UNITED GROCERS, INC., AND SUBSIDIARIES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
----------------------------------------
Quarterly report pursuant to Section 13 or 15 (d)
of the Securities Exchange Act of 1934
----------------------------------------
For the quarterly period ended June 27, 1997
Commission File Number 2-60487
United Grocers, Inc.
(Exact name of registrant as specified in its charter)
Oregon 93-0301970
(State or other jurisdiction of (IRS Employer identification No.)
incorporation or organization)
6433 S.E. Lake Road
Post Office Box 22187, Milwaukie, Oregon 97269
(address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (503) 833-1000
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
act of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ].
Indicate the number of shares outstanding for each of the issuer's classes of
common stock, as of the latest practicable date.
Class Outstanding at August 14, 1997
Common shares, $5 par value 604,149 shares
-1-
<PAGE>
UNITED GROCERS, INC., AND SUBSIDIARIES
INDEX
Pages
PART I: Financial Information
Item 1. Financial Statements
Consolidated Statements of Operations
for the quarters and year-to-date periods
ended June 27, 1997 and June 28, 1996 3-4
Consolidated Balance Sheets as of
June 27, 1997 and September 27, 1996 5-6
Consolidated Statements of Cash Flows
for the year-to-date periods ended
June 27, 1997 and June 28, 1996 7-8
Notes to the Consolidated Financial
Statements 9
Item 2. Management's Discussion and Analysis
of Financial Condition and Results
of Operations 10-12
PART II: Other Information
Item 3 12
Item 4 12
Item 5 12
Item 6 12
Signature 13
-2-
<PAGE>
UNITED GROCERS, INC., AND SUBSIDIARIES
PART I: FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
Quarter ended Quarter ended
June 27, 1997 June 28, 1996
------------- ---------------
Net sales and operations $ 322,060,384 $ 332,521,681
------------- ---------------
Costs and expenses:
Cost of sales 275,994,715 286,034,521
Operating expenses 38,314,177 33,776,176
Selling and administrative
expenses 6,237,712 3,001,019
Depreciation 1,840,196 1,611,370
Interest:
Interest expense 3,692,392 3,891,871
Interest income (1,115,526) (1,099,342)
------------- ---------------
Interest expense,net 2,576,866 2,792,529
------------- ---------------
Total costs and expenses 324,963,666 327,215,615
------------- ---------------
Income(loss)before members'
allowances and patronage
dividends, and income taxes (2,903,282) 5,306,066
Members' allowances (2,450,914) (3,716,231)
Members' patronage dividends -- (1,200,000)
------------- ---------------
Income(loss)before income taxes (5,354,196) 389,835
(Provision)benefit for income taxes 2,821,600 (52,270)
------------- ---------------
Net income(loss) $(2,532,596) $337,565
============= ===============
The accompanying notes are an integral part of the consolidated financial
statements.
-3-
<PAGE>
UNITED GROCERS, INC., AND SUBSIDIARIES
PART I: FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
Year-to date Year-to-date
period ended period ended
June 27, 1997 June 28, 1996
------------- -------------
Net sales and operations $ 973,651,940 $ 932,026,087
------------- -------------
Costs and expenses:
Cost of sales 838,192,007 801,257,674
Operating expenses 104,005,255 95,105,831
Selling and administrative
expenses 14,303,464 8,025,042
Depreciation 5,419,182 4,595,146
Interest:
Interest expense 12,115,194 10,909,042
Interest income (3,314,302) (3,825,903)
------------- -------------
Interest expense,net 8,800,892 7,083,139
------------- -------------
Total costs and expenses 970,720,800 916,066,832
------------- -------------
Income before members'
allowances and patronage
dividends, and income taxes 2,931,140 15,959,255
Members' allowances (7,652,172) (11,149,347)
Members' patronage dividends -- (3,000,000)
------------- -------------
Income(loss)before income taxes (4,721,032) 1,809,908
(Provision) benefit for income taxes 2,600,000 (543,285)
------------- -------------
Net income (loss) $ (2,121,032) $ 1,266,623
============= =============
The accompanying notes are an integral part of the consolidated financial
statements.
-4-
<PAGE>
UNITED GROCERS, INC., AND SUBSIDIARIES
PART I: FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CONSOLIDATED BALANCE SHEETS
ASSETS June 27,1997 September 27,
1996
------------ ------------
Current Assets:
Cash and cash equivalents $ 9,876,536 $ 16,509,866
Investments maintained for
insurance reserves 51,195,901 46,828,893
Accounts and notes receivable 79,467,366 78,571,016
Inventories 95,246,365 105,420,187
Other current assets 5,158,254 4,814,449
Deferred income taxes 2,317,772 2,317,772
------------ ------------
Total current assets 243,262,194 254,462,183
------------ ------------
Non-current assets:
Notes receivable 23,481,026 24,715,039
Investment in affiliated companies 12,577,620 12,477,107
Other receivables and investments 4,751,131 6,363,865
Other non-current assets 19,921,737 17,223,023
------------ ------------
Total non-current assets 60,731,514 60,779,034
------------ ------------
Property, plant and equipment -
(net of accumulated depreciation) 69,435,490 68,902,737
------------ ------------
TOTAL $373,429,198 $384,143,954
============ ============
The accompanying notes are an integral part of the consolidated financial
statements.
-5-
<PAGE>
UNITED GROCERS, INC., AND SUBSIDIARIES
PART I: FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CONSOLIDATED BALANCE SHEETS
(CONTINUED)
LIABILITIES AND MEMBERS' EQUITY June 27,1997 September 27,
1996
------------ ------------
Current liabilities:
Notes payable - bank $ 61,040,000 $ 61,173,867
Accounts payable 90,312,058 82,076,707
Insurance reserves supported by
investments 28,632,982 29,561,657
Compensation and taxes payable 7,795,531 5,021,977
Other accrued expenses 5,915,998 5,130,182
Members' patronage payable -- 3,200,110
Current installments on
long-term liabilities 6,740,442 9,073,983
------------ ------------
Total current liabilities 200,437,011 195,238,483
Long-term liabilities 133,508,342 143,134,105
Deferred income taxes 712,267 3,312,267
Deferred income 1,574,903 1,000,026
------------ ------------
Total liabilities 336,232,523 342,684,881
------------ ------------
Members' equity:
Common stock (authorized, 10,000,000
shares at $5.00 par value; issued
and outstanding, 603,749 shares at
June 27, 1997 and 638,451 shares
at September 27, 1996) 3,018,745 3,192,255
Additional paid-in capital 23,063,521 24,224,262
Retained earnings 10,914,835 13,842,966
Unrealized gain on investments 199,574 199,590
------------ ------------
Total members' equity 37,196,675 41,459,073
------------ ------------
TOTAL $373,429,198 $384,143,954
============ ============
The accompanying notes are an integral part of the consolidated financial
statements.
-6-
<PAGE>
UNITED GROCERS, INC., AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Year-to-date Year-to-date
period ended period ended
June 27, 1997 June 28, 1996
------------- -------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ (2,121,032) $ 1,266,623
Adjustments to reconcile
net income (loss) to net cash provided by
operating activities:
Depreciation 5,419,182 4,595,146
Provision for doubtful accounts
and notes 1,987,046 1,573,161
Patronage dividends payable in
common stock -- 1,322,497
Loss on sale of assets 544,508 40,595
Deferred income taxes (2,600,000) --
Decrease (increase) in non-cash
current assets:
Accounts and notes receivable (7,702,966) (1,684,025)
Inventories 10,173,822 5,719,774
Other current assets (343,805) 3,832,155
Increase (decrease) in non-cash
current liabilities:
Accounts payable and insurance
reserves 7,306,678 (4,451,588)
Compensation and taxes payable 2,773,554 (289,817)
Other accrued expenses 785,816 1,781,872
Members' patronage payable (3,200,110) (4,696,867)
Decrease (increase) in
non-current assets (3,160,781) (113,929)
------------ ------------
Net cash provided by
operating activities 9,861,912 8,895,597
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Loans to members (8,856,658) (14,091,810)
Collections on loans to members 4,354,256 1,331,675
Proceeds from sale of member loans 12,530,273 4,235,367
Redemption of investments 7,116,425 1,175,240
Purchase of investments (11,483,449) (12,060,639)
Sale of property/plant/equipment 10,179,084 6,423,546
Purchase of property/plant/equipment (16,100,650) (9,930,702)
Purchase of business combination -- (23,251,791)
------------- ------------
Net cash used in
investing activities (2,260,719) (46,169,114)
------------- ------------
The accompanying notes are an integral part of the consolidated financial
statements.
-7-
<PAGE>
UNITED GROCERS, INC., AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Year-to-date Year-to-date
period ended period ended
June 27, 1997 June 28, 1996
------------- -------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Sale of common stock $ 93,368 $ 378,123
Repurchase of common stock (2,234,721) (2,407,027)
Proceeds of long-term liabilities:
Revolving bank lines of credit 5,266,134 43,636,077
Mortgages and notes 1,939,254 3,253,037
Redeemable notes and certificates 10,135,500 14,489,000
Repayment of long-term liabilities:
Mortgages and notes (6,870,215) (3,188,159)
Redeemable notes and certificates (22,563,843) (14,139,600)
----------- -----------
Net cash provided by (used in)
financing activities (14,234,523) 42,021,451
----------- -----------
Net increase (decrease) in cash
and cash equivalents (6,633,330) 4,747,934
Cash and cash equivalents, beginning
of year 16,509,866 13,045,456
----------- -----------
Cash and cash equivalents, end of
year-to-date period $ 9,876,536 $ 17,793,390
=========== ===========
The accompanying notes are an integral part of the consolidated financial
statements.
-8-
<PAGE>
UNITED GROCERS, INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
Note 1. MANAGEMENT'S STATEMENT
In the opinion of management the accompanying unaudited financial statements
contain all adjustments necessary to present fairly the financial position of
United Grocers, Inc. and Subsidiaries (the Company) at June 27, 1997 and the
results of operations for the quarterly and year-to-date periods ended June 27,
1997 and June 28, 1996 and cash flows for the year-to-date periods ended June
27, 1997 and June 28, 1996. The Notes to the Consolidated Financial Statements
which are contained in the 1996 Annual Report to Shareholders and incorporated
by reference into the 1997 Form 10-K should be read in conjunction with these
Consolidated Financial Statements.
Operating results for the period ended June 27, 1997 are not necessarily
indicative of the results that may be expected for the entire fiscal year ending
October 3, 1997, or any other period.
Note 2. ACCOUNTING PRONOUNCEMENTS
The Financial Accounting Standards Board (FASB) has issued several accounting
pronouncements which the Company will be required to adopt in future fiscal
reporting periods.
The Company will adopt FASB Statement No. 129 "Disclosure of Information About
Capital Structure" during the first quarter of fiscal 1998. The Company does not
expect that adoption of the disclosure requirements of this pronouncement will
have a material impact on its financial statements.
FASB Statement No. 130 "Reporting Comprehensive Income", which the Company will
adopt during the first quarter of fiscal 1998, establishes standards for
reporting and display of comprehensive income and its components in financial
statements. Comprehensive income generally represents all changes in members'
equity except those resulting from investments by or distributions to members.
Such changes are generally not significant to the Company; and the adoption of
Statement No. 130, including the required comparative presentation for prior
periods, is not expected to have a material impact on its financial statements.
FASB Statement No. 131 "Disclosures about Segments of an Enterprise and Related
Information" requires that a publicly-held company report financial and
descriptive information about its operating segments in financial statements
issued to shareholders for interim and annual periods. The Statement also
requires additional disclosures with respect to products and services,
geographic areas of operation, and major customers. The Company operates
diversified wholesale grocery distribution and insurance businesses and has
historically provided detailed operating segment and other information in its
communications to shareholders; however, such information has not typically been
presented in the consolidated financial statements and related notes. The
Company expects to adopt Statement No. 131 in the first quarter of fiscal 1998.
-9-
<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Year-to-date period ended June 27, 1997 ("1997") compared to year-to-date
period ended June 28, 1996 ("1996").
RESULTS OF OPERATIONS
OVERVIEW
Profitability before income taxes decreased from income of $1.8 million to a
loss of $4.7 million primarily due to increases in operating, selling and
administrative expenses, partially offset by increases in gross margin dollars
and reduced member allowances and patronage dividends. The increases in
operating, selling and administrative expenses were primarily due to the
addition of the operations of the wholesale division of Bay Area Foods, Inc.,
dba Market Wholesale Grocery ("Market Wholesale") in fiscal 1996. Other
increases were due to higher retail store losses, the recording of a reserve for
the estimated cost of an executive's severance ($1.4 million), the establishment
of reserves for the net realizable value of certain equipment ($1.0 million) and
the write-off of certain receivables estimated to be uncollectible ($2.0
million). These reserves are all reflected in the financial statements for the
quarter ended June 27, 1997.
NET SALES AND OPERATIONS
In 1997, net sales and operations increased to $973.7 million from $932.0
million in 1996 (4.5%), due primarily to the additional volume associated with
the operation of Market Wholesale, and higher sales volume from retail and Cash
& Carry operations, due to new units. In 1997, wholesale sales to members of the
Company decreased 5.8 percent. A significant portion of this decrease occurred
in the quarter ended June 27, 1997.
The insurance segment's net premiums, commissions and fees increased 3.5% in
1997 to $17.6 million, primarily due to increased market penetration.
COSTS AND EXPENSES
In 1997, total costs and expenses increased $54.7 million to $970.7 million
(99.7% of sales). This compares to $916.1 million (98.3% of sales) in 1996. The
components of costs and expenses are outlined below:
-10-
<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS (CONTINUED)
Year-to-date Year-to-date
period ended period ended
June 27, 1997 June 28, 1996
------------- -------------
Costs and expenses as a percent of net sales and operations:
Cost of sales 86.1% 86.0%
Operating expenses 10.7 10.2
Selling and administrative
expenses 1.5 0.9
Depreciation 0.5 0.5
Interest expense, net 0.9 0.7
--- ---
Total 99.7% 98.3%
==== ====
MEMBER ALLOWANCES AND PATRONAGE DIVIDENDS
In 1997, member allowances and patronage dividends were $7.7 million (0.8% of
sales). This compares to $14.1 million (1.5% of sales) in 1996. The decrease is
primarily due to lower income available for patronage distribution.
NET INCOME AND INCOME TAXES
Loss after member allowances, patronage dividends, and before income taxes was
$4.7 million in 1997 compared to income of $1.8 million in 1996. Net loss was
$2.1 million compared to net income of $1.3 million in 1996.
