party agrees to take normal and reasonable precautions and
exercise due care to maintain the confidentiality of all information
identified as "confidential" or "secret" by the Debtor and provided to or
obtained by the Secured Party or by or on behalf of the Debtor under this
Agreement or any other Credit Document, and neither the Secured Party nor any
of their respective Affiliates shall use any such information other than in
connection with or in enforcement of this Agreement and the other Credit
Documents, except to the extent that such information (i) was or becomes
generally available to the public other than as a result of disclosure by the
Secured Party, or (ii) was or becomes available on a nonconfidential basis
from a source other than the Debtor, provided that such source is not bound by
a confidentiality agreement with the Debtor known to the Secured Party;
provided, however, that the Secured Party may disclose such information (1) at
the request or pursuant to any requirement of any governmental authority to
which the Secured Party is subject or in connection with an examination of the
Secured Party by any such governmental authority; (2) pursuant to subpoena or
other court process; (3) when required to do so in accordance with the
provisions of any applicable requirement of law; (4) to the extent reasonably
required in connection with any litigation or proceeding (including, but not
limited to, any bankruptcy proceeding) to which the Secured Party, or their
respective affiliates may be party; provided that, to the extent practicable,
the Debtor has had reasonable notice of such litigation or proceeding and
shall be afforded a reasonable opportunity to raise its objections to
disclosure in such litigation or proceeding; (5) to the extent reasonably
required in connection with the exercise of any remedy hereunder or under any
other Credit Document; (6) to the Secured Party's independent auditors,
accountants, attorneys and other professional advisors; (7) to any affiliate
of the Secured Party and to any participant in or assignee of, or potential
participant in or assignee of, the Secured Party's rights and obligations
under the Note, provided that such affiliate,
7
participant or assignee agrees to keep such information confidential to the
same extent required of the Secured Party hereunder; and (8) as expressly
permitted under the terms of any other document or agreement regarding
confidentiality to which a Debtor is party or is deemed party with the Secured
Party. The Secured Party shall have no liability for the breach by any other
Person of the provisions of this Section 2.6.]
2.7 Collateral Reporting. No more than once each quarter (and at any time
upon the Secured Party's request following the occurrence and during the
continuance of an Event of Default), the Debtor shall promptly provide the
Secured Party upon its written request with the following documents, in form
satisfactory to the Secured Party: (a) an aging of the Debtor's Accounts; (b)
Inventory reports; (c) copies of invoices in connection with the Debtor's
Accounts, customer statements, credit memos, remittance advices and reports,
deposit slips, shipping and delivery documents in connection with the Debtor's
Accounts and for Inventory and Equipment acquired by the Debtor, purchase
orders and invoices; (d) such other reports as to the Collateral as the
Secured Party shall reasonably request in writing from time to time; and (e)
with the delivery of each of the foregoing, a certificate of an officer of the
Debtor certifying the accuracy and completeness of the foregoing. If any of
the Debtor's records or reports of the Collateral are prepared by an
accounting service or other agent, the Debtor hereby authorizes such service
or agent to deliver such records, reports, and related documents to the
Secured Party, upon its written request following the occurrence and during
the continuance of an Event of Default.
2.8 Accounts. (a) The Debtor hereby represents and warrants to the Secured
Party, with respect to the Debtor's Accounts, that: (i) each existing Account
is, and each future Account will be, owned by the Debtor free and clear of all
Liens other than Permitted Liens, (ii) each existing Account represents, and
each future Account will represent, a bona fide sale or lease and delivery of
goods by the Debtor, or rendition of services by the Debtor, in the ordinary
course of the Debtor's business; (iii) each existing Account is, and each
future Account will be, for a liquidated amount payable by the Account Debtor
thereon on the terms set forth in the invoice therefor or in the schedule
thereof delivered to the Secured Party, without any offset, deduction,
defense, or counterclaim except those known to the Debtor and disclosed to the
Secured Party in accordance with this Agreement; (iv) no payment will be
received with respect to any Account, and no credit, discount, or extension,
or agreement therefor will be granted on any Account, except in the ordinary
course of business or as reported to the Secured Party in accordance with this
Agreement; (v) each copy of any invoice relating to an Account and delivered
to the Secured Party by the Debtor will be a genuine copy of the original
invoice sent to the Account Debtor named therein; and (vi) all goods described
in each invoice will have been delivered to the Account Debtor and all
services described in each invoice will have been performed.
(b) The Debtor shall not re-date any invoice or sale or make sales on
extended dating beyond that customary in the Debtor's business or extend or
modify any Account except in the ordinary course of business. If the Debtor
becomes aware of any matter adversely affecting the collectibility of any
Account or Accounts of any Account Debtor involving in the aggregate an amount
greater than $50,000, including information regarding the Account Debtor's
creditworthiness, the Debtor will promptly so advise the Secured Party.
(c) The Debtor shall not accept any promissory note or other instrument in
excess of $100,000 in aggregate amount or maturing more than 12 months after
the issuance date thereof, except a check or other instrument for the
immediate payment of money, with respect to any Account without the Secured
Party's written consent, and the Debtor shall notify the Secured Party of any
such promissory notes in excess of $100,000 delivered to the Debtor in respect
of any Account; provided that if an Event of Default exists, the Debtor shall
not accept any such note or instrument (regardless of amount) without the
consent of the Secured Party. Any such note or instrument shall be considered
as evidence of the Account and not payment thereof and the Debtor will
promptly deliver any such instrument in excess of $100,000 (and, if an Event
of Default exists, all such notes and instruments) to the Secured Party,
endorsed by the Debtor to the Secured Party in a manner satisfactory in form
and substance to the Secured Party. Regardless of the form of presentment,
demand or notice of protest with respect thereto, the Debtor shall remain
liable on any such note or instrument pledged by it to the Secured Party, up
to the amount of the outstanding Obligations, until such instrument is paid in
full.
(d) The Debtor shall notify the Secured Party promptly of all disputes and
claims with any Account Debtors in excess of $50,000, individually, or
$100,000 in the aggregate for all Account Debtors, and the Debtor agrees
8
to settle, contest, or adjust such dispute or claim at no expense to the
Secured Party. No discount, credit or allowance shall be granted to any such
Account Debtor without the Secured Party's prior written consent, except for
discounts, credits and allowances made or given in the ordinary course of the
Debtor's business when no Event of Default exists hereunder. The Secured Party
may, at all times when an Event of Default exists, settle or adjust disputes
and claims directly with Account Debtors for amounts and upon terms which the
Secured Party, shall consider advisable and, in all cases, the Secured Party
will credit the Obligations with only the net amounts received by the Secured
Party in payment of any Accounts of the Debtor.
(e) If an Account Debtor returns any Inventory to the Debtor when no Event
of Default exists, then the Debtor shall, to the extent consistent with past
practice, promptly determine the reason for such return and shall issue a
credit memorandum to the Account Debtor in the appropriate amount. The Debtor
shall immediately report to the Secured Party any return involving an amount
in excess of $100,000. Each such report shall indicate the reasons for the
returns and the locations and condition of the returned Inventory. All
returned Inventory shall be subject to the Secured Party's Liens thereon.
2.9 Collection of Accounts; Payments. Beginning on or after the Maturity
Date, (a) until the Secured Party notifies the Debtor to the contrary, the
Debtor shall make collection of all Accounts and other Collateral for the
Secured Party, shall receive all payments as the Secured Party's trustee, and
shall, if so requested in writing by the Secured Party, immediately deliver
all payments in their original form duly endorsed in blank to the Secured
Party or, during the existence of a Default if so requested in writing by the
Secured Party, shall deposit the same into a blocked deposit account
established for the Debtor at a bank acceptable to the Secured Party and
subject to documentation reasonably acceptable to the Secured Party. When an
Event of Default exists, if the Debtor is so requested in writing by the
Secured Party, the Debtor shall establish a lock-box service for collections
of Accounts at a bank acceptable to the Secured Party and pursuant to
documentation reasonably satisfactory to the Secured Party. If such lock-box
service is established, the Debtor shall instruct all Account Debtors to make
all payments directly to the address established for such service. If,
notwithstanding such instructions, the Debtor receives any proceeds of
Accounts, it shall receive such payments as the Secured Party's trustee, and
shall immediately deliver such payments to the Secured Party in their original
form duly endorsed in blank. All collections received in any such lock-box or
blocked deposit account or directly by the Secured Party, and all funds in any
blocked deposit account to which such collections are deposited shall be
subject to the Secured Party's sole control. The Secured Party or the Secured
Party's designee may, at any time when an Event of Default exists, notify
Account Debtors that the Accounts have been assigned to the Secured Party and
of the Secured Party's security interest therein, and may collect them
directly and charge the collection costs and out-of-pocket expenses to the
Debtor. So long as an Event of Default has occurred and is continuing, the
Debtor, at the Secured Party's written request, shall execute and deliver to
the Secured Party such documents as the Secured Party shall require to grant
the Secured Party access to any post office box in which collections of
Accounts are received.
(b) If sales of Inventory are made for cash, the Debtor shall, if so
requested by the Secured Party in writing, immediately deliver to the Secured
Party or deposit into a blocked deposit account the cash which the Debtor
receives.
(c) All payments (including funds received by the Secured Party at a bank
designated by it) received by the Secured Party on the Accounts of the Debtor
or as proceeds of other Collateral solely in an amount up to the then
aggregate amount of the Obligations will be the Secured Party's sole property
for its benefit and will be credited to the Obligations (conditional upon
final collection upon receipt by the Secured Party), and any excess thereof
shall be the sole property of the Debtor and shall be immediately delivered to
and/or deposited for the account of, the Debtor.
2.10 Inventory. The Debtor represents and warrants to the Secured Party and
agrees with the Secured Party that all of the Inventory owned by the Debtor is
and will be held for sale or lease, or to be furnished in connection with the
rendition of services, in the ordinary course of the Debtor's business, and is
and will be fit for such purposes. The Debtor will keep its Inventory in good
and marketable condition, at its own expense. The
9
Debtor will not, without the prior written consent of the Secured Party (which
consent shall not be unreasonably withheld), acquire or accept any Inventory
on consignment or approval. The Debtor agrees that all Inventory, if any,
produced by any Debtor in the United States will be produced in accordance
with the Federal Fair Labor Standards Act of 1938, as amended, and all rules,
regulations, and orders thereunder. The Debtor will conduct a physical count
of the Inventory at least once per fiscal year (and at any time upon the
Secured Party's request following the occurrence and during the continuance of
an Event of Default), without materially disrupting the business, at such
other times as the Secured Party reasonably requests in writing. The Debtor
will not, without the Secured Party's written consent (which consent shall not
be unreasonably withheld), sell any Inventory on a ▇▇▇▇-and-hold, guaranteed
sale, sale or return, sale on approval, consignment, or other repurchase or
return basis.
2.11 Equipment. (a) The Debtor represents and warrants to the Secured Party
and agrees with the Secured Party that all of the Equipment owned by the
Debtor that is material to the day-to-day operations of the Debtor's business
is and will be used or held for use in the Debtor's business, and is and will
be fit for such purposes. The Debtor shall keep and maintain its Equipment in
good operating condition and repair (ordinary wear and tear excepted) and
shall make all necessary replacements thereof.