LIQUIDITY AND CAPITAL RESOURCES
CASH FLOWS FROM OPERATING ACTIVITIES
In 1997, the Company was provided $9.9 million in cash by its operations, an
increase of $1.0 million from cash provided by operations in 1996. Merchandise
inventories decreased primarily due to efficiencies in procurement and
distribution.
CASH FLOWS FROM INVESTING ACTIVITIES
In 1997, the Company used $2.3 million in cash in investing activities. This
compares to the $46.2 million in cash used by investing activities in 1996. The
primary reasons for the decrease in the cash flow used by investing activities
were the $23.3 million business combination in 1996, and the change in the
Company's member financing activities. In 1997, the Company's member financing
activities provided $8.0 million in cash. In 1996, the Company's member
financing activities used $8.5 million in cash.
CASH FLOWS FROM FINANCING ACTIVITIES
In 1997, the Company's financing activities used $14.2 million in cash compared
to cash provided of $42.0 million in 1996. In 1996, cash was primarily provided
through the utilization of the Company's bank credit lines. In 1997, cash used
for payments on notes and mortgages was provided by cash from operating and
investing activities, as well as through the utilization of the Company's bank
credit lines.
FINANCIAL COVENANTS
The Company was out of compliance with, resulting in defaults under, certain of
its financial covenants with certain lenders as of June 27, 1997. Discussions
are continuing with the Company's lenders to obtain necessary waivers of these
covenant defaults. The noncompliance with and defaults under financial covenants
could affect the Company's ability to borrow funds in the future, although as of
August 13, 1997, no lender had indicated that it would take action as a result
of the noncompliance or defaults.
CAPITAL INVESTMENT NOTES
Due to a decrease in liquidity in 1997, the Company suspended its policy of
voluntarily prepaying outstanding Capital Investment Notes upon request of the
holder in April 1997. In 1997, both the outstanding principal balance and amount
of sales of Capital Investment Notes have decreased.
-11-
<PAGE>
Part II
Item 3. DEFAULTS UPON SENIOR SECURITIES
The Company's loan agreements with banks and other lenders require that it
maintain certain financial ratios. Knowledge by the Company's officers that the
Company has failed to maintain the required ratios constitutes an event of
default under certain of the agreements. Discussions to waive the ratios default
and amend the existing agreements are continuing. As of August 13, 1997, none of
the lenders had indicated that it would take any action on account of the
Company's noncompliance with the financial ratio covenants.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
Item 5. OTHER INFORMATION
The Company has agreed to exchange certain business information with Associated
Grocers, Inc., for the purpose of evaluating the feasibility of a business
combination among both companies, including a potential merger. Discussions
regarding a potential business combination are ongoing as of August 13, 1997.
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibit 10.A - Transition Agreement with former Chief Executive Officer
Exhibit 10.B - Amended and Restated Credit Agreement dated as of May 31,
1996, by and among registrant, Bank of America NW, N.A., United
States National Bank of Oregon, and The Hongkong and Shanghai
Banking Coproration, Limited, as amended as of July 25, 1996,
September 27, 1996, October 28, 1996, November 29, 1996, December
26, 1996, January 31, 1997, February 28, 1997, April 30, 1997, and
May 30, 1997.
Exhibit 27 - Financial Data Schedule
(b) Reports on Form 8-K
April 18, 1997 - Form 8-K, reporting the resignation of the Chief
Executive Officer (item 5)
June 24, 1997 - Form 8-K reporting a change in Registrant's certifying
accountant (item 4)
-12-
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Date: August 14, 1997 UNITED GROCERS, INC.
(Registrant)
By /s/ John W. White
John W. White
Vice President
(Principal Accounting Officer)
-13-
TRANSITION AGREEMENT
This agreement is made and executed this 8th day of May, 1997, by and
between UNITED GROCERS, INC., an Oregon corporation, hereinafter referred to as
"UG," and ALAN C. JONES, hereinafter referred to as "Jones."
WHEREAS, Jones has occupied the position of Chief Executive Officer of
UG since 1983, and was previously employed by UG in various positions prior
thereto since 1964, and
WHEREAS, UG and Jones previously entered into an Executive Compensation
Agreement - 1991 ("Compensation Agreement"), dated March 7, 1991, and
WHEREAS, Jones and UG are desirous of terminating the aforesaid
Compensation Agreement effective the date hereof, and
WHEREAS, the parties hereto are also desirous of settling any and all
claims either party may have against the other of whatsoever kind, nature or
description, and
WHEREAS, UG is further desirous of retaining the unique experience,
ability and services of Jones as acting Chief Executive Officer for an interim
period until such time as a replacement Chief Executive Officer is retained;
until the Board of Directors determines Jones's services are no longer required;
or December 1, 1997, whichever first occurs, and
WHEREAS, UG is further desirous of obtaining Jones's assurances as a
condition to the performance by UG of its obligations hereunder, that during the
term of this agreement and of any renewal thereof, he will not directly or
indirectly render any services of an advisory nature, or otherwise to or become
employed by or participate in, or engage in any business which, directly or
indirectly, is competitive with the wholesale distribution of grocery and
related products which are customarily stocked by retail supermarkets within the
- 1 -
<PAGE>
States of Oregon, Washington and California, without the prior written consent
of UG. Provided, however, that nothing herein contained shall prohibit Jones
from owning stock or other securities of a competitor which are relatively
insubstantial to the total outstanding stock of such competitor and so long as
he, in fact, does not have the power to control, participate in or direct the
management or polices of such competitor, and does not serve as a director or
officer of, or is not otherwise associated with any competitor. It is expressly
acknowledged, however, by and between the parties hereto, that Jones's
involvement, employment, affiliation or ownership in the retail grocery industry
shall not constitute a violation of this agreement or a prohibited activity.
NOW, THEREFORE, in consideration of the promises of the parties one
unto the other, and the above recitals which by reference are hereby
incorporated herein, it is hereby agreed as follows:
1. Jones will continue to serve as Chief Executive Officer during the
transition until such time as UG retains the services of a new Chief Executive
Officer or until December 1, 1997, whichever first occurs. Following UG's
employment of a new Chief Executive Officer, Jones will thereafter act as and
serve as an employee of UG and be available upon reasonable notice to provide
advice and assistance to the Board of Directors or the replacement Chief
Executive Officer. However, such services shall not exceed five hours per month.
2. Term. The term of this agreement shall commence on March 1, 1997,
and shall continue for a period of seven years from said date.
3. Compensation. As compensation for the services to be rendered by
Jones, UG shall pay Jones base compensation of $275,000 per annum for a period
from March 1, 1997,
- 2 -
<PAGE>
through February 28, 1999. Thereafter, for a period of five years, UG shall pay
Jones base compensation of $137,500 per annum from March 1, 1999, to February
28, 2004. Such compensation shall be paid to Jones with the same frequency as
executives of UG are compensated. In addition thereto, Jones will have the
continuing use of his company car through the expiration of the current lease in
January, 2000. The company shall be responsible for maintenance, repairs,
insurance and other incidental costs attendant thereto.
4. Employee Benefits/Expenses. UG shall reimburse Jones for all
reasonable, customary and necessarily incurred expenses in carrying out his
duties. Jones shall present to UG from time to time an itemized account of such
expenses and in such form as may be required by UG. This reimbursement of
expenses will continue as long as Jones continues to perform the duties of Chief
Executive Officer.
5. Employee Benefits. This agreement is not, however, intended and
shall not be deemed to waive, release and/or modify any rights, benefits and/or
privileges to which Jones and/or his spouse may be entitled to as an employee of
UG under any retirement or pension plan (qualified or non-qualified), including
without limitation the Executive Deferred Compensation Plan, 401(k),
supplemental 401(k) and medical, dental or other plans which are now in effect
or such other medical and dental plans as may subsequently be offered to senior
management of UG. In the event UG is unable to include Jones and his spouse in
the group medical and dental plans, UG agrees to provide medical and dental
insurance providing comparable benefits for Jones and his spouse. UG represents
and warrants that the benefits Jones will receive under the pension plan will be
determined in the same manner and at the same level of benefits as if he retired
at age 62. The 401(k) benefits will, however, be based upon the salary actually
earned each year during the term of this agreement. In
- 3 -
<PAGE>
addition thereto, UG shall continue to pay annually, in addition to the
compensation set forth herein, the sum of $48,387 per year, which sum shall be
used by Jones to satisfy the insurance premium policy with Guardian Life
Insurance Company. The company shall pay to Jones the aforesaid $48,387 sum
prior to the premium due dates at December 1, 2003. The company will, upon
expiration of this agreement, cause the collateral assignment of benefits under
the November 14, 1994 assignment, to be released.
6. Release/Jones. In consideration of the foregoing payments and as a
material inducement to UG to enter into this agreement, Jones does hereby
completely release and forever discharge UG and its officers, directors, agents,
employees, successors, estate, heirs and assigns from any and all claims,
rights, demands, actions, obligations and causes of action in every kind,
nature, character, known or unknown, which Jones may now have or has ever had
against UG arising from or in any way connected with Jones's prior employment,
termination of employment or lack of employment with UG, including, but not
limited to, all "constructive discharge" and "wrongful discharge" claims, all
claims relating to any contracts of employment, whether express or implied, all
past claims relating to wages, salary, compensation payments, expense
reimbursements, loans, costs, expenses or attorney's fees, any covenant of good
faith in fair dealing, whether express or implied, and any tort of any nature,
any legal restriction on UG's right to terminate employees, or any federal,
state or municipal law, rule, regulation or ordinance, including, without
limitation, the Federal Age Discrimination and Employment Act, as amended, Title
VII of the Civil Rights Act of 1964, as amended, and any other laws or
regulations relating to prior employment, discrimination and expense
reimbursement.
- 4 -
<PAGE>
7. Release/UG. In consideration for entering into this agreement, UG
hereby releases and forever discharges Jones from any and all claims, rights,
demands, actions, obligations and causes of action of any and every kind, nature
and character, known or unknown, which UG may now have, has ever had, or may
have in the future against Jones arising from or in any way connected with
Jones's prior employment, including, but not limited to, any and all claims
arising out of any tort of any nature, or any federal, state or municipal law,
rule, regulation or ordinance, excepting therefrom only claims arising from
criminal wrongdoings, obligations, preserved or created, by this agreement.
8. Restrictive Covenant. Jones expressly agrees as a condition to the
performance by UG of its obligations hereunder, that during the term of this
agreement and of any renewal thereof, he will not directly or indirectly render
any services of an advisory nature, or otherwise to or become employed by or
participate in, or engage in any business which, directly or indirectly, is
competitive with the wholesale distribution of grocery and related products
which are customarily stocked by retail supermarkets within the States of
Oregon, Washington and California, without the prior written consent of UG.
Provided, however, that nothing herein contained shall prohibit Jones from
owning stock or other securities of a competitor which are relatively
insubstantial to the total outstanding stock of such competitor and so long as
he, in fact, does not have the power to control, participate in or direct the
management or polices of such competitor, and does not serve as a director or
officer of, or is not otherwise associated with any competitor. It is expressly
acknowledged, however, by and between the parties hereto, that Jones's
involvement, employment, affiliation or ownership in the retail grocery industry
shall not constitute a violation of this agreement or a prohibited activity.
- 5 -
<PAGE>
9. This agreement shall be binding and enforceable by Jones against UG,
its successors and assigns.
10. The parties hereto agree that they respectively will refrain from
making any disparaging statements, releases, comments or publications with
respect to the other party.
IN WITNESS WHEREOF, the parties hereto have caused this agreement to
executed the day and year first above written.
UNITED: United Grocers, Inc.
By: /s/ GORDON E. SMITH
Name: Gordon E. Smith
Title: Chairman of the Board
JONES: /s/ ALAN C. JONES
Alan C. Jones
- 6 -
AMENDED AND RESTATED
CREDIT AGREEMENT
By and Among
BANK OF AMERICA NW, N.A.
UNITED STATES NATIONAL BANK OF OREGON
THE HONGKONG AND SHANGHAI BANKING CORPORATION, LIMITED
as Lenders,
BANK OF AMERICA NW, N.A.
as Agent,
and
UNITED GROCERS, INC.
as Borrower
---------------------------------------------
May 31, 1996
---------------------------------------------
$115,000,000
- 1 -
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE 1 DEFINITIONS............................................... 2
Section 1.1 Certain Defined Terms........................ 2
Section 1.2 Interest Rate Definitions.................... 8
Section 1.3 General Principles Applicable to
Definitions.................................................... 8
Section 1.4 Accounting Terms............................. 8
ARTICLE 2 THE LOANS................................................. 8
Section 2.1 Loans........................................ 8
(a) Revolving Line of Credit........................... 8
(b) Operating Line of Credit........................... 9
(c) Long-term Acquisition Line of Credit............... 9
(d) Short-term Acquisition Line of Credit.............. 10
(e) Overnight Line of Credit........................... 10
(f) Relationship to Prior Credit Agreement............. 11
Section 2.2 Manner of Borrowing.......................... 11
Section 2.3 Agent's Right to Fund........................ 12
Section 2.4 Repayment of Principal....................... 13
Section 2.5 Interest on Loans............................ 13
(a) Interest Definitions............................... 13
(b) General Provisions................................. 15
(c) Selection of Alternative Rates for Loans........... 16
(d) Selection of Applicable Interest Rate for
Overnight Loans.......................................... 17
(e) Applicable Days For Computation of Interest........ 18
(f) Unavailable Fixed Rate............................. 18
(g) Compensation for Increased Costs................... 19
Section 2.6 Prepayments.................................. 20
Section 2.7 Notes........................................ 20
Section 2.8 Manner of Payments........................... 21
Section 2.9 Application of Proceeds...................... 22
(a) Before Default..................................... 22
(b) Payments after Default............................. 24
(c) Setoffs............................................ 26
(d) General Provisions................................. 26
Section 2.10 Fees......................................... 27
(a) Agent's Fee........................................ 27
(b) Certain Commitment Fees............................ 27
i
<PAGE>
(c) U.S. Bank Commitment Fees.......................... 28
(d) Seafirst Commitment Fees........................... 28
(e) Payment of Commitment Fees......................... 28
Section 2.11 Reduction in Commitments..................... 28
ARTICLE 3 BANKERS' ACCEPTANCES...................................... 29
Section 3.1 Bankers' Acceptances......................... 29
Section 3.2 Manner of Presenting Drafts.................. 29
Section 3.3 Discounting of Drafts........................ 31
Section 3.4 Indemnification; Increased Costs............. 32
Section 3.5 Payment of Drafts by Borrower................ 33
Section 3.6 Compliance With Governmental
Regulations; Insurance....................... 33
Section 3.7 Guaranty of Documents and Instruments........ 34
Section 3.8 Revocation by Operation of Law............... 34
Section 3.9 Relationship to Prior Credit Agreement....... 34
ARTICLE 4 LETTERS OF CREDIT......................................... 34
Section 4.1 Letters of Credit............................ 34
Section 4.2 Manner of Requesting Letters of Credit....... 35
Section 4.3 Indemnification; Increased Costs............. 36
Section 4.4 Payment by Borrower.......................... 37
Section 4.5 Relationship to Prior Credit Agreement....... 37
ARTICLE 5 CONDITIONS................................................ 37
Section 5.1 Notice of Borrowing, Promissory Notes,
Etc.......................................... 37
Section 5.2 Corporate Authority.......................... 38
Section 5.3 Legal Opinion................................ 38
Section 5.4 Defaults, Etc................................ 38
Section 5.5 Payment of All Accrued Interest and
Fees......................................... 38
Section 5.6 Other Information............................ 38
ARTICLE 6 REPRESENTATIONS AND WARRANTIES............................ 39
Section 6.1 Corporate Existence and Power................ 39
Section 6.2 Corporate Authorization...................... 39
Section 6.3 Government Approvals, Etc.................... 39
Section 6.4 Binding Obligations, Etc..................... 39
Section 6.5 Litigation................................... 40
Section 6.6 Indebtedness................................. 40
Section 6.7 Financial Condition.......................... 40
Section 6.8 Title and Liens.............................. 40
Section 6.9 Taxes........................................ 40
Section 6.10 Laws, Orders, Other Agreements............... 41
Section 6.11 Federal Reserve Regulations.................. 41
Section 6.12 ERISA........................................ 41
ii
<PAGE>
Section 6.13 Security Offerings........................... 42
Section 6.14 Warranties with Respect to Drafts............ 42
Section 6.15 Further Warranties with Respect to
Drafts....................................... 42
Section 6.16 Acceptances.................................. 42
Section 6.17 Patents, Licenses, Franchises................ 43
Section 6.18 Investment Company; Public Utility
Holding Company.............................. 43
Section 6.19 Environmental and Safety Health Matters...... 43
Section 6.20 Reaffirmation................................ 43
Section 6.21 Representations as a Whole................... 43
ARTICLE 7 AFFIRMATIVE COVENANTS..................................... 44
Section 7.1 Preservation of Corporate Existence,
Etc.......................................... 44
Section 7.2 Keeping of Books and Records; Visitation
Rights....................................... 44
Section 7.3 Maintenance of Property, Etc................. 44
Section 7.4 Compliance with Laws, Etc.................... 44
Section 7.5 Other Obligations............................ 44
Section 7.6 Insurance.................................... 45
Section 7.7 Financial Information........................ 45
(a) Annual Audited Financial Statements................ 45
(b) Quarterly Unaudited Financial Statements........... 45
(c) Quarterly Compliance Certificates.................. 46
(d) Other.............................................. 46
Section 7.8 Notification................................. 46
Section 7.9 Additional Payments; Additional Acts......... 47
Section 7.10 Use of Proceeds from Acceptances............. 47
Section 7.11 Funded Debt.................................. 47
Section 7.12 Working Capital.............................. 48
Section 7.13 Fixed Charge Coverage........................ 48
Section 7.14 Minimum Capital and Subordinated Debt........ 48
Section 7.15 Member Notes Receivable Ratio................ 48
Section 7.16 Relocation of Offices........................ 49
Section 7.17 Use of Proceeds.............................. 49
Section 7.18 Amendments to Private Placement;
Prepayments of Private Placement............. 49
Section 7.19 Insurance Company............................ 49
ARTICLE 8 NEGATIVE COVENANTS........................................ 50
Section 8.1 Liquidation, Merger, Sale of Assets.......... 50
Section 8.2 Contingent Indebtedness...................... 51
Section 8.3 Liens........................................ 51
Section 8.4 ERISA Compliance............................. 51
Section 8.5 No Name Change, Etc.......................... 52
Section 8.6 Transactions With or by Affiliates........... 52
iii
<PAGE>
ARTICLE 9 EVENTS OF DEFAULT......................................... 52
Section 9.1 Events of Default............................ 52
(a) Payment Default.................................... 52
(b) Breach of Warranty................................. 53
(c) Breach of Certain Covenants........................ 53
(d) Breach of Other Covenant........................... 53
(e) Cross-default...................................... 53
(f) Voluntary Bankruptcy, Etc.......................... 54
(g) Involuntary Bankruptcy, Etc........................ 54
(h) Insolvency, Etc.................................... 54
(i) Judgment........................................... 54
(j) ERISA.............................................. 55
(k) Government Action.................................. 55
(l) Change in Control.................................. 55
(m) Validity Contest................................... 55
(n) Insurance Claim.................................... 55
Section 9.2 Consequences of Default...................... 55
ARTICLE 10 THE AGENT................................................ 56
Section 10.1 Authorization and Action..................... 56
Section 10.2 Duties and Obligations....................... 57
Section 10.3 Dealings Between Seafirst and Borrower....... 59
Section 10.4 Lender Credit Decision....................... 59
Section 10.5 Indemnification.............................. 59
Section 10.6 Successor Agent.............................. 59
ARTICLE 11 MISCELLANEOUS............................................ 60
Section 11.1 No Waiver; Remedies Cumulative............... 60
Section 11.2 Right of Setoff.............................. 61
Section 11.3 Governing Law................................ 61
Section 11.4 Consent to Jurisdiction; Waiver of
Immunities; Attorneys' Fees.................. 61
Section 11.5 Notices...................................... 61
Section 11.6 Mandatory Arbitration........................ 62
Section 11.7 Assignment and Participations................ 62
Section 11.8 Severability................................. 63
Section 11.9 Survival..................................... 63
Section 11.10 Conditions Not Fulfilled..................... 63
Section 11.11 Entire Agreement; Amendment, Etc............. 64
Section 11.12 Other Debt................................... 64
Section 11.13 Authorized Officers.......................... 64
Section 11.14 Headings..................................... 64
Section 11.15 Counterparts................................. 64
Section 11.16 Oral Agreements Not Enforceable.............. 64
iv
<PAGE>
SCHEDULES
Schedule 1 Prepayment Fee Calculations
Schedule 2 Authorized Officers
EXHIBITS
Exhibit A-1 - Revolving Note (Seafirst)
Exhibit A-2 - Revolving Note (U.S. Bank)
Exhibit A-3 - Revolving Note (Hong Kong Bank)
Exhibit B-1 - Operating Note (Seafirst)
Exhibit B-2 - Operating Note (U.S. Bank)
Exhibit B-3 - Operating Note (Hong Kong Bank)
Exhibit C-1 - Long-Term Acquisition Note (Seafirst)
Exhibit C-2 - Long-Term Acquisition Note (U.S. Bank)
Exhibit D-1 - Short-Term Acquisition Note (Seafirst)
Exhibit D-2 - Short-Term Acquisition Note (U.S. Bank)
Exhibit E - Overnight Note (U.S. Bank)
Exhibit F - Form of Legal Opinion
v
<PAGE>
AMENDED AND RESTATED
CREDIT AGREEMENT
THIS AMENDED AND RESTATED CREDIT AGREEMENT ("Agreement") is made as of May
31, 1996, by and among BANK OF AMERICA NW, N.A., successor by name change to
Seattle-First National Bank, a national banking association ("Seafirst"), UNITED
STATES NATIONAL BANK OF OREGON, a national banking association ("U.S. Bank"),
THE HONGKONG AND SHANGHAI BANKING CORPORATION, LIMITED, an extra national
banking institution ("Hong Kong Bank") (each individually a "Lender" and
collectively the "Lenders"), SEAFIRST, as agent for the Lenders (the "Agent")
and UNITED GROCERS, INC., an Oregon corporation (the "Borrower").
RECITALS
A. Borrower is primarily in the business of selling food products and
other miscellaneous items to its shareholder members who operate retail grocery
stores. Borrower requires various credit facilities for its day to day business
affairs and operations.
B. As of May 31, 1995, Seafirst, U.S. Bank, Borrower and Agent executed an
Amended and Restated Credit Agreement (the "Restated Credit Agreement").
Pursuant to the terms of the Restated Credit Agreement, Seafirst and U.S. Bank
agreed to make certain revolving credit facilities available to Borrower.
C. As of November 30, 1995, Seafirst and U.S. Bank agreed to assign a
portion of their respective interests in and to all Operating Loans and
Revolving Loans together with a corresponding assignment of related interests in
the Restated Credit Agreement and related loan documents to Hong Kong Bank all
pursuant to that certain Loan Purchase Agreement executed as of November 30,
1995 by and among Lenders. In connection therewith the parties hereto executed
Amendment Number One to the Amended and Restated Credit Agreement as of November
30, 1995. As of April 30 1996, the parties hereto executed Amendment Number Two
to the Amended and Restated Credit Agreement. The Restated Credit Agreement as
amended by such Amendment Number One and Amendment Number Two is referred to
herein as the "Prior Credit Agreement."
D. The parties hereto now desire to amend and restate the Prior Credit
Agreement to extend the applicable Maturity Dates by one additional year and to
make certain other changes all as set forth below.
1
<PAGE>
NOW THEREFORE, the parties hereto hereby agree to amend and restate the
Prior Credit Agreement as follows:
AGREEMENT
ARTICLE 1
DEFINITIONS
SECTION 1.1 CERTAIN DEFINED TERMS. As used in this Agreement, the
following terms have the following meanings:
"Acceptance Advances" means, as of any date of determination, the
sum of (a) the aggregate face amount of all outstanding unmatured Drafts plus
(b) the aggregate face amount of all matured Drafts for which the Borrower has
not yet paid.
"Acceptance Request" has the meaning given in Section 3.2(a).
"Agent" means Seafirst and any successor agent selected pursuant to
Section 10.6 hereof.
"Borrower" means United Grocers, Inc., an Oregon corporation, and
any Successor or permitted assign.
"Business Day" means any day other than Saturday, Sunday or another
day on which banks are authorized or obligated to close in Seattle, Washington,
except in the context of the selection of a LIBOR Loan or the calculation of the
LIBOR Rate for any Applicable Interest Period, in which event "Business Day"
means any day other than Saturday or Sunday on which dealings in foreign
currencies and exchange between banks may be carried on in London, England and
Seattle, Washington.
"Code" means the Internal Revenue Code of 1986, as amended from time
to time.
"Consolidated Tangible Net Worth" has the meaning given in Section
7.15.
"Controlled Group" means all members of a controlled group of
corporations and all trades or businesses (whether or not incorporated) under
common control which, together with the Borrower, are treated as a single
employer under Section 414(b) or 414(c) of the Code.
2
<PAGE>
"Default" means any event which but for the passage of time, the
giving of notice, or both would be an Event of Default.
"Draft" has the meaning given in Section 3.2(d).
"Eligible Draft" means a draft that is eligible for discount under
the Federal Reserve Act (12 U.S.C. ss. 372), and is eligible for purchase under
the rules and regulations established from time to time by the Federal Reserve
Bank of New York.
"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended from time to time.
"Event of Default" has the meaning given in Section 9.1.
"Federal Funds Rate" means, for any period, a fluctuating interest
rate per annum equal for each day during such period to the weighted average of
the rates on overnight federal funds transactions with members of the Federal
Reserve System arranged by federal funds brokers, as published for such day (or,
if such day is not a Business Day, for the next preceding Business Day) by the
Federal Reserve Bank of New York, or, if such rate is not so published for any
day which is a Business Day, the average of the quotations for such day on
transactions received by the Agent from three federal funds brokers of
recognized standing selected by the Agent.
"Funded Debt" has the meaning given in Section 7.11.
"GIC" has the meaning given in Section 7.19.
"Government Approval" means an approval, permit, license, franchise,
right, privilege, authorization, certificate, or consent of any Governmental
Authority.
"Governmental Authority" means the government of the United States
or any State or any foreign country or any political subdivision of any thereof
or any branch, department, agency, instrumentality, court, tribunal or
regulatory authority which constitutes a part or exercises any sovereign power
of any of the foregoing.
"Incipient Payment Default" means any event which but for the
passage of time, the giving of notice or both would be an Event of Default
described in subsection 9.1(a) hereof.
"Indebtedness" means for any person (a) all items of indebtedness or
liability (except capital, surplus, deferred
3
<PAGE>
credits and reserves, as such) which would be included in determining total
liabilities as shown on the liability side of a balance sheet as of the date as
of which indebtedness is determined, (b) indebtedness secured by any Lien,
whether or not such indebtedness shall have been assumed, (c) any other
indebtedness or liability for borrowed money or for the deferred purchase price
of property or services for which such person is directly or contingently liable
as obligor, guarantor, or otherwise, or in respect of which such person
otherwise assures a creditor against loss, and (d) any other obligations of such
person under leases which shall have been or should be recorded as capital
leases.
"Lenders" means Seafirst, U.S. Bank and Hong Kong Bank and any
Successors thereto or permitted assigns thereof.
"Letter of Credit" means a stand-by letter of credit issued by
Seafirst or a Seafirst Affiliate pursuant to Section 4.2 hereof for the account
of Borrower.
"Letter of Credit Commitment" has the meaning given in Section
4.2(b).
"Letter of Credit Usage" means as of any date of determination, the
sum of (i) the aggregate face amount of all outstanding unmatured Letters of
Credit, plus (ii) the aggregate amount of all payments made by Seafirst and any
Seafirst Affiliates under Letters of Credit and not yet reimbursed by Borrower
pursuant to Section 4.4.
"Lien" means, for any person, any security interest, pledge,
mortgage, charge, assignment, hypothecation, encumbrance, attachment,
garnishment, execution or other voluntary or involuntary lien upon or affecting
the revenues of such person or any real or personal property in which such
person has or hereafter acquires any interest, except (a) liens for Taxes which
are not delinquent or which remain payable without penalty or the validity or
amount of which is being contested in good faith by appropriate proceedings upon
stay of execution of the enforcement thereof; (b) liens imposed by law (such as
mechanics' liens) incurred in good faith in the ordinary course of business
which are not delinquent or which remain payable without penalty or the validity
or amount of which is being contested in good faith by appropriate proceedings
upon stay of execution of the enforcement thereof with, in the case of liens on
property of the Borrower, provision having been made to the satisfaction of the
Agent for the payment thereof in the event the contest is determined adversely
to the Borrower; and (c) deposits or pledges under worker's compensation,
unemployment insurance, social security or
4
<PAGE>
other similar laws or made to secure the performance of bids, tenders, contracts
(except for repayment of borrowed money), or leases, or to secure statutory
obligations or surety or appeal bonds or to secure indemnity, performance or
other similar bonds given in the ordinary course of business.