(b) The Debtor shall promptly inform the Secured Party of any material
additions to or deletions from the Equipment. The Debtor shall not permit any
Equipment to become a fixture with respect to real property or to become an
accession with respect to other personal property with respect to which real
or personal property the Secured Party does not have a first priority Lien.
The Debtor will not, without the Secured Party's prior written consent (which
consent shall not be unreasonably withheld), alter or remove any identifying
symbol or number on any of the Debtor's Equipment constituting Collateral.
(c) The Debtor shall not, without the Secured Party's prior written
consent, sell, lease as a lessor, or otherwise dispose of any of the Debtor's
Equipment; provided, however, that the Debtor may dispose of Equipment to the
extent permitted by the Term Note and the Credit Agreement (if the same is
executed by the Debtor and Ahold); and provided, further, that the Debtor may
dispose of obsolete, unusable or non-useful Equipment without the Secured
Party's consent, subject to the conditions set forth in the next sentence. In
the event any of such Equipment is sold, transferred or otherwise disposed of
pursuant to the second proviso contained in the immediately preceding
sentence, (1) if such sale, transfer or disposition is effected without
replacement of such Equipment, or such Equipment is replaced by Equipment
leased by the Debtor or by Equipment purchased by the Debtor subject to a
Permitted Lien, which replacement in either case, may occur up to thirty (30)
days following the date of such sale, transfer or disposition, then the Debtor
shall deliver all of the cash proceeds of any such sale, transfer or
disposition to the Secured Party, and (2) if such sale, transfer or
disposition is made in connection with the purchase by the Debtor of
replacement Equipment, then the Debtor shall use the proceeds of such sale,
transfer or disposition to purchase such replacement Equipment within thirty
(30) days after such disposition and shall deliver to the Secured Party
written evidence of the use of the proceeds for such purchase. All replacement
Equipment purchased by the Debtor shall be free and clear of all Liens except
Permitted Liens.
2.12 Assigned Contracts. The Debtor shall fully perform all of its
obligations under each of the Assigned Contracts, and shall enforce all of its
material rights and remedies thereunder. Without limiting the generality of
the foregoing, the Debtor shall take all action reasonably necessary or
appropriate, as determined solely by the Debtor, to permit, and shall not take
any action which would have any materially adverse effect upon, the full
enforcement of all indemnification rights under the Assigned Contracts. The
Debtor shall notify the Secured Party in writing, promptly after the Debtor
becomes aware thereof, of any event or fact which could give rise to a claim
by it for indemnification under any of the material Assigned Contracts, and
shall diligently pursue, as it deems appropriate, such right and report to the
Secured Party on all further developments with respect thereto. The Debtor
shall remit directly to the Secured Party for application to the Obligations
in such order as the Secured Party shall determine, all amounts received by
the Debtor as indemnification or otherwise pursuant to its Assigned Contracts.
If the Debtor shall fail after the Secured Party's demand to pursue diligently
any right under the material Assigned Contracts, or an Event of Default then
exists, the Secured Party may directly enforce such right in its own or the
Debtor's name and may enter into such settlements or other agreements with
respect
10
thereto as the Secured Party, shall determine. In any suit, proceeding or
action brought by the Secured Party under any Assigned Contract for any sum
owing thereunder or to enforce any provision thereof, the Debtor shall
indemnify, defend and hold the Secured Party harmless from and against all
expense (including without limitation Attorney Costs), loss or damage suffered
by reason of any defense, setoff, counterclaims, recoupment, or reduction of
liability whatsoever of the obligor thereunder arising out of a breach by the
Debtor of any obligation thereunder or arising out of any other agreement,
indebtedness or liability at any time owing from the Debtor to or in favor of
such obligor or its successors. All obligations of the Debtor under an
Assigned Contract shall be and remain enforceable only against the Debtor and
shall not be enforceable against the Secured Party. Notwithstanding any
provision hereof to the contrary, the Debtor shall at all times remain liable
to observe and perform all of its material duties and obligations under the
Assigned Contracts, and the Secured Party's exercise of any of its rights with
respect to the Collateral shall not release the Debtor from any of such duties
and obligations. The Secured Party shall not be obligated to perform or
fulfill the Debtor's duties or obligations under the Assigned Contracts or to
make any payment thereunder, or to make any inquiry as to the nature or
sufficiency of any payment or property received by it thereunder or the
sufficiency of performance by any party thereunder, or to present or file any
claim, or to take any action to collect or enforce any performance, any
payment of any amounts, or any delivery of any property.
2.13 Documents, Instruments, and Chattel Paper. The Debtor represents and
warrants to the Secured Party that (a) all documents, instruments, and chattel
paper, if any, describing, evidencing, or constituting Collateral, and all
signatures and endorsements thereon, are and will be complete, valid, and
genuine in all material respects, and (b) all goods evidenced by such
documents, instruments, and chattel paper are and will be owned by the Debtor,
free and clear of all Liens other than Permitted Liens.
2.14 Right to Cure. The Secured Party may, in its discretion, pay any
amount or do any act required of the Debtor hereunder in order to preserve,
protect, maintain or enforce the Obligations of the Debtor, the Collateral or
the Secured Party's Liens therein, and which the Debtor fails to pay or do
after reasonable prior notice from the Secured Party (which in any event need
not be longer than 10 days), including, without limitation, payment of any
judgment against the Debtor, any insurance premium, any warehouse charge, any
finishing or processing charge, any landlord's claim, and any other Lien upon
or with respect to the Collateral. The Debtor shall immediately upon demand
reimburse the Secured Party for all payments that the Secured Party makes
under this Section 2.14 and all out-of-pocket costs and expenses that the
Secured Party pays or incurs in connection with any action taken by the
Secured Party hereunder with respect to the Obligations or the Collateral, and
such reimbursement obligation shall be added to the Debtor's Obligations. Any
payment made or other action taken by the Secured Party under this Section
2.14 shall be without prejudice to any right to assert an Event of Default
under Credit Document and to proceed thereafter as herein provided.