"Loans" shall mean the Revolving Loans, the Operating Loans, the
Short-term Acquisition Loans, the Long-term Acquisition Loans and the Overnight
Loans.
"Loan Documents" means this Agreement, the Notes, the Drafts, the
Letters of Credit, the Reimbursement Agreements, and all other certificates,
instruments and other documents executed by or on behalf of the Borrower in
connection with this Agreement or the transactions contemplated hereby.
"Long-term Acquisition Commitment" has the meaning given in Section
2.1(c).
"Long-term Acquisition Line Maturity Date" means July 31, 1997.
"Long-term Acquisition Loan" has the meaning given in Section
2.1(c).
"Long-term Acquisition Note" has the meaning given in Section
2.7(c).
"Long-term Maturity Date" means April 30, 1998.
"Majority Lenders" means at any time Lenders having at least
sixty-six 2/3% of the Total Commitment.
"Maturity Date" means the Long-term Maturity Date, the Long-term
Acquisition Line Maturity Date, the Short-term Maturity Date, or the Short-term
Acquisition Line Maturity Date, as applicable.
"Members' Equity" has the meaning given in Section 7.11.
"Notes" has the meaning given in Section 2.7.
"Notice of Borrowing" means a written or oral request for a Loan
(other than an Overnight Loan) from the Borrower delivered to the Agent in the
manner, at the time, and containing the information required by the terms of
Section 2.2(a) or a written or oral request for an Overnight Loan from the
Borrower
5
<PAGE>
delivered to U.S. Bank in the manner, at the time, and containing the
information required by the terms of Section 2.2(b).
"Operating Commitment" has the meaning given in Section 2.1(b).
"Operating Loan" has the meaning given in Section 2.1(b).
"Operating Note" has the meaning given in Section 2.7(b).
"Overnight Commitment" has the meaning given in Section 2.1(e).
"Overnight Loan" has the meaning given in Section 2.1(e).
"Overnight Note" has the meaning given in Section 2.7(e).
"PBGC" means the Pension Benefit Guaranty Corporation or any entity
succeeding to any or all of its functions under ERISA.
"Pension Plan" means an "employee pension benefit plan" (as such
term is defined in ERISA) from time to time maintained by the Borrower or a
member of the Controlled Group.
"Plan" shall mean, at any time, an employee pension benefit plan
which is covered by Title IV of ERISA or subject to the minimum funding
standards under Section 412 of the Code and is either (a) maintained by the
Borrower or any member of the Controlled Group for employees of the Borrower or
any member of the Controlled Group or (b) maintained pursuant to a collective
bargaining agreement or any other arrangement under which more than one employer
makes contributions and to which the Borrower or any member of the Controlled
Group is then making or accruing an obligation to make contributions or has
within the preceding five (5) plan years made contributions.
"Prime Rate" means, on any day, the Agent's publicly announced prime
rate of interest at its principal office (which prime rate is a reference rate
and not necessarily the lowest rate of interest charged by the Agent to its
prime customers), changing as such prime rate changes.
"Prior Credit Agreement" shall have the meaning given in the
Recitals.
6
<PAGE>
"Private Placement Agreement" means any agreement currently existing
or hereafter entered into by Borrower for the private placement of debt
securities issued by Borrower.
"Reimbursement Agreements" has the meaning given in Section 4.2(c).
"Revolving Commitment" has the meaning given in Section 2.1(a).
"Revolving Loan" means a Loan made pursuant to Section 2.1(a).
"Revolving Note" has the meaning given in Section 2.7(a).
"Seafirst Affiliate" means any person that directly or indirectly
controls or is controlled by or under common control with Seafirst.
"Short-term Acquisition Commitment" has the meaning given in Section
2.1(d).
"Short-term Acquisition Line Maturity Date" means July 31, 1996.
"Short-term Acquisition Loan" has the meaning given in Section
2.1(d).
"Short-term Acquisition Note" has the meaning given in Section
2.7(d).
"Short-term Maturity Date" means April 30, 1997.
"Subordinated Debt" has the meaning given in Section 7.11.
"Successor" means, for any corporation or banking association, any
successor by merger or consolidation, or by acquisition of substantially all of
the assets of the predecessor.
"Tax" means, for any person, any tax, assessment, duty, levy, impost
or other charge imposed by any Governmental Authority on such person or on any
property, revenue, income, or franchise of such person and any interest or
penalty with respect to any of the foregoing.
7
<PAGE>
"Total Commitment" means the total of U.S. Bank's Overnight
Commitment, Seafirst's Letter of Credit Commitment, Seafirst's and U.S. Bank's
Short-term Acquisition Commitment and Long-term Acquisition Commitment and each
Lender's Revolving Commitment and Operating Commitment.
"Unfunded Vested Liabilities" means, with respect to any Plan at any
time, the amount (if any) by which (a) the present value of all vested
nonforfeitable benefits under such Plan exceeds (b) the fair market value of all
Plan assets allocable to such benefits, all determined as of the then most
recent evaluation date for such Plan, but only to the extent that such excess
represents a potential liability of the Borrower or any member of the Controlled
Group to the PBGC or the Plan under Title IV of ERISA.
SECTION 1.2 INTEREST RATE DEFINITIONS. Certain definitions related to the
provisions governing the calculation and payment of interest are set forth in
Section 2.5(a).
SECTION 1.3 GENERAL PRINCIPLES APPLICABLE TO DEFINITIONS. Definitions
given in Sections 1.1 and 2.5(a) shall be equally applicable to both singular
and plural forms of the terms therein defined and references herein to "he" or
"it" shall be applicable to persons whether masculine, feminine or neuter.
References herein to any document including, but without limitation, this
Agreement, shall be deemed a reference to such document as it now exists, and
as, from time to time hereafter, the same may be amended. Reference herein to a
"person" or "persons" shall be deemed to be a reference to an individual,
corporation, partnership, trust, unincorporated association, joint venture,
joint-stock company, government (including political subdivisions), Governmental
Authority or agency or any other entity. In the computation of periods of time
from a date to a later date, "from" means "from and including" and "to" and
"until" each means "to but excluding."
SECTION 1.4 ACCOUNTING TERMS. Except as otherwise provided herein,
accounting terms not specifically defined shall be construed, and all accounting
procedures shall be performed, in accordance with generally accepted United
States accounting principles consistently applied.
ARTICLE 2
THE LOANS
SECTION 2.1 LOANS.
8
<PAGE>
(A) REVOLVING LINE OF CREDIT. Subject to the terms and conditions of
this Agreement, each Lender hereby severally agrees to make loans ("Revolving
Loans") to the Borrower from time to time on Business Days during the period
beginning on the date hereof and ending on the Long-term Maturity Date in
amounts equal to such Lender's pro rata share (as set forth below) of each
requested loan provided that, after giving effect to any requested loan the
aggregate of all Revolving Loans from such Lender will not exceed at any one
time outstanding the sum set forth opposite its name below (such Lender's
"Revolving Commitment").
Lender Commitment Pro Rata Share
------ ---------- --------------
Seafirst $18,750,000 44.1176%
U.S. Bank $18,750,000 44.1176%
Hong Kong Bank $ 5,000,000 11.7648%
----------- ---------
Total Revolving $42,500,000 100.00%
Commitment
The Revolving Loans described in this Section 2.1(a) constitute a revolving
credit and within the amount and time specified, the Borrower may pay, prepay
and reborrow.
(B) OPERATING LINE OF CREDIT. Subject to the terms and conditions of
this Agreement, each Lender hereby severally agrees to make loans ("Operating
Loans") to the Borrower from time to time on Business Days during the period
beginning on the date hereof and ending on the Short-term Maturity Date in
amounts equal to such Lender's pro rata share (as set forth below) of each
requested loan provided that, after giving effect to any requested loan the
aggregate of all Operating Loans from such Lender will not exceed at any one
time outstanding an amount equal to (a) the sum set forth opposite such Lender's
name below (such Lender's "Operating Commitment"); less (b) the Acceptance
Advances in respect of Drafts accepted and discounted by such Lender in
accordance with the terms of Article 3 hereof.
9
<PAGE>
Lender Commitment Pro Rata Share
------ ---------- --------------
Seafirst $18,750,000 44.1176%
U.S. Bank $18,750,000 44.1176%
Hong Kong Bank $ 5,000,000 11.7648%
----------- ---------
Total Operating $42,500,000 100.00%
Commitment
The Operating Loans described in this Section 2.1(b) constitute a revolving
credit and within the amount and time specified, the Borrower may pay, prepay
and reborrow.
(C) LONG-TERM ACQUISITION LINE OF CREDIT. Subject to the terms and
conditions of this Agreement, each of Seafirst and U.S. Bank hereby severally
agrees to make loans ("Long-term Acquisition Loans") to the Borrower from time
to time on Business Days during the period beginning on the date hereof and
ending on the Long-term Acquisition Line Maturity Date in amounts equal to such
Lender's pro rata share (as set forth below) of each requested loan provided
that, after giving effect to any requested loan the aggregate of all Long-term
Acquisition Loans from such Lender will not exceed at any one time outstanding
the sum set forth opposite its name below (such Lender's "Long-term Acquisition
Commitment").
Lender Commitment Pro Rata Share
------ ---------- --------------
Seafirst $4,000,000 44.44%
U.S. Bank $5,000,000 55.56%
----------- -------
Total Long-term $9,000,000 100.00%
Acquisition
Commitment
The Long-term Acquisition Loans described in this Section 2.1(c) constitute a
revolving credit and within the amount and time specified, the Borrower may pay,
prepay and reborrow.
(D) SHORT-TERM ACQUISITION LINE OF CREDIT. Subject to the terms and
conditions of this Agreement, each of Seafirst and U.S. Bank hereby severally
agrees to make loans ("Short-term Acquisition Loans") to the Borrower from time
to time on Business Days during the period beginning on the date hereof and
ending on the Short-term Acquisition Line Maturity Date in amounts equal to
10
<PAGE>
such Lender's pro rata share (as set forth below) of each requested loan
provided that, after giving effect to any requested loan the aggregate of all
Short-term Acquisition Loans from such Lender will not exceed at any one time
outstanding the sum set forth opposite its name below (such Lender's "Short-term
Acquisition Commitment").
Lender Commitment Pro Rata Share
------ ---------- --------------
Seafirst $5,000,000 50.00%
U.S. Bank $5,000,000 50.00%
----------- -------
Total Short-term $10,000,000 100.00%
Acquisition
Commitment
The Short-term Acquisition Loans described in this Section 2.1(d) constitute a
revolving credit and within the amount and time specified, the Borrower may pay,
prepay and reborrow.
(E) OVERNIGHT LINE OF CREDIT. Subject to the terms and conditions of
this Agreement, U.S. Bank hereby agrees to make loans ("Overnight Loans") to the
Borrower from time to time on Business Days during the period beginning on the
date hereof and ending on the Short-term Maturity Date provided that, after
giving effect to any requested loan the aggregate of all Overnight Loans will
not exceed at any one time outstanding the sum of Ten Million Dollars
($10,000,000) (U.S. Bank's "Overnight Commitment"). The Overnight Loans
described in this Section 2.1(e) constitute a revolving credit and within the
amount and time specified, the Borrower may pay, prepay and reborrow.
(F) RELATIONSHIP TO PRIOR CREDIT AGREEMENT. The Revolving Loans, the
Operating Loans, the Long-Term Acquisition Loans, the Short-Term Acquisition
Loans and the Overnight Loans outstanding under the Prior Credit Agreement as of
the effective date of this Agreement, shall be deemed to have been advanced
under Sections 2.1(a), (b), (c), (d) and (e) hereof, respectively.
SECTION 2.2 MANNER OF BORROWING.
(a) For each requested Loan other than an Overnight Loan, the
Borrower shall give the Agent a Notice of Borrowing specifying the date of a
requested borrowing and the amount thereof. The Borrower may give a written or
oral Notice of Borrowing on the same day it wishes a Loan to be made if said
Notice of Borrowing is received by the Agent no later than
11
<PAGE>
10:00 a.m. (Seattle time) on the date of the requested borrowing, provided that
if the Borrower shall simultaneously elect to have interest accrue on a Loan at
a rate other than the Prime Rate by giving an Interest Rate Notice (as defined
in Section 2.5(c)(1)) in respect of such borrowing, the Notice of Borrowing
shall be given prior to 10:00 a.m. (Seattle time) on a Business Day at least
three (3) Business Days prior to the requested date of borrowing. Requests for
borrowing, or confirmations thereof, received after the designated hour will be
deemed received on the next succeeding Business Day. Each such Notice of
Borrowing shall be irrevocable and shall be deemed to constitute a
representation and warranty by the Borrower that as of the date of such notice
the statements set forth in Article 6 hereof are true and correct and that no
Default or Event of Default has occurred and is continuing. On receipt of a
Notice of Borrowing, the Agent shall promptly notify each Lender by telephone,
telex or facsimile of the date of the requested borrowing and the amount
thereof. Each Lender shall before 12:00 noon (Seattle time) on the date of the
requested borrowing, pay such Lender's pro rata share of the aggregate principal
amount of the requested borrowing in immediately available funds to the Agent at
its Commercial Loan Processing Center, Seattle, Washington. Upon fulfillment to
the Agent's satisfaction of the applicable conditions set forth in Article 5,
and after receipt by the Agent of such funds, the Agent will promptly make such
funds available to the Borrower at Borrower's general checking account
maintained at the Main Branch of U.S. Bank in Portland, Oregon or at such other
place as may be designated by Borrower in a writing delivered to Agent.
(b) For each requested Overnight Loan, the Borrower shall give U.S.
Bank a Notice of Borrowing specifying the date of the requested borrowing and
the amount thereof. The Borrower may give a written or oral Notice of Borrowing
on the same day it wishes an Overnight Loan to be made if said Notice of
Borrowing is received by U.S. Bank not later than 10:00 a.m. (Portland time) on
the date of the requested borrowing provided, that, any Notice of Borrowing
given orally shall be confirmed by the Borrower in a writing delivered to U.S.
Bank not later than 1:00 p.m. (Portland time) on the date such oral notice is
given. Requests for borrowing or confirmations thereof received after the
designated hour will be deemed received on the next succeeding Business Day.
Each such Notice of Borrowing shall be irrevocable and shall be deemed to
constitute a representation and warranty by the Borrower that as of the date of
such notice the statements set forth in Article 6 hereof are true and correct
and that no Default or Event of Default has occurred and is continuing. Upon
fulfillment to U.S. Bank's satisfaction of the applicable conditions set forth
in Article 5, U.S. Bank will
12
<PAGE>
promptly make such funds available to the Borrower at Borrower's general
checking account maintained at the Main Branch of U.S. Bank in Portland, Oregon
or at such other place as may designated by Borrower in a writing delivered to
U.S. Bank. Promptly upon request, U.S. Bank shall provide Agent with information
regarding Overnight Loans made to Borrower, including without limitation
information regarding the date, amount, interest rate, and payments made by
Borrower in respect of any such Loans.
SECTION 2.3 AGENT'S RIGHT TO FUND. Unless the Agent shall have received
notice from a Lender prior to 12:00 noon (Seattle time) on the date of any
requested borrowing that such Lender will not make available to the Agent its
pro rata share of the requested borrowing, the Agent may assume that such Lender
has made such funds available to the Agent on the date such Loan is to be made
in accordance with Section 2.2(a) hereof and the Agent may, in reliance upon
such assumption, make available to the Borrower on such date a corresponding
amount. If and to the extent that such Lender shall not have so made such
portion available to the Agent, such Lender and the Borrower, jointly and
severally, agree to pay to the Agent forthwith on demand such corresponding
amount, together with interest thereon for each day from the date such amount is
made available to the Borrower until the date such amount is repaid to the
Agent, at (a) in the case of the Borrower, the Prime Rate and (b) in the case of
such Lender, the Federal Funds Rate. Any such repayment by the Borrower shall be
without prejudice to any rights it may have against the Lender that has failed
to make available its funds for any requested borrowing.
SECTION 2.4 REPAYMENT OF PRINCIPAL.
(a) The Borrower shall repay to the Lenders the principal amount of each
Revolving Loan on the Long-term Maturity Date, the principal amount of each
Long-term Acquisition Loan on the Long-term Acquisition Line Maturity Date, the
principal amount of each Operating Loan on the Short-term Maturity Date, the
principal amount of each Short-term Acquisition Loan on the Short-term
Acquisition Line Maturity Date, and the principal amount of each Overnight Loan
on demand made by U.S. Bank; provided, however, if U.S. Bank makes no such
demand, then on the Short-term Maturity Date.
(b) Borrower agrees to pay to Agent for the account of Seafirst and U.S.
Bank immediately upon the receipt thereof, as a mandatory prepayment, an amount
equal to the net proceeds received by Borrower from the sale of any trade
receivables (other than sales made in the ordinary course of Borrower's
business). Any such payment shall be applied by Agent as
13
<PAGE>
provided in Section 2.9(a)(iii) and upon Borrower's making of any such payment,
(A) the aggregate Long-term Acquisition Commitments for both Lenders shall be
immediately, permanently and irrevocably reduced by an amount equal to one-half
of such payment and (B) the aggregate Short-term Acquisition Commitments for
both Lenders shall be immediately, permanently and irrevocably reduced by an
amount equal to one-half of such payment.
SECTION 2.5 INTEREST ON LOANS.
(a) INTEREST DEFINITIONS. As used in this Section 2.5 and elsewhere
in the Agreement the following terms have the following meanings:
"Applicable Interest Period" means, with respect to any Loan
accruing interest at a LIBOR Rate, the period commencing on the first date the
Borrower elects to have such LIBOR Rate apply to such Loan pursuant to Section
2.5(c) and ending one, two, three or six months thereafter as specified in the
Interest Rate Notice given in respect of such Loan; provided, however, that
Borrower may not select a six-month interest period for an Operating Loan and
provided further, that no Applicable Interest Period may be selected for any
LIBOR Loan if it extends beyond such Loan's Maturity Date.
"Applicable Interest Rate" means (i) for each Loan other than an
Overnight Loan, the Prime Rate or the LIBOR Rate, as designated by the Borrower
in an Interest Rate Notice given with respect to such Loan (or portion thereof)
or otherwise determined pursuant to Section 2.5(c); and (ii) for each Overnight
Loan, the U.S. Bank Prime Rate or the Interim Rate, as designated by the
Borrower in an Interest Rate Notice given with respect to such Loan or otherwise
determined pursuant to Section 2.5(d).
"Interest Rate Notice" has the meaning given in Section 2.5(c) and
(d).
"Interim Rate" means, a per annum rate of interest equal to the sum
of (a) the per annum rate of interest established from time to time by U.S. Bank
as its "overnight money market rate" for loans of comparable amounts; and (b)
seventy-five (75) basis points (three-fourths of one percent) changing as such
"overnight money market rate" changes from time to time.
"LIBOR Loan" means any Loan or portion thereof bearing interest at
the LIBOR Rate.
14
<PAGE>
"LIBOR Rate" means, with respect to any LIBOR Loan for any
Applicable Interest Period, an interest rate per annum equal to the sum of (a)
seventy-five (75) basis points (three-fourths of one percent) and (b) the
product of (i) the Euro-dollar Rate in effect for such Applicable Interest
Period and (ii) the Euro-dollar Reserves in effect on the first day of such
Applicable Interest Period.
As used herein the "Euro-dollar Rate" will be determined by reference to
that rate (rounded upward, if necessary, to the next one-hundredth of one
percent (.01%)) which appears on the Reuters Screen LIBO Page as of 11:00 a.m.
(London time) on the day that is two (2) Business Days prior to the first date
of the proposed Applicable Interest Period. If more than one such rate appears
on the Reuters Screen LIBO Page, the rate will be the arithmetic mean of such
rates. If there are no applicable quotes on such Reuters Screen LIBO Page, the
Euro-dollar Rate will be determined by reference to that rate (rounded upward,
if necessary, to the next one-hundredth of one percent (.01%)) appearing on the
display designated as "Page 3750" on the Telerate Service (or on such other page
on that service or such other service designated by the British Banker's
Association for the display of that Association's Interest Settlement Rates for
U.S. Dollar deposits) as of 11:00 a.m. (London time) on the day that is two (2)
Business Days prior to the first date of the proposed Applicable Interest
Period. If there are no applicable quotes on the Reuters Screen LIBO Page or
available through Telerate Service, then the LIBOR Rate shall be deemed
unavailable as provided in Section 2.5(f) hereof.
As used herein, the term "Euro-dollar Reserves" means a fraction
(expressed as a decimal), the numerator of which is the number one and the
denominator of which is the number one minus the aggregate of the maximum
reserve percentages (including, without limitation, any special, supplemental,
marginal or emergency reserves) expressed as a decimal established by the Board
of Governors of the Federal Reserve System or any other banking authority to
which the Agent is subject for Eurocurrency Liability (as defined in Regulation
D of such Board of Governors). It is agreed that for purposes hereof, each LIBOR
Loan shall be deemed to constitute a Eurocurrency Liability and to be subject to
the reserve requirements of Regulation D, without benefit of credit or
proration, exemptions or offsets which might otherwise be available to any
Lender from time to time under such Regulation D. Euro-dollar Reserves shall be
adjusted automatically on and as of the effective date of any change in any
reserve percentage and shall apply to Applicable Interest Periods commencing
after the effective date of such change.
15
<PAGE>
"U.S. Bank Prime Rate" means, on any day, U.S. Bank's publicly
announced prime rate of interest at its principal office (which prime rate is a
reference rate and not necessarily the lowest rate of interest charged by U.S.
Bank to its prime customers), changing as such prime rate changes.
(b) GENERAL PROVISIONS. The Borrower agrees to pay interest to
Lenders on the unpaid principal amount of each Loan from the date of such Loan
until such Loan shall be due and payable at a per annum rate equal to the
Applicable Interest Rate, and, if default shall occur in the payment when due of
any such Loan (or portion thereof), from the maturity of that Loan until it is
paid in full at a per annum rate equal to two percentage points (2%) above the
Prime Rate (changing as the Prime Rate changes) provided, however, that if
default shall occur in the payment when due of any Overnight Loan (or portion
thereof), Borrower agrees to pay to U.S. Bank interest on the unpaid principal
amount of such Loan from the maturity thereof until it is paid in full at a per
annum rate equal to two percentage points (2%) above the U.S. Bank Prime Rate
(changing as the U.S. Bank Prime Rate changes). Accrued but unpaid interest on
each LIBOR Loan shall be paid on the last day of each Applicable Interest
Period, on the applicable Maturity Date and, additionally, in the case of a
LIBOR Loan for which the Applicable Interest Period is six months, on the day
that is three months after the commencement of such Applicable Interest Period.
Accrued but unpaid interest on each Loan accruing interest at the Prime Rate,
the U.S. Bank Prime Rate or the Interim Rate shall be paid on the last Business
Day of each calendar month commencing May 31, 1996 and on the applicable
Maturity Date. Unpaid interest accruing on amounts in default shall be payable
on demand.
(c) SELECTION OF ALTERNATIVE RATES FOR LOANS.
(1) The Borrower may, subject to the requirements of this
Section 2.5(c), on at least three (3) Business Days' prior oral or written
notice elect to have interest accrue on any Loan (other than an Overnight Loan)
or any portion thereof at a LIBOR Rate for an Applicable Interest Period. Such
notice (herein, an "Interest Rate Notice") shall be deemed delivered when
communicated to the Agent (in the case of an oral notice) or when received by
the Agent (in the case of a written notice) except that an Interest Rate Notice
communicated to or received by the Agent after 10:00 a.m. (Seattle time) on any
Business Day, shall be deemed to have been delivered or received on the
immediately succeeding Business Day. Such Interest Rate Notice shall identify,
subject to the conditions of this Section 2.5(c), the Loan or portions thereof
and the Applicable Interest Period
16
<PAGE>
which the Borrower selects. Any such Interest Rate Notice shall be irrevocable
and shall constitute a representation and warranty by the Borrower that as of
the date of such Interest Rate Notice, the statements set forth in Article 6 are
true and correct and that no Event of Default or Default has occurred and is
continuing. If the Interest Rate Notice is given orally, the Borrower agrees to
promptly confirm such notice in a writing delivered to the Agent.
(2) The Borrower's right to select a LIBOR Rate to apply to a
Loan (other than an Overnight Loan) or any portion thereof shall be subject to
the following conditions: (i) the aggregate of all Loans or portions thereof to
accrue interest at a particular LIBOR Rate for the same Applicable Interest
Period shall be an integral multiple of One Hundred Thousand Dollars ($100,000)
and not less than One Million Dollars ($1,000,000); (ii) a LIBOR Rate may not be
selected for any Loan or portion thereof which is already accruing interest at a
LIBOR Rate unless such selection is only to become effective at the maturity of
the Applicable Interest Period then in effect; (iii) the LIBOR Rate shall not be
unavailable pursuant to Section 2.5(f); (iv) no Default or Event of Default
shall have occurred and be continuing; and (v) if the Borrower elects to have
some portion (but less than all) of the Loans accrue interest at the LIBOR Rate,
the Borrower shall select a portion of each Lender's outstanding Loans of the
same type (e.g. Revolving Loans, Operating Loans) to accrue interest at such
rate in proportion to their respective pro rata shares.
(3) In the absence of an effective request for the application
of a LIBOR Rate, the Loans (other than the Overnight Loans) or remaining
portions thereof shall accrue interest at the Prime Rate. Any Interest Rate
Notice which specifies a LIBOR Rate but fails to identify an Applicable Interest
Period shall be deemed to be a request for the LIBOR Rate for an Applicable
Interest Period of one (1) month. The Interest Rate Notice may be given with and
contained in any Notice of Borrowing provided that the requisite number of days
for prior notice for both the borrowing and the selection of a LIBOR Rate shall
be satisfied.
(4) If the Borrower delivers an Interest Rate Notice with any
Notice of Borrowing for a Loan and the Borrower thereafter declines to take such
Loan or a condition precedent to the making of such Loan is not satisfied or
waived, the Borrower shall indemnify the Agent and each Lender for all losses
and any costs which the Agent or any Lender may sustain as a consequence thereof
including, without limitation, the costs of re-employment of funds at rates
lower than the cost to the Lenders of such
17
<PAGE>
funds. A certificate from the Agent or any Lender setting forth the amount due
to it pursuant to this subparagraph (c) and the basis for, and the calculation
of, such amount shall be conclusive evidence of the amount due to it hereunder.
Payment of the amount owed shall be due within fifteen (15) days after the
Borrower's receipt of such certificate.
(d) SELECTION OF APPLICABLE INTEREST RATE FOR OVERNIGHT LOANS.
(1) The Borrower may, subject to the requirements of this
Section 2.5(d), on at least three (3) Business Days' prior oral or written
notice elect to have interest accrue on an Overnight Loan at the Interim Rate.
Such Interest Rate Notice shall be deemed delivered when communicated to U.S.
Bank (in the case of oral notice) or when received by U.S. Bank (in the case of
written notice) except that an Interest Rate Notice communicated to or received
by U.S. Bank after 10:00 a.m. (Portland time) on any Business Day, shall be
deemed to have been delivered or received on the immediately succeeding Business
Day. Such Interest Rate Notice shall identify, subject to the conditions of this
Section 2.5(d), the Loan which the Borrower selects. Any such Interest Rate
Notice shall be irrevocable and shall constitute a representation and warranty
by the Borrower that as of the date of such Interest Rate Notice, the statements
set forth in Article 6 are true and correct and that no Event of Default or
Default has occurred and is continuing. If the Interest Rate Notice is given
orally, the Borrower agrees to promptly confirm such notice in a writing
delivered to U.S. Bank.
(2) The Borrower's right to select an Interim Rate to apply to
an Overnight Loan or any portion thereof shall be subject to the following
conditions: (i) the aggregate of all Overnight Loans or portions thereof to
accrue interest at a particular Interim Rate shall be an integral multiple of
One Hundred Thousand Dollars ($100,000) and not less than One Million Dollars
($1,000,000); and (ii) no Default or Event of Default shall have occurred and be
continuing.
(3) In the absence of an effective request for the application
of an Interim Rate, the Overnight Loans or remaining portions thereof shall
accrue interest at the U.S. Bank Prime Rate.