2.15 Power of Attorney. During the existence of a Default, the Debtor
hereby appoints the Secured Party and the Secured Party's designee as the
Debtor's attorney, with power: (a) to endorse the Debtor's name on any checks,
notes, acceptances, money orders, or other forms of payment or security that
come into the Secured Party's possession; (b) to sign the Debtor's name on any
invoice, ▇▇▇▇ of lading, warehouse receipt or other document of title relating
to any Collateral, on drafts against customers, on assignments of Accounts, on
notices of assignment, financing statements and other public records; (c) so
long as there exists any Event of Default, to notify the post office
authorities to change the address for delivery of the Debtor's mail to an
address designated by the Secured Party and to receive, open and dispose of
all mail addressed to the Debtor; (d) to send requests for verification of
Accounts to customers or Account Debtors; (e) to clear Inventory through
customs in the Debtor's name, the Secured Party's name or the name of the
Secured Party's designee, and to sign and deliver to customs officials powers
of attorney in the Debtor's name for such purpose; and (f) to do all things
necessary to carry out this Agreement. The Debtor ratifies and approves all
acts of such attorney. The Secured Party will not be liable for any acts or
omissions or for any error of judgment or mistake of fact or law except for
its gross negligence or willful misconduct. This power, being coupled with an
interest, is irrevocable until this Agreement has been terminated and the
Obligations have been fully satisfied.
2.16 The Secured Party's Rights, Duties and Liabilities. The Debtor assumes
all responsibility and liability arising from or relating to the use, sale or
other disposition of the Collateral. Neither the Secured Party,
11
nor any of its officers, directors, employees or agents, shall be liable or
responsible in any way for the safekeeping of any of the Collateral, or for any
loss or damage thereto, or for any diminution in the value thereof, or for any
act of default of any warehouseman, carrier, forwarding agency or other person
whomsoever, all of which shall be at the Debtor's sole risk except that in the
case of any Collateral in the Secured Party's possession, the Secured Party
shall use the same degree of care in the respect thereto as it uses with
respect to its own property. The Obligations shall not be affected by any
failure of the Secured Party to take any steps to perfect the Secured Party's
Liens or to collect or realize upon the Collateral, nor shall loss of or damage
to the Collateral release any Debtor from any of the Obligations. So long as
there exists any Event of Default, the Secured Party may (but shall not be
required to), without notice to or consent from the Debtor, ▇▇▇ upon or
otherwise collect, extend the time for payment of, modify or amend the terms
of, compromise or settle for cash, credit, or otherwise upon any terms, grant
other indulgences, extensions, renewals, compositions, or releases, and take or
omit to take any other action with respect to the Collateral, any security
therefor, any agreement relating thereto, any insurance applicable thereto, or
any Person liable directly or indirectly in connection with any of the
foregoing, without discharging or otherwise affecting the liability of the
Debtor for the Obligations or under this Agreement, any other Credit Document
or any other agreement now or hereafter existing between the Secured Party and
the Debtor.
Section 3. Information and Notices.
3.1 Information. The Debtor shall promptly deliver to the Secured Party all
such information regarding the financial and business affairs, operations,
and/or conditions of the Debtor as the Secured Party shall reasonably request
in writing, and shall notify its accountants and auditors that the Secured
Party is authorized to obtain such information directly from them.
3.2 Notices to Secured Party. The Debtor shall notify the Secured Party, in
writing, of the following matters at the following times:
(a) Promptly, and in any event within five (5) days, after becoming
aware of any Event of Default.
(b) Promptly, and in any event within five (5) days, after becoming
aware of any material adverse change in the Collateral.
(c) Promptly, and in any event within five (5) days, after becoming
aware of any pending or threatened action, suit, proceeding, or
counterclaim by any Person, or any pending or threatened investigation by a
Governmental Authority which may have a material adverse effect on the
Collateral.
(d) Promptly, and in any event within five (5) days, after becoming
aware of any pending or threatened strike, work stoppage, unfair labor
practice claim, or other labor dispute affecting any Debtor or any of its
Subsidiaries in a manner which could reasonably be expected to have a
material adverse effect on the Collateral.
(e) Promptly, and in any event within five (5) days, after becoming
aware of any violation of any law, statute, regulation, or ordinance of a
governmental Authority affecting the Debtor or any Subsidiary or affiliate
thereof which could reasonably be expected to have a material adverse
effect on the Collateral.
(f) Promptly, and in any event within five (5) days, after receipt of
any notice of any violation by the Debtor or any Subsidiary thereof of any
Environmental Law which could reasonably be expected to have a material
adverse effect on the Collateral or that any Governmental Authority has
asserted that the Debtor or any Subsidiary thereof is not in compliance
with any Environmental Law or is investigating the Debtor's or such
Subsidiary's compliance therewith.
(g) Promptly, and in any event within five (5) days, after receipt of
any written notice that the Debtor or any Subsidiary thereof is or may be
liable to any Person as a result of an Environmental Release or threatened
Environmental Release of any Hazardous Materials or that the Debtor or any
Subsidiary thereof is subject to investigation by any Governmental
Authority evaluating whether any remedial action is needed to respond to an
Environmental Release or threatened Environmental Release of any Hazardous
Materials which, in either case, is reasonably likely to give rise to
liability in excess of $100,000 or have a material adverse effect on the
Collateral.
12
(h) Promptly, and in any event within five (5) days, after receipt of
any written notice of the imposition of any Environmental Lien against any
property of the Debtor or any of its Subsidiaries which could reasonably be
expected to have a material adverse effect on the Debtor or the Collateral.
(i) Any change in the Debtor's name, state of incorporation, or form of
organization, trade names or styles under which the Debtor will sell
Inventory or create Accounts, or to which instruments in payment of
Accounts may be made payable, in each case at least thirty (30) days prior
thereto.
Each notice given under this Section 3 shall describe the subject matter
thereof in reasonable detail, and shall set forth the action that the Debtor
has taken or proposes to take with respect thereto.
Section 4. Events of Default. The occurrence of any one or more of the
following events or circumstance shall constitute an "Events of Default"
hereunder:
(a) the Debtor shall fail to pay in full when due any amount payable by
the Debtor hereunder or under any other Credit Document, subject to
applicable cure periods as may be agreed upon, if any;
(b) the Debtor shall default in the performance or observance of any
other covenant, agreement or obligation of the Debtor hereunder and such
default shall continue for 30 days after the Debtor receives notice thereof
from the Secured Party;
(c) any representation or warranty made or deemed to be made by the
Debtor hereunder or under any other Credit Document or any certificate,
financial statement or report furnished by the Debtor pursuant hereto or
thereto shall prove to be untrue in any material respect when made, deemed
made or furnished;
(d) this Agreement shall cease to be in full force and effect or the
Debtor shall assert that this Agreement, the Note or any other Credit
Document to which the Debtor is a party is not binding upon it; or
(e) there shall occur any Event of Default under (and as defined in) the
Note or (if executed by the Debtor and Ahold) the Credit Agreement or any
other Credit Document.
Section 5. Remedies.
5.1 Remedies of Secured Party. Except to the extent otherwise provided in
the Credit Agreement (if executed by the Debtor and Ahold), upon the
occurrence and during the continuance of an Event of Default: (i) the Secured
Party shall have, in addition to all other rights hereunder or under any other
Credit Document, the rights and remedies of a secured party under the UCC and
other applicable law; (ii) the Secured Party may, at any time, take possession
of the Collateral and keep it on the Debtor's premises, at no cost to the
Secured Party, or remove any part of it to such other place or places as the
Secured Party may desire, or the Debtor shall, upon the Secured Party's
demand, at the Debtor's cost, assemble the Collateral and make it available to
the Secured Party at a place specified by the Secured Party; and (iii) the
Secured Party may sell and deliver any Collateral at public or private sales,
for cash, upon credit or otherwise, at such prices and upon such terms as the
Secured Party deems advisable, in its sole discretion, and may, if the Secured
Party deems it reasonable, postpone or adjourn any sale of the Collateral by
an announcement at the time and place of sale or of such postponed or
adjourned sale without giving a new notice of sale. Without in any way
requiring notice to be given in the following manner, the Debtor agrees that
any notice by the Secured Party of sale, disposition or other intended action
hereunder or in connection herewith, whether required by the UCC or otherwise,
shall constitute reasonable notice to the Debtor if such notice is mailed by
registered or certified mail, return receipt requested, postage prepaid, or is
delivered personally against receipt, at least ten (10) days prior to such
action to the Debtor's address specified in or pursuant to Section 7.9. If any
Collateral is sold on terms other than payment in full at the time of sale, no
credit shall be given against the Obligations until the Secured Party receives
payment, and if the buyer defaults in payment, the Secured Party may resell
the Collateral without further notice to the Debtor. In the event the Secured
Party seeks to take possession of all or any portion of the Collateral by
judicial process, the Debtor irrevocably waives: (i) the posting of any bond,
surety or security with respect thereto which might otherwise be required;
(ii) any demand for possession prior to the commencement of any suit or action
to recover the Collateral; and (iii) any requirement that the Secured Party
retain possession and not dispose of any
13
Collateral until after trial or final judgment. The Debtor agrees that the
Secured Party has no obligation to preserve rights to the Collateral or
marshal any Collateral for the benefit of any Person. The Secured Party is
hereby granted a license or other right to use, without charge, the Debtor's
labels, patents, copyrights, name, trade secrets, trade names, trademarks,
customer lists and advertising matter, or any similar property, in completing
production of, advertising or selling any Collateral, and the Debtor's rights
under all licenses and all franchise agreements shall inure to the Secured
Party's benefit for such purpose. The proceeds of sale shall be applied first
to all out-of-pocket expenses of sale, including without limitation attorneys'
fees, and then to the Obligations in whatever order the Secured Party elects.
The Secured Party will return any excess to the Debtor or as a court may
otherwise direct, and the Debtor shall remain liable for any deficiency.
5.2 Debtor's Waiver of Rights and Claims. If an Event of Default occurs,
the Debtor hereby waives all rights to notice and hearing prior to the
exercise by the Secured Party of the Secured Party's rights to repossess the
Collateral without judicial process or to replevy, attach or levy upon the
Collateral without notice or hearing. The Debtor also waives all claims,
damages and demands against the Lender arising out of the repossession,
retention or sale of the Collateral or any part or parts thereof, except any
such claims, damages and demands arising out of the gross negligence or
willful misconduct of the Lender.
Section 6. Representations and Warranties. The Debtor represents and
warrants to the Secured Party that:
6.1 Due Organization. The Debtor (a) is a corporation duly incorporated and
validly existing, in good standing, under the laws of its State of
incorporation, (ii) has the power and authority to own its property and assets
and to transaction the business in which it is engaged and (c) is duly
qualified and authorized to engage in business in each jurisdiction where the
ownership by it of property or the conduct by it of business makes such
qualification and authorization necessary, except where the failure to be so
qualified and authorized would not have a Material Adverse Effect.