(4) If the Borrower delivers an Interest Rate Notice with any
Notice of Borrowing for an Overnight Loan and the Borrower thereafter declines
to take such Loan or a condition precedent to the making of such Loan is not
satisfied or waived, the Borrower shall indemnify U.S. Bank for all losses and
any
18
<PAGE>
costs which U.S. Bank may sustain as a consequence thereof including, without
limitation, the costs of reemployment of funds at rates lower than the cost to
U.S. Bank of such funds. A certificate from U.S. Bank setting forth the amount
due to it pursuant to this subparagraph (d) and the basis for, and the
calculation of, such amount shall be conclusive evidence of the amount due to it
hereunder. Payment of the amount owed shall be due within fifteen (15) days
after the Borrower's receipt of such certificate.
(e) APPLICABLE DAYS FOR COMPUTATION OF INTEREST. Computations of
interest shall be made on the basis of a year of three hundred sixty (360) days
for the actual number of days (including the first day but excluding the last
day) occurring in the period for which such interest is payable.
(f) UNAVAILABLE FIXED RATE. If any Lender determines that for any
reason, fair and adequate means do not exist for establishing a particular LIBOR
Rate or that a LIBOR Rate will not adequately and fairly reflect the cost to it
of making or maintaining the principal amount of a particular LIBOR Loan or that
accruing interest on any LIBOR Loan has become unlawful or is contrary to any
internal policies (of general application), such Lender may give notice of that
fact to the Agent and the Borrower and such determination shall be conclusive
and binding absent manifest error. After such notice has been given and until
the Lender notifies the Agent and the Borrower that the circumstances giving
rise to such notice no longer exist, the interest rate or rates so identified in
such notice shall no longer be available. Any subsequent request by the Borrower
to have interest accrue at such a LIBOR Rate shall be deemed to be a request for
interest to accrue at the Prime Rate. If the circumstances giving rise to the
notice described herein no longer exist, the Lender who had previously given
notice of the unavailability of rate(s) shall notify the Agent and the Borrower
in writing of that fact, and the Borrower shall then once again become entitled
to request that such LIBOR Rates apply to the Loans in accordance with Section
2.5(c) hereof.
(g) COMPENSATION FOR INCREASED COSTS. In the event that after the
date hereof any change occurs in any applicable law, regulation, treaty or
directive or interpretation thereof by any authority charged with the
administration or interpretation thereof, or any condition is imposed by any
authority after the date hereof or any change occurs in any condition imposed by
any authority on or prior to the date hereof which:
(1) subjects any Lender to any Tax, (other than any Tax
measured by such Lender's net income) or changes the
19
<PAGE>
basis of taxation of any payments to any Lender on account of principal of or
interest on any LIBOR Loan, the Note (to the extent the Note evidences a LIBOR
Loan) or fees in respect of such Lender's obligation to make LIBOR Loans or
other amounts payable with respect to its LIBOR Loans; or
(2) imposes, modifies or determines applicable any reserve,
deposit or similar requirements against any assets held by, deposits with or for
the account of, or loans or commitments by, any office of any Lender in
connection with its LIBOR Loans to the extent the amount of which is in excess
of, or was not applicable at the time of computation of, the amounts provided
for in the definition of such LIBOR Rate; or
(3) affects the amount of capital required or expected to be
maintained by banks generally or corporations controlling banks and any Lender
determines that the amount by which it or any corporation controlling it is
required or expected to maintain or increase its capital is increased by, or
based upon, the existence of this Agreement or of any Lender's Loans or
Commitment hereunder;
(4) imposes upon any Lender any other condition with respect
to its LIBOR Loans or its obligation to make LIBOR Loans;
which, as a result thereof, (A) increases the cost to any Lender of making or
maintaining its Loans or any of its Commitments hereunder, or (B) reduces the
net amount of any payment received by any Lender in respect of its LIBOR Loans
(whether of principal, interest, commitment fees or otherwise), or (C) requires
any Lender to make any payment on or calculated by reference to the gross amount
of any sum received by it in respect of its LIBOR Loans, in each case by an
amount which such Lender in its sole judgment deems material, then and in any
such case the Borrower shall pay to such Lender on demand such amount or amounts
as will compensate such Lender for any increased cost, deduction or payment
actually incurred or made by such Lender. The demand for payment by any Lender
shall be delivered to the Agent and the Borrower and shall state the subjection
or change which occurred or the reserve or deposit requirements or other
conditions which have been imposed upon such Lender or the request, direction or
requirement with which it has complied, together with the date thereof, the
amount of such cost, reduction or payment and the manner in which such amount
has been calculated. The statement of any Lender as to the additional amounts
payable pursuant to this Section 2.5(g) shall be conclusive evidence of the
amounts due hereunder absent manifest error.
20
<PAGE>
The protection of this Section 2.5(g) shall be available to the Lenders
regardless of any possible contention of invalidity or inapplicability of the
relevant law, regulation, treaty, directive, condition or interpretation
thereof. In the event that the Borrower pays any Lender the amount necessary to
compensate such Lender for any charge, deduction or payment incurred or made by
such Lender as provided in this Section 2.5(g), and such charge, deduction or
payment or any part thereof is subsequently returned to such Lender as a result
of the final determination of the invalidity or inapplicability of the relevant
law, regulation, treaty, directive or condition, then such Lender shall remit to
the Borrower the amount paid by the Borrower which has actually been returned to
such Lender (together with any interest actually paid to such Lender on such
returned amount), less such Lender's costs and expenses incurred in connection
with such governmental regulation or any challenge made by such Lender with
respect to its validity or applicability.
SECTION 2.6 PREPAYMENTS. Loans accruing interest at the Prime Rate, the
U.S. Bank Prime Rate and the Interim Rate may be repaid at any time without
penalty or premium. If a LIBOR Loan is paid prior to the end of the Applicable
Interest Period, a fee computed in the manner set out in Schedule 1 shall be
assessed and paid at the time of such payment. Such fee shall apply in all
circumstances where a LIBOR Loan is paid prior to the end of the Applicable
Interest Period, regardless of whether such payment is voluntary, mandatory,
required by Section 2.4(b) or the result of the Agent's or any Lender's
collection efforts.
SECTION 2.7 NOTES.
(a) The Revolving Loans shall be evidenced by amended and
restated promissory notes in the form of Exhibits A- 1, A-2 and A-3 hereto, each
payable to the order of a Lender, dated the date of this Agreement, and in the
principal amount of such Lender's Revolving Commitment (the "Revolving Notes").
(b) The Operating Loans shall be evidenced by amended and
restated promissory notes in the form of Exhibits B- 1, B-2 and B-3 hereto, each
payable to the order of a Lender, dated the date of this Agreement, and in the
principal amount of such Lender's Operating Commitment (the "Operating Notes").
(c) The Long-term Acquisition Loans shall be evidenced by
amended and restated promissory notes in the form of Exhibits C-1 and C-2
hereto, payable to the order of Seafirst and U.S. Bank, respectively, dated the
date of this Agreement, and in
21
<PAGE>
the principal amount of each such Lender's Long-term Acquisition Commitment (the
"Long-term Acquisition Notes").
(d) The Short-term Acquisition Loans shall be evidenced by
amended and restated promissory notes in the form of Exhibits D-1 and D-2
hereto, payable to the order of Seafirst and U.S. Bank, respectively, dated the
date of this Agreement and in the principal amount of each such Lender's
Short-term Acquisition Commitment (the "Short-term Acquisition Notes").
(e) The Overnight Loans shall be evidenced by an amended and
restated promissory note in the form of Exhibit E hereto, payable to the order
of U.S. Bank, dated the date of this Agreement and in the principal amount of
U.S. Bank's Overnight Commitment (the "Overnight Note").
Each Lender shall record in its records, or at its option on a schedule
attached to its Note, the date and amount of each Loan, the interest rate
applicable to such Loan and, in the case of LIBOR Loans, the Applicable Interest
Period. The aggregate unpaid principal amount so recorded shall be presumptive
evidence of the principal amount owing and unpaid on the Note. The failure to so
record any such amount or error in so recording such amount shall not, however,
limit or otherwise affect the obligations of Borrower hereunder or under the
Notes to repay the principal amount of the Loans together with all interest
accruing thereon.
SECTION 2.8 MANNER OF PAYMENTS.
(a) All payments and prepayments of principal and interest on any
Loan (other than an Overnight Loan) and all other amounts payable hereunder
(other than commitment fees payable under Section 2.10(c) hereof) or under any
other Loan Document due from the Borrower to the Agent or any Lender shall be
made by paying the same in United States Dollars and in immediately available
funds to the Agent at its Commercial Loan Service Center, Seattle, Washington
not later than 12:00 noon (Seattle time) on the date on which such payment or
prepayment shall become due. Any payment made after 12:00 noon (Seattle time) on
any Business Day shall be deemed to have been received on the next Business Day.
All payments and prepayments of principal and interest on any Overnight Loan and
all payments of commitment fees payable under Section 2.10(c) hereof shall be
made by the Borrower by paying the same in United States Dollars and in
immediately available funds to U.S. Bank at its Commercial Loan Service Center,
Portland, Oregon not later than 3:00 p.m. (Portland time) on the date on which
such payment or prepayment shall become due. Any payment made after 3:00 p.m.
(Portland
22
<PAGE>
time) on any Business Day shall be deemed to have been received on the next
Business Day.
(b) The Borrower hereby authorizes the Agent and each Lender, if and
to the extent any payment is not promptly made pursuant to this Agreement or any
other Loan Document, to charge from time to time against any or all of the
accounts of the Borrower with any Lender or any affiliate of any Lender any
amount due hereunder or under such other Loan Document.
(c) Whenever any payment hereunder or under any other Loan Document
shall be stated to be due or whenever the last day of any interest period would
otherwise occur on a day other than a Business Day, such payment shall be made
and the last day of such interest period shall occur on the next succeeding
Business Day and such extension of time shall in such case be included in the
computation and payment of interest or commitment fees, as the case may be,
unless such extension would cause such payment to be made or the last day of
such interest period to occur in the next following calendar month, in which
case such payment shall be due and the last day of such interest period shall
occur on the next preceding Business Day.
SECTION 2.9 APPLICATION OF PROCEEDS.
(a) BEFORE DEFAULT. Any payment made by Borrower or received for
Borrower's account shall be applied as follows if after applying such payment no
Event of Default or Incipient Payment Default shall have occurred and be
continuing:
(i) Payments made by Borrower to, or received for Borrower's
account by, U.S. Bank shall be applied to amounts due in respect of Overnight
Loans in accordance with the following priorities:
(A) First, to expenses and indemnities due to U.S. Bank
hereunder or under any other Loan Document;
(B) Second, to fees due to U.S. Bank under Section
2.10(c) hereof;
(C) Third, to interest due on any Overnight Loans;
(D) Fourth, to repay principal then due in respect of
Overnight Loans;
(E) Fifth, to prepay principal of such of the Overnight
Loans as may be designated by Borrower if such
23
<PAGE>
prepayment is permitted in a notice provided contemporaneously with any such
payment and, in the absence of any such designation, as U.S. Bank may elect; and
(F) Sixth, if all amounts due to U.S. Bank in respect of
the Overnight Loans have been paid in full and such Loans have been fully
repaid, U.S. Bank shall immediately transfer amounts remaining, if any, to Agent
for application pursuant to Section 2.9(a)(ii).
(ii) Payments made by Borrower to, or received for Borrower's
account by Agent shall be applied to amounts due in respect of Revolving Loans,
Operating Loans, Short-term Acquisition Loans, Long-term Acquisition Loans,
Drafts, and Letters of Credit in accordance with the following priorities:
(A) First, to expenses and indemnities due to Agent and
the Lenders hereunder or under any other Loan Documents;
(B) Second, to fees due to Agent and Lenders under
Sections 2.10(a), (b) and (d) hereof;
(C) Third, to interest due on any Operating, Revolving,
Short-term Acquisition and Long-term Acquisition Loans;
(D) Fourth, to repay principal then due in respect of
the Operating, Revolving, Short-term Acquisition and Long-term Acquisition
Loans;
(E) Fifth, to pay all amounts due in respect of any
Draft;
(F) Sixth, to pay all amounts due in respect of any
Letter of Credit;
(G) Seventh, to prepay principal of such of the
Revolving, Operating, Short-term Acquisition and Long-term Acquisition Loans and
to fund a cash collateral account to be held by Agent to secure Borrower's
payment obligations not yet due in respect of Letters of Credit, all as may be
designated by Borrower, provided, however, that any designation by Borrower
under this Section 2.9(a)(ii)(G) shall be communicated in a notice provided
contemporaneously with any such payment and, provided further, that if Borrower
elects to prepay the Long-term Acquisition Loans or to fund a cash collateral
account to secure its payment obligations not yet due in respect of Letters of
Credit, Borrower must elect both to prepay the Long-term
24
<PAGE>
Acquisition Loans and to fund such cash collateral account in the same
proportion that the then outstanding principal balance of the Long-term
Acquisition Loans bears to the Letter of Credit Usage; in the absence of any
designation by Borrower under this Section 2.9(a)(ii)(G), such payments shall be
applied to prepay the Revolving, Operating, Short-term Acquisition and Long-term
Acquisition Loans and to fund a cash collateral account to be held by Agent to
secure Borrower's payment obligations not yet due in respect of Letters of
Credit proportionally to the then outstanding principal balances of the
Revolving, Operating, Short-term Acquisition and Long-term Acquisition Loans and
the Letter of Credit Usage;
(H) Eighth, to fund a cash collateral account to be held
by Agent to secure Borrower's payment obligations not yet due in respect of
Drafts in proportion to the then outstanding Acceptance Advances; and
(I) Ninth, if all amounts due to Lenders, any Seafirst
Affiliate and Agent in respect of the Revolving Loans, Operating Loans,
Short-term Acquisition Loans, Long-term Acquisition Loans, Drafts, and Letters
of Credit have been paid in full, all such Loans have been fully repaid, and an
amount equal to the sum of the then-outstanding Acceptance Advances and Letter
of Credit Usage is held by Agent as cash collateral to secure Borrower's
obligations in respect of Drafts and Letters of Credit, Agent shall immediately
transfer amounts remaining, if any, to U.S. Bank for application pursuant to
Section 2.9(a)(i).