6.2 Valid Execution; Binding Effect. The Debtor has the power to execute,
deliver and perform this Agreement and each of the other Credit Documents to
which it is a party and has taken all necessary corporate action to authorize
the execution, delivery and performance by it of this Agreement. The Debtor
has duly executed and delivered this Agreement, and this Agreement constitutes
its legal, valid and binding obligations enforceable in accordance with its
terms, subject, as to enforceability, to applicable bankruptcy, insolvency and
similar laws affecting creditors' rights generally and to general principals
of equity (regardless of whether enforcement is sought in a proceeding in
equity or at law).
6.3 No Violation. Neither the execution, delivery or performance by the
Debtor of this Agreement or of any other Credit Documents to which it is a
party, nor compliance by it with the terms and provisions hereof or thereof,
will (i) violate any provision of the certificate or articles of incorporation
or By-Laws of the Debtor, (ii) contravene any material provision of any law,
statute, rule or regulation or any order, writ, injunction or decree of any
court or Governmental Authority or (iii) conflict or be inconsistent with or
result in any breach of any of the terms, covenants, conditions or provisions
of, or constitute a default under, or result in the creation or imposition of
(or the obligation to create or impose) any Lien (other than the Secured
Party's Liens) upon any of the property or assets of the Debtor pursuant to
the terms of any agreement, contract or instrument to which the Debtor is a
party or by which it or any of its property or assets is bound or to which it
may be subject.
6.4 No Consents. No order, consent, approval, license, authorization or
validation of, or filing, recording or registration with, or exemption by, any
Governmental Authority is required to authorize, or is otherwise required in
connection with (other than as have heretofore been obtained or made), (i) the
execution, delivery and performance by the Debtor of this Agreement or (b) the
legality, validity, binding effect or enforceability of this Agreement or the
Liens granted hereunder, except for the filing of UCC financing statements and
continuation statements with respect thereto in all jurisdictions specified by
the UCC, and the filing of all necessary recording instruments in respect of
the Debtor's intellectual property with the appropriate recording office.
14
6.5 Liens. This Agreement creates, in favor of the Secured Party, a valid
and (upon filing of UCC financing statements and other instruments with
respect thereto) perfected security interest in all Collateral owned by the
Debtor, subject to no other Liens (other than Permitted Liens).
Section 7. Miscellaneous.
7.1 Cumulative Remedies; No Prior Recourse to Collateral. The enumeration
herein of the Secured Party's rights and remedies is not intended to be
exclusive, and such rights and remedies are in addition to and not by way of
limitation of any other rights or remedies that the Secured Party may have
under any other Credit Document or under the UCC or other applicable law. The
Secured Party shall have the right, in its sole discretion, to determine which
rights and remedies are to be exercised and in which order. The exercise of
one right or remedy shall not preclude the exercise of any others, all of
which shall be cumulative. The Secured Party may, without limitation, proceed
directly against the Debtor to collect the Obligations without any prior
recourse to the Collateral, or any other obligor on the Obligations. No
failure to exercise and no delay in exercising, on the part of the Secured
Party, any right, remedy, power or privilege hereunder, shall operate as a
waiver thereof; nor shall any single or partial exercise of any right, remedy,
power or privilege hereunder preclude any other or further exercise thereof or
the exercise of any other right, remedy, power or privilege.
7.2 Illegality, Etc.. The illegality or unenforceability of the Note or any
other Credit Document or any instrument or agreement referred to herein shall
not in any way affect or impair the legality or enforceability of this
Agreement.
7.3 GOVERNING LAW; CHOICE OF FORUM; SERVICE OF PROCESS. (a) THIS AGREEMENT
SHALL BE INTERPRETED AND THE RIGHTS AND LIABILITIES OF THE PARTIES HERETO
DETERMINED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT
REGARD TO ITS CHOICE OF LAW RULES THAT WOULD MAKE THE LAWS OF ANY OTHER
JURISDICTION APPLICABLE TO THIS AGREEMENT; PROVIDED THAT PERFECTION ISSUES
UNDER ARTICLE 9 OF THE UCC MAY, TO THE EXTENT REQUIRED BY SAID ARTICLE 9, BE
DETERMINED UNDER APPLICABLE CHOICE OR CONFLICT OF LAW RULES SET FORTH IN
ARTICLES 9 OF THE UCC.
(b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT MAY BE
BROUGHT IN THE COURTS OF THE STATE OF NEW YORK OR OF THE UNITED STATES FOR THE
SOUTHERN DISTRICT OF NEW YORK (AND SHALL BE BROUGHT BY THE DEBTOR ONLY IN SAID
COURTS), AND BY EXECUTION AND DELIVERY OF THIS AGREEMENT THE DEBTOR CONSENTS,
FOR ITSELF AND IN RESPECT OF ITS PROPERTY, TO THE NON-EXCLUSIVE JURISDICTION
OF THOSE COURTS (AND ALL APPELLATE COURTS THEREFROM) IN ANY SUCH ACTION OR
PROCEEDING. THE DEBTOR IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING ANY
OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON
CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY ACTION
OR PROCEEDING IN SUCH COURTS IN RESPECT OF THIS AGREEMENT OR ANY DOCUMENT
RELATED HERETO. NOTWITHSTANDING THE FOREGOING, THE SECURED PARTY SHALL HAVE
THE RIGHT TO BRING ANY ACTION OR PROCEEDING AGAINST THE DEBTOR OR ITS PROPERTY
IN THE COURTS OF ANY OTHER JURISDICTION WHICH THE SECURED PARTY DEEMS
NECESSARY OR APPROPRIATE IN ORDER TO COLLECT THE OBLIGATIONS OR REALIZE ON THE
COLLATERAL OR OTHER SECURITY FOR THE OBLIGATIONS.
(c) THE DEBTOR HEREBY WAIVES PERSONAL SERVICE OF ANY AND ALL PROCESS UPON
IT AND CONSENTS THAT ALL SUCH SERVICE OF PROCESS MAY BE MADE BY REGISTERED OR
CERTIFIED MAIL (RETURN RECEIPT REQUESTED) DIRECTED TO THE DEBTOR AT ITS
ADDRESS SET FORTH IN OR PURSUANT TO SECTION 7.9, AND SERVICE SO MADE SHALL BE
DEEMED TO BE COMPLETED FIVE (5) BUSINESS DAYS AFTER THE SAME
15
SHALL HAVE BEEN SO DEPOSITED IN THE U.S. MAILS POSTAGE PREPAID. NOTHING
CONTAINED HEREIN SHALL AFFECT THE RIGHT OF SECURED PARTY TO SERVE LEGAL
PROCESS BY ANY OTHER MANNER PERMITTED BY LAW.
7.4 WAIVER OF JURY TRIAL. THE DEBTOR HEREBY WAIVES ITS RIGHT TO A TRIAL BY
JURY OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF OR RELATED
TO THIS AGREEMENT, THE OTHER CREDIT DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED
HEREBY OR THEREBY, WHETHER WITH RESPECT TO CONTRACT CLAIMS, TORT CLAIMS, OR
OTHERWISE. WITHOUT LIMITING THE FOREGOING, THE DEBTOR FURTHER AGREES THAT ITS
RIGHT TO A TRIAL BY JURY IS WAIVED BY OPERATION OF THIS SECTION AS TO ANY
ACTION, COUNTERCLAIM OR OTHER PROCEEDING WHICH SEEKS, IN WHOLE OR IN PART, TO
CHALLENGE THE VALIDITY OR ENFORCEABILITY OF THIS AGREEMENT OR THE OTHER CREDIT
DOCUMENTS OR ANY PROVISION HEREOF OR THEREOF. THIS WAIVER SHALL APPLY TO ANY
SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS
AGREEMENT AND THE OTHER CREDIT DOCUMENTS.
7.5 WAIVER OF CERTAIN CLAIMS. THE DEBTOR AGREES THAT IT WILL NOT ASSERT
AGAINST THE SECURED PARTY, AND HEREBY WAIVES, ANY CLAIM FOR CONSEQUENTIAL,
INCIDENTAL, SPECIAL OR PUNITIVE DAMAGES IN CONNECTION WITH THIS AGREEMENT OR
ANY OF THE OTHER CREDIT DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY OR
THEREBY.
7.6 Survival of Representations and Warranties. All of the Debtor's
representations and warranties contained in this Agreement shall survive the
execution, delivery, and acceptance thereof by the parties, notwithstanding
any investigation by the Secured Party or its agents.
7.7 Other Security and Guaranties. The Secured Party may, without notice or
demand and without affecting the Debtor's obligations hereunder, from time to
time: (a) take from any Person and hold collateral (other than the Collateral)
for the payment of all or any part of the Obligations and exchange, enforce or
release such collateral or any part thereof; and (b) accept and hold any
endorsement or guaranty of payment of all or any part of the Obligations and
release or substitute any such endorser or guarantor, or any Person who has
given any Lien in any other collateral as security for the payment of all or
any part of the Obligations, or any other Person in any way obligated to pay
all or any part of the Obligations.
7.8 Fees and Expenses; Interest. (a) The Debtor agrees, to pay to the
Secured Party, on demand, all reasonable costs and out-of-pocket expenses that
the Secured Party pays or incurs in connection with the administration (after
the occurrence and during the continuance of an Event of Default), enforcement
and termination of this Agreement, including, without limitation: (i) costs
and out-of-pocket expenses (including Attorneys Costs) paid or incurred to
obtain payment of the Obligations, enforce the Secured Party's Liens, sell or
otherwise realize upon the Collateral, and otherwise enforce the provisions of
this Agreement or to defend any claims made or threatened against the Secured
Party arising out of the transactions contemplated hereby (including, without
limitation, preparations for and consultations concerning any such matters);
(ii) costs and out-of-pocket expenses (including Attorney Costs) for any
amendment, supplement, waiver or consent in connection with this Agreement;
(iii) costs and out-of-pocket expenses of lien searches; (iv) taxes, fees and
other charges for filing financing statements and continuations, and other
actions to perfect, protect, and continue the Secured Party's Liens; (v) sums
paid or incurred to pay any amount or take any action required of the Debtor
under this Agreement that the Debtor fails to pay or take; (vi) costs of
inspections, and verifications of the Collateral, including, without
limitation, travel, lodging, and meals for inspections of the Collateral and
the Debtor's operations by the Secured Party; (vii) costs and out-of-pocket
expenses of collecting checks and other items of payment, and establishing and
maintaining blocked accounts and lock boxes; and (viii) costs and expenses of
preserving and protecting the Collateral. The foregoing shall not be construed
to limit any other provisions of the Credit Documents regarding costs and out-
of-pocket expenses to be paid by the Debtor.
16
(b) If the Debtor fails to pay when due any amount payable by it to the
Secured Party hereunder (including any reimbursement obligations of the Debtor
hereunder), after written notice thereof from the Secured Party, such unpaid
amount shall bear interest, payable by the Debtor on demand, at a rate per
annum equal to the rate borne by the Note on overdue amounts of principal.
7.9 Notices. Except as otherwise provided herein, all notices, demands and
requests that any party is required or elects to give to any other shall be in
writing and any such notice shall become effective (a) upon personal delivery
thereof, including, but not limited to, delivery by overnight mail and courier
service or (b) three (3) business days after it shall have been mailed by
United States mail, first class, certified or registered, with postage
prepaid, in each case addressed to the party to be notified as follows
(provided that no notice to the Secured party shall be effective until
actually received by it):
If to BEW:
BEW, Inc.