(iii) Notwithstanding anything herein to the contrary, if after
applying such payment no Event of Default or Incipient Payment Default shall
have occurred and be continuing, the net proceeds received by the Borrower from
the sale of any trade receivables (other than sales made in the ordinary course
of Borrower's business) shall be paid to Agent upon receipt and applied first as
if Section 2.9(a)(ii) (other than subsection I thereof) applied and as if there
were no expenses, fees, indemnities, interest, or principal due in respect of
the Operating or Revolving Loans, no outstanding principal balances of the
Operating or Revolving Loans, and no outstanding Acceptance Advances. The
balance of such proceeds, if any, shall then be applied in accordance with
Section 2.9(a)(ii).
(b) PAYMENTS AFTER DEFAULT. Any payment made by Borrower or received
or obtained for Borrower's account hereunder (whether received by any Lender or
Agent) shall be applied as follows if after applying such payment an Event of
Default or Incipient Payment Default shall have occurred and be continuing:
25
<PAGE>
(i) As used in this Section 2.9(b) the Revolving Commitments,
the Operating Commitments, the Short-term Acquisition Commitments, the Long-term
Commitments, the Overnight Commitment and the Letter of Credit Commitment shall
each be referred to as a "Line of Credit" and together may sometimes be referred
to as the "Commitments." Each Line of Credit will be assigned a percentage (such
Line of Credit's "Default Payment Percentage") which shall be a fraction
(expressed as a decimal) for which the numerator is the sum of (A) all fees,
expenses, indemnities and interest accrued but unpaid (whether or not then due)
under or in respect of such Line of Credit as of the date on which the payment
which is to be applied was first received and (B) (1) in the case of all Lines
of Credit other than the Operating Line of Credit and the Letter of Credit Line
of Credit, the then outstanding principal balance for all Loans made under such
Line of Credit; (2) in the case of the Operating Line of Credit, the sum of the
then outstanding principal balance for all Operating Loans and the then
outstanding Acceptance Advances; or (3) in the case of the Letter of Credit Line
of Credit, the then outstanding Letter of Credit Usage, and the denominator is
the sum of (A) all fees, expenses, indemnities and interest accrued but unpaid
(whether or not then due) under the Loan Documents through such date and (B) the
sum of the then outstanding principal balance for all Loans, the then
outstanding Acceptance Advances and the then outstanding Letter of Credit Usage.
For purposes of this Section 2.9(b)(i), fees, expenses, and indemnities which
are incurred in respect of the Drafts shall be deemed to have been incurred in
respect of the Operating Line of Credit. For purposes of this Section 2.9(b),
fees, expenses and indemnities which are not incurred in respect of any one Line
of Credit or which are incurred in respect of more than one Line of Credit,
shall be deemed to have been incurred in respect of the Short-term Acquisition
Line of Credit.
(ii) A portion of each payment equal to the product of the
Line of Credit's Default Payment Percentage and the total amount of the payment
made shall be applied to the Indebtedness incurred in respect of such Line of
Credit in the following order of priority:
(A) First, to expenses and indemnities accrued
thereunder;
(B) Second, to fees due in respect thereof;
(C) Third, to interest due on any Loans made thereunder;
26
<PAGE>
(D) Fourth, to repay the principal then due in respect
of any Loans made thereunder;
(E) Fifth, to pay all amounts due in respect of any
Draft or Letter of Credit;
(F) Sixth, to prepay principal of such of the Loans as
are made thereunder and as are selected by the Majority Lenders for payment or,
in the case of Overnight Loans, as are selected by U.S. Bank for payment; and
(G) Seventh, to fund a cash collateral account to be
held by Agent to secure such of Borrower's payment obligations not yet due in
respect of Drafts and Letters of Credit accepted or issued thereunder.
For purposes of this Section 2.9(b)(ii), Drafts shall be deemed to have been
accepted under the Operating Line of Credit.
(iii) Lenders each agree to immediately advise Agent as to any
payment received from Borrower or for Borrower's account and, if after applying
such payment an Event of Default or Incipient Payment Default shall have
occurred and be continuing, to immediately disburse such payment (or portions
thereof) to the other Lenders in accordance with instructions received from
Agent, which instructions shall be drawn to result in an application of proceeds
as herein provided for.
(c) SETOFFS. If any Lender shall obtain any payment for Borrower's
account through the exercise of any right of counterclaim, setoff, banker's lien
or similar rights, in excess of that portion of the payment to which it would
otherwise be entitled to receive pursuant to the terms of Sections 2.9(a),
2.9(b), and 2.9(d) hereof, such Lender shall forthwith purchase from the other
Lenders such participations in the Loans (or where applicable, the Drafts and
Letters of Credit) made by them as shall be necessary to cause such purchasing
Lender to share the excess payment with them in the same proportion as such
payment would have been shared had it been received as a voluntary payment from
Borrower pursuant to the terms of Section 2.9(a) or (b) as the case may be. If
any of such excess payment is afterwards recovered from such purchasing Lender,
the purchase of the participations shall be rescinded and the purchase price
restored, without interest, to the extent of such recovery. Borrower authorizes
the purchase of such participations and agrees that any Lender so purchasing a
participation from another Lender may exercise all of its rights to payment
(including the right of setoff) with respect to such participation as fully as
27
<PAGE>
if such Lender were the direct creditor of Borrower in the amount of such
participation.
(d) GENERAL PROVISIONS. Where, pursuant to the Sections 2.9(a) and
2.9(b) hereof, amounts are to be applied to Borrower's obligations to pay fees,
interest, principal in respect of any particular Loan, or amounts outstanding in
respect of Drafts, the amount to be so applied shall be applied to Borrower's
obligations and disbursed to the Lenders pro rata in the same proportion that
their respective Commitments bear to the sum of all Commitments for the
applicable Line of Credit, and Agent will remit such amounts to the Lenders
promptly upon the receipt thereof. Amounts to be applied to Borrower's
obligations in respect of Letters of Credit, however, shall be disbursed to
Seafirst for application in accordance with Article 4 hereof. Whenever pursuant
to the terms of Section 2.9(a) or (b) hereof, the Agent or any Lender is
authorized to elect particular loans for prepayment, it shall, to the extent
consistent with the foregoing order of priority elect to cause Loans accruing
interest at the Prime Rate and the U.S. Bank Prime Rate to be prepaid prior to
the prepayment of any other Loans.
SECTION 2.10 FEES.
(a) AGENT'S FEE. Borrower promises to pay to Agent an agent's fee as
agreed in writing between Agent and Borrower, in advance, throughout the term of
this Agreement payable as of July 31, 1996 and upon each July 31 of each year
thereafter which fee shall be solely for Agent's account and shall not be shared
with the Lenders. All such fees shall be fully earned when due and
nonrefundable, in whole or in part, when paid.
(b) CERTAIN COMMITMENT FEES. The Borrower agrees to pay to the
Agent, for the account of the Lenders the following commitment fees:
(i) Revolving Line of Credit. From the date hereof until the
Long-term Maturity Date, a commitment fee shall be computed daily at the rate of
1/4 of 1% per annum on the unused portion of the Revolving Commitments;
(ii) Operating Line of Credit. From the date hereof until the
Short-term Maturity Date, a commitment fee shall be computed daily at the rate
of 1/4 of 1% per annum on an amount equal to the unused portion of the Operating
Commitments less the Acceptance Advances;
(iii) Short-term Acquisition Line of Credit. From the date
hereof until the Short-term Acquisition Line Maturity
28
<PAGE>
Date, a commitment fee shall be computed daily at the rate of 1/4 of 1% per
annum on the unused portion of the Short-term Acquisition Commitments; and
(iv) Long-term Acquisition Line of Credit. From the date
hereof until the Long-term Acquisition Line Maturity Date, a commitment fee
shall be computed daily at the rate of 1/4 of 1% per annum on the unused portion
of the Long-term Acquisition Commitments.
(c) U.S. BANK COMMITMENT FEES. From the date hereof until the
Short-term Maturity Date, a commitment fee shall be computed daily at the rate
of 1/4 of 1% per annum on the difference between the Overnight Commitment and
the then outstanding principal balance of the Overnight Loans and paid to U.S.
Bank.
(d) SEAFIRST COMMITMENT FEES. From the date hereof until the
Long-term Maturity Date, a commitment fee shall be computed daily at the rate of
1/4 of 1% per annum on the difference between the Letter of Credit Commitment
and the then outstanding Letter of Credit Usage and paid to Agent for the
account of Seafirst.
(e) PAYMENT OF COMMITMENT FEES. Commitment fees payable under
Section 2.10(b), (c) and (d) shall commence accruing as of the date hereof and
shall be payable in arrears at quarterly intervals commencing on July 1, 1996,
and payable on the first Business Day of each October, January, April and July
thereafter, except that accrued commitment fees shall be payable on any
applicable Maturity Date and on demand after the occurrence of an Event of
Default. Computations of commitment fees shall be made on the basis of a year of
three hundred sixty (360) days for the actual number of days (including the
first day but excluding the last day) occurring in the period for which such
fees are payable.
SECTION 2.11 REDUCTION IN COMMITMENTS.
(a) VOLUNTARY REDUCTION IN COMMITMENTS. Upon sixty (60) days'
advance written notice by Borrower to Agent and all of the Lenders, Borrower may
reduce the Lenders' Revolving Commitments, Operating Commitments, Short-term
Acquisition Commitments, Long-term Acquisition Commitments, Overnight Commitment
or Letter of Credit Commitment provided, that after giving effect to such
reduction, the outstanding principal balance of the corresponding Loans does not
exceed the Commitments being reduced and provided further that after giving
effect to such reduction, the sum of the outstanding principal
29
<PAGE>
balance of the Operating Loans and the Acceptance Advances does not exceed the
Operating Commitments and provided further that after giving effect to such
reduction, the then outstanding Letter of Credit Usage does not exceed the
Letter of Credit Commitment and provided further that neither the Long-term
Acquisition Commitment nor the Letter of Credit Commitment may be voluntarily
reduced under this Section 2.11(a) unless both such Commitments are fully and
simultaneously terminated. Any reduction in the Commitments for any line of
credit hereunder shall be in an amount not less than an amount equal to the
lesser of (a) One Million Dollars ($1,000,000), and (b) the applicable
Commitments then in effect, and shall permanently reduce each Lender's
corresponding Commitment, so that, after giving effect to such reduction, each
Lender's pro rata share of the Commitments for such line of credit will be
unchanged.
(b) AUTOMATIC REDUCTION IN COMMITMENTS. The Short-term and Long-term
Acquisition Commitments shall each be automatically reduced, on a
dollar-for-dollar basis, with each payment or prepayment of the outstanding
principal balance of the Short-term and Long-term Acquisition Loans,
respectively. Each reduction of the Long-term Acquisition Commitment under this
Section 2.11(b) shall also result in an automatic reduction of the Letter of
Credit Commitment on a nine dollar-to-one dollar basis. Any reduction in the
Commitments for any line of credit hereunder shall permanently reduce each
Lender's corresponding Commitment, so that, after giving effect to such
reduction, each Lender's pro rata share of the Commitments for such line of
credit will be unchanged.
ARTICLE 3
BANKERS' ACCEPTANCES
SECTION 3.1 BANKERS' ACCEPTANCES. The Borrower may present drafts drawn by
it on the Lenders to the Lenders for acceptance and discount in accordance with
the terms and conditions of this Article 3.
SECTION 3.2 MANNER OF PRESENTING DRAFTS.
(a) From time to time, the Borrower may request that the Lenders
accept and discount drafts which the Borrower proposes to present under this
Agreement. Such request will be made by delivering a written request or making
an oral request (an "Acceptance Request") to the Agent on a Business Day not
later than 9:00 a.m. (Seattle time) on the date on which the Borrower proposes
to present its draft for acceptance and discount, provided that, any Acceptance
Request given orally
30
<PAGE>
shall be confirmed by the Borrower in a writing delivered to the Agent not later
than 11:00 A.M. (Seattle time) on the date such oral Acceptance Request is made.
Each Acceptance Request shall be deemed to constitute a representation and
warranty by the Borrower that as of the date of such Request statements set
forth in Article 6 hereof are true and correct (and apply to the drafts and
underlying transactions described in such Request) and that no Default or Event
of Default has occurred and is continuing. Each Acceptance Request shall
identify the drafts for which a quote is requested by specifying the total face
amount for all such drafts, the proposed date of presentment and the maturity of
such drafts and the nature of the underlying transaction(s) relating to such
drafts. Each draft identified in an Acceptance Request shall (i) be scheduled
for presentment on a Business Day prior to the Short-term Maturity Date; (ii)
shall be in a face amount such that after giving effect to the acceptance of all
drafts identified in the Acceptance Request (and in any other Acceptance Request
given at the same time), the sum of the then-outstanding principal balance of
the Operating Loans and the then-outstanding Acceptance Advances will not exceed
the total of the Lenders' Operating Commitments; (iii) shall have a maturity of
not more than ninety-two (92) days and, in any event, shall mature not later
than the Short-term Maturity Date; and (iv) shall be an Eligible Draft. The
aggregate of all drafts identified in any one Acceptance Request shall be in a
face amount which is an integral multiple of One Million Dollars ($1,000,000)
and not less than Three Million Dollars ($3,000,000). Drafts identified in any
one Acceptance Request shall be related to the same transaction, shall have the
same maturity date and be shall be scheduled for presentment to each Lender in
the same proportion that such Lenders' Operating Commitment bears to the
aggregate Operating Commitment for all Lenders.
(b) On receipt of any Acceptance Request, the Agent shall promptly
notify each Lender by telephone, telex or facsimile of the scheduled date for
presentment of the drafts and the amount thereof. Upon fulfillment to each
Lender's satisfaction of the applicable conditions set forth in this Article 3
and Article 5 of this Agreement, each Lender shall before 12:00 noon (Seattle
time) on the date of the scheduled presentment accept each draft presented to it
which complies with the terms of Section 3.2(a) hereof, discount such draft in
the manner hereinafter provided for, and pay the net proceeds thereof in
immediately available funds to the Agent at its Commercial Loan Processing
Center, Seattle, Washington. Upon fulfillment to the Agent's satisfaction of the
applicable conditions set forth in this Article 3 and Article 5 of this
Agreement, and after receipt by the Agent of such funds, the Agent will promptly
make
31
<PAGE>
such funds available to the Borrower at Borrower's general checking account
maintained at the Main Branch of U. S. Bank in Portland, Oregon or at such other
place as may be designated by Borrower in a writing delivered to Agent.