▇▇ ▇▇▇▇▇▇▇ ▇▇▇.
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇
if to Ahold:
Koninklijke Ahold NV
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇
▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
Attention: Ton van Tielraden, Esq.
if to the Debtor:
Peapod, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
or, as to any party, to such other address as such party shall designate for
itself by like notice to the other parties. Failure or delay in delivering
copies of any notice, demand, request, consent, approval, declaration or other
communication to the Persons designated above to receive copies shall not
adversely affect the effectiveness of such notice, demand, request, consent,
approval, declaration or other communication.
7.10 Waiver of Notices. Unless otherwise expressly provided herein, the
Debtor waives presentment, protest and notice of demand or dishonor and
protest as to any instrument and notice of intent to accelerate the
Obligations, as well as any and all other notices to which it might otherwise
be entitled. No notice to or demand on the Debtor which the Secured Party may
elect to give shall, except as otherwise expressly provided herein, entitle
the Debtor to any or further notice or demand in the same, similar or other
circumstances.
7.11 Binding Effect. The provisions of this Agreement shall be binding upon
and inure to the benefit of the respective representatives, successors and
assigns of the parties hereto; provided, however, that no right or interest
herein or any obligation hereunder may be assigned by the Debtor without the
prior written consent of the Secured Party. The rights and benefits of the
Secured Party hereunder shall inure to the benefit of any successor thereto
and, if the Secured Party so agrees, to any Person acquiring any interest of
the Secured Party in the Obligations or any part thereof.
7.12 Indemnity of the Secured Party by the Debtor. [Intentionally Omitted]
7.13 Final Agreement; Amendments. This Agreement and the other Credit
Documents are intended by the Debtor and the Secured Party to be the final,
complete, and exclusive expression of the agreement between them. This
Agreement, together with the other Credit Documents, supersedes any and all
prior oral or written
17
agreements relating to the subject matter hereof. No modification, rescission,
waiver, release, or amendment of any provision of this Agreement shall be
made, except by a written agreement signed by the Debtor and the Secured
Party.
7.14 Right of Setoff. In addition to any rights and remedies of the Secured
Party provided by law, the Secured Party is authorized at any time and from
time to time, without prior notice to the Debtor, any such notice being waived
by the Debtor to the fullest extent permitted by law, to set-off and apply any
and all deposits (general or special, time or demand, provisional or final) at
any time held by, and other indebtedness at any time owing by, the Secured
Party to or for the credit or the account of the Debtor against any and all
Obligations owing to the Secured Party, now or hereafter existing,
irrespective of whether or not the Secured Party shall have made demand under
this Agreement or any Credit Document and although such Obligations may be
contingent or unmatured. The Secured Party agrees promptly to notify the
Debtor after any such set-off and application made by the Secured Party;
provided, however, that the failure to give such notice shall not affect the
validity of such set-off and application.
7.15 Severability. If any part of this Agreement is contrary to, prohibited
by or deemed invalid under any applicable law of any jurisdiction, such
provision shall, as to such jurisdiction, be inapplicable and deemed omitted
to the extent so contrary, prohibited or invalid, without invalidating the
remainder hereof or affecting the validity or enforceability of such provision
in any other jurisdiction.
7.16 Section Headings. Section headings used in this Agreement are for
convenience only and shall not affect the construction of this Agreement.
7.17 Counterparts. This Agreement may be executed in any number of
counterparts and by the Secured Party and the Debtor in separate counterparts,
each of which shall be an original, but all of which shall together constitute
one and the same agreement. Delivery by a party by facsimile transmission of a
counterpart of this Agreement signed by such party shall be effective as a
manual delivery by such party of such counterpart.
7.18 Release of Collateral. Upon payment in full of all the Obligations and
the termination of the Notes and (if the Credit Agreement is executed by the
Debtor and Ahold) the termination of all obligations the Secured Party to make
loans to the Debtor, the Secured Party at the request of the Debtor shall
promptly, and in any event within 2 Weeks after the request therefor, execute,
deliver and file such instruments as the Debtor shall reasonably request (and
at the Debtor's expense) in order to reassign, release or terminate its
security in the Collateral.
7.19 References. Unless and until the Credit Agreement is executed by Ahold
and the Debtor and loans are made to Debtor thereunder, all references to the
"Secured Party" shall be to BEW. Upon execution of the Credit Agreement by
Ahold and Debtor and the repayment of the Term Loan and all other indebtedness
owing to BEW by Debtor under the Credit Documents, all references herein to
the "Secured Party" (except in Sections 2.16, 7.3, 7.4, 7.5 and 7.8) shall
refer to Ahold; provided, however, in the event BEW is required to return any
such payments to Debtor or trustee or receiver therefor, all references to the
"Secured Party" shall again include BEW.
[Remainder of this page intentionally left blank; signature pages follow]
18
IN WITNESS WHEREOF, each party hereto has executed and delivered this
Agreement by its duly authorized officer as of the date first written above.
Debtor
PEAPOD, INC.
/s/ ▇▇▇ ▇▇▇▇▇▇▇▇▇▇
By: _________________________________
Name: ▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Title: Senior VP and Chief Financial
Officer
19
IN WITNESS WHEREOF, each party hereto has executed and delivered this
Agreement by its duly authorized officer as of the date first written above.
Secured Party
BEW, Inc.
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇
By: _________________________________
Name: ▇▇▇▇ ▇. ▇▇▇▇▇
Title: President
20
IN WITNESS WHEREOF, each party hereto has executed and delivered this
Agreement by its duly authorized officer as of the date first written above.
Secured Party
Koninklijke Ahold NV
/s/ Ton van Tielraden
By: _________________________________
Name: Ton van Tielraden
Title: Senior Vice President and
General Counsel
21