(c) Unless the Agent shall have received notice from a Lender prior
to 12:00 noon (Seattle time) on the date of any scheduled presentment that such
Lender will not accept and discount the draft(s) presented to it or will not
make available to the Agent the discounted proceeds thereof, the Agent may
assume that such Lender has made such funds available to the Agent on the date
such draft is scheduled for presentment in accordance with Section 3.2(b) hereof
and the Agent may, in reliance upon such assumption, make available to the
Borrower on such date a corresponding amount. If and to the extent that such
Lender shall not have so made such net proceeds available to the Agent, such
Lender and the Borrower, jointly and severally, agree to pay to the Agent
forthwith on demand such corresponding amount, together with interest thereon
for each day from the date such amount is made available to the Borrower until
the date such amount is repaid to the Agent, at (a) in the case of the Borrower,
the Prime Rate and (b) in the case of such Lender, the Federal Funds Rate. Any
such repayment by the Borrower shall be without prejudice to any rights it may
have against the Lender that has failed to accept and discount the presented
draft or that has failed to make the net proceeds thereof available to Agent.
(d) Any draft accepted and discounted by a Lender pursuant to the
terms hereof is referred to herein as a "Draft." Each Lender may retain or
rediscount any such Draft, at its sole election, and any amounts received by
such Lender upon rediscounting shall be solely for the account of such Lender.
(e) In order to facilitate the acceptance and discounting of drafts,
the Borrower may from time to time deliver to each Lender a supply of drafts
executed by the Borrower as drawer and designating the Lender as drawee and
payee, but with the face amount and the maturity left blank. Each Lender agrees
to hold the drafts delivered to it pursuant to the terms hereof and in so doing
give such drafts the same physical care and provide the same safeguards as it
affords other similar property. On each occasion on which the Borrower elects to
present a draft to a Lender for acceptance and discount pursuant to subsection
3.2(a) above, such Lender shall fill in the date, the face amount and the
maturity of such draft in accordance with the corresponding Acceptance Request
and such draft shall be deemed presented, accepted and discounted on such date.
32
<PAGE>
SECTION 3.3 DISCOUNTING OF DRAFTS. On the date scheduled for presentment
and acceptance of any draft hereunder, and upon fulfillment to each Lender's
satisfaction of the applicable conditions set forth in this Article 3 and
Article 5 of this Agreement, such Lender shall discount the presented draft as
follows: The amount of such discount shall be the product of (a) the face amount
of the presented draft; (b) the sum of (i) seventy-five (75) basis points
(three-fourths of one percent) and the Applicable Acceptance Rate; and (c) a
fraction, the numerator of which is the number of days (including the first day
but excluding the last day) in the period commencing on the date such draft is
to be accepted and the date on which such draft matures, and the denominator of
which is three hundred sixty (360). As used herein, "Applicable Acceptance Rate"
shall mean the per annum rate equal to the highest of the rates quoted by each
Lender to the Agent on the date such draft is to be accepted as such Lender's
rate for discounting an eligible banker's acceptance. After soliciting such
quotes from the Lenders, Agent shall promptly advise each Lender of the
"Applicable Acceptance Rate." Each Lender shall retain for its own account the
amount of the discount determined in accordance with the terms hereof and shall
pay an amount equal to the face amount of the presented draft less such discount
to the Agent for disbursal to the Borrower in accordance with the terms hereof.
SECTION 3.4 INDEMNIFICATION; INCREASED COSTS. In the event that any Draft
for any reason whatsoever is deemed by any Lender not to be an Eligible Draft,
the Borrower agrees to indemnify such Lender on demand for any and all
additional costs, expenses, or damages incurred by such Lender, directly or
indirectly, arising out of such ineligibility, including, without limitation,
any costs of maintaining reserves in respect of such Draft, any premium rates
imposed by the Federal Deposit Insurance Corporation and any costs or expenses
arising in any manner from the lack of liquidity of such Draft. A certificate as
to such additional amounts submitted to the Borrower by any Lender shall be
final, conclusive, and binding, absent manifest error.
If at any time after the date hereof the introduction of or any change in
applicable law, rule, or regulation or in the interpretation or the
administration thereof by any Governmental Authority charged with the
interpretation or administration thereof, or compliance by any Lender with any
requests directed by any such Governmental Authority (whether or not having the
force of law) shall, with respect to any Draft subject such Lender to any Tax or
impose, modify, or deem applicable any reserve, special deposit, or similar
requirements against assets of, deposits with or for the account of, credit
extended by the Lender or shall impose on the Lender any other conditions
33
<PAGE>
affecting Drafts and the result of any of the foregoing is to increase the cost
to the Lender of accepting, discounting, rediscounting or holding Drafts or to
reduce the amount of any sum received or receivable by the Lender hereunder with
respect to the Drafts, then, upon demand by such Lender, the Borrower shall pay
to such Lender such additional amount or amounts as will compensate the Lender
for such increased cost or reduction. A certificate submitted to the Borrower by
the Lender setting forth the basis for the determination of such additional
amount or amounts necessary to compensate the Lender as aforesaid, shall be
conclusive evidence of the amounts due hereunder, absent manifest error.
The Borrower agrees to indemnify and hold the Agent and Lenders harmless
from and against any and all (a) Taxes and other fees payable in connection with
Drafts or the provisions of this Agreement relating to the acceptance and
discounting of drafts, and (b) any and all actions, claims, damages, losses,
liabilities, fines, penalties, costs, and expenses of every nature, including
reasonable attorney's fees, (i) suffered or incurred by the Agent or any Lender
by reason of any Lender's having accepted, discounted or rediscounted Drafts, or
(ii) suffered or incurred by the Agent or any Lender in connection with the
Agent's or Lender's exercising or preserving any of its rights hereunder, or
(iii) otherwise arising out of or relating to this Article 3 or any Drafts;
provided, however, said indemnification shall not apply to the extent that any
such action, claim, damage, loss, liability, fine, penalty, cost, or expense
arises out of or is based solely upon the willful misconduct or gross negligence
of the party seeking indemnity hereunder.
Any Lender requesting any indemnity or other payment from the Borrower
under this Section 3.4 shall simultaneously provide a copy of such request to
Agent.
SECTION 3.5 PAYMENT OF DRAFTS BY BORROWER. The Borrower agrees to pay to
the Agent, the face amount of each Draft in immediately available funds at the
Agent's Commercial Loan Processing Center not later than 10:30 a.m. (Seattle
time) on the date of such Draft's maturity; provided, that, pursuant to the
terms of Section 9.2, following the occurrence of an Event of Default, the face
amount of each Draft may become immediately due and payable. If prior to the
occurrence of an Event of Default, Borrower fails to pay any Drafts on their
maturity date, such failure shall be deemed to be a Notice of Borrowing for a
Operating Loans in the amount of all such Drafts. If the Borrower shall default
in its obligations to pay a Draft at maturity (or upon an earlier acceleration)
either directly or
34
<PAGE>
with the proceeds of Operating Loans deemed requested as of such maturity date,
interest shall accrue on the unpaid face amount thereof at a per annum rate
equal to two (2) percentage points above the Prime Rate changing as such Prime
Rate changes from the maturity date (or such earlier date as the face amount may
become due and payable) until payment in full by the Borrower. Interest on such
unpaid amounts shall be payable on demand.
SECTION 3.6 COMPLIANCE WITH GOVERNMENTAL REGULATIONS; INSURANCE. The
Borrower agrees to procure promptly any essential import, export or other
license and in all other material respects comply with all laws, statutes,
rules, regulations and orders of any Governmental Authority with respect to the
import, export, shipping, financing or warehousing of goods as part of any
transaction relating to any Draft. The Borrower furthermore agrees to pay all
Taxes, shipping, warehousing, cartage or other charges or expenses upon or with
regard to such goods involved in any such transaction and should the Agent, any
Lender or any of their respective correspondents pay for, or incur any liability
in connection with, any above-mentioned shipping or other license or any
insurance, tax, shipping, warehousing, cartage or other charges, the Borrower
will satisfy the same or reimburse the Agent, such Lender or their
correspondents, as the case may be, promptly therefor upon demand. From time to
time, upon request by the Agent or any Lender, the Borrower shall provide the
Agent with evidence reasonably satisfactory to the Agent of its compliance with
the terms of this Section 3.6.
SECTION 3.7 GUARANTY OF DOCUMENTS AND INSTRUMENTS. The Borrower agrees to
furnish the Agent and the Lenders with such documents and other information as
the Agent or any Lender may from time to time reasonably request relating to
drafts presented for acceptance and discount and the related underlying import,
export or distribution transactions. The Borrower guarantees the existence,
genuineness, validity, correctness and sufficiency of all documents and other
instruments (including but not limited to any documents of title and insurance
and governmental certificates) provided or exhibited to the Agent or any Lender
and represents that such documents and the property represented thereby are free
from all Liens. The Borrower agrees that it will take all necessary or proper
action to meet all legal and other conditions and will warrant and defend same
against the lawful claims and demands of all persons.
SECTION 3.8 REVOCATION BY OPERATION OF LAW. If this Agreement or any
provisions herein relating to the acceptance and discounting of drafts should be
terminated or revoked by operation of law, the Borrower will indemnify and hold
the Agent and each Lender harmless from any loss which may be suffered or
35
<PAGE>
incurred by the Agent or any Lender in accepting, discounting or rediscounting
any Draft or otherwise acting hereunder but nothing in this Section 3.8 shall
require any Lender to accept, discount or rediscount any draft contrary to any
applicable laws.
SECTION 3.9 RELATIONSHIP TO PRIOR CREDIT AGREEMENT. Any draft accepted by
a Lender under the Prior Credit Agreement which remains outstanding on the
effective date of this Agreement shall be deemed to be a "Draft" accepted and
discounted hereunder.
ARTICLE 4
LETTERS OF CREDIT
SECTION 4.1 LETTERS OF CREDIT. Upon Borrower's request, Seafirst shall
issue or shall cause a Seafirst Affiliate to issue one or more standby letters
of credit for the Borrower's account in accordance with the terms and conditions
of this Article 4.
SECTION 4.2 MANNER OF REQUESTING LETTERS OF CREDIT.
(a) From time to time, the Borrower may request that Seafirst issue
standby letters of credit for Borrower's account or extend or renew any existing
Letters of Credit. Such request will be made by delivering a written request for
the issuance, extension or renewal of such a letter of credit to Seafirst not
later than 12:00 noon (Seattle time) one Business Day prior to the date a new
letter of credit is to be issued or an existing Letter of Credit is scheduled to
be renewed. Each such request shall be deemed to constitute a representation and
warranty by the Borrower that as of the date of such request, statements set
forth in Article 6 hereof are true and correct and that no Default or Event of
Default has occurred and is continuing. Each such request shall specify the face
amount of the requested letter of credit, the proposed date of expiration for
such letter of credit, the name of the intended beneficiary thereof, and whether
such letter of credit is an extension or renewal of a Letter of Credit.
(b) Each letter of credit requested hereunder shall be in a face
amount such that after issuance of such letter of credit, the Letter of Credit
Usage does not exceed One Million Dollars ($1,000,000) or such lower amount as
is determined pursuant to Section 2.11 hereof (Seafirst's "Letter of Credit
Commitment"). In addition, each letter of credit requested hereunder (i) shall
be in a face amount which is an integral multiple of Fifty Thousand Dollars
($50,000) and not less than One Hundred Thousand Dollars ($100,000); and (ii)
and unless otherwise acceptable to Seafirst shall have an expiration date of
36
<PAGE>
not later than the earlier of the first anniversary of the date on which such
letter of credit is to be issued or the Long-term Acquisition Line Maturity
Date.
(c) At the request of Seafirst, the Borrower shall execute a letter
of credit application and reimbursement agreement ("Reimbursement Agreements"),
in the standard form then used by Seafirst or any Seafirst Affiliate, in respect
of each letter of credit requested hereunder.
(d) Subject to the satisfaction of the conditions precedent set
forth in Article 5 and the Borrower's compliance with the terms of this Section
4.2, Seafirst shall issue and deliver the requested letter of credit or shall
cause a Seafirst Affiliate to issue and deliver the requested letter of credit
to the Borrower or to the Borrower's designated beneficiary at such address as
the Borrower may specify. New Letters of Credit and extensions or renewals of
any existing Letters of Credit shall contain terms and conditions customarily
included in Seafirst's or any Seafirst Affiliate's letters of credit and shall
otherwise be in a form acceptable to Seafirst. For each such Letter of Credit,
Borrower shall pay to Seafirst a letter of credit fee on the date such Letter of
Credit is issued in an amount equal to three-fourths of one percent (.75%) of
the face amount thereof.
(e) In the event of any conflict between the terms of any
Reimbursement Agreement and the terms of this Agreement, the terms of this
Agreement shall control; provided, however, with respect to letters of credit
issued by any Seafirst Affiliate, the terms of the Reimbursement Agreement shall
control.
SECTION 4.3 INDEMNIFICATION; INCREASED COSTS. The Borrower agrees to
indemnify Seafirst and the Seafirst Affiliates on demand for any and all
additional costs, expenses, or damages incurred by Seafirst or any Seafirst
Affiliate, directly or indirectly, arising out of the issuance of any Letter of
Credit, including, without limitation, any costs of maintaining reserves in
respect thereof and any premium rates imposed by the Federal Deposit Insurance
Corporation in connection therewith. A certificate as to such additional amounts
submitted to the Borrower by Seafirst shall be final, conclusive, and binding,
absent manifest error.
If at any time after the date hereof the introduction of or any change in
applicable law, rule, or regulation or in the interpretation or the
administration thereof by any Government Authority charged with the
interpretation or administration thereof, or compliance by Seafirst or any
Seafirst Affiliate with any requests directed by any such Government Authority
(whether
37
<PAGE>
or not having the force of law) shall, with respect to any Letter of Credit
subject Seafirst or any Seafirst Affiliate to any Tax or impose, modify, or deem
applicable any reserve, special deposit, or similar requirements against assets
of, deposits with or for the account of, credit extended by Seafirst or any
Seafirst Affiliate or shall impose on Seafirst or any Seafirst Affiliate any
other conditions affecting the Letters of Credit and the result of any of the
foregoing is to increase the cost to Seafirst or any Seafirst Affiliate of
issuing a Letter of Credit or to reduce the amount of any sum received or
receivable by Seafirst or any Seafirst Affiliate hereunder with respect to the
Letters of Credit, then, upon demand by Seafirst, the Borrower shall pay to
Seafirst such additional amount or amounts as will compensate Seafirst or such
Seafirst Affiliate for such increased cost or reduction. A certificate submitted
to the Borrower by Seafirst setting forth the basis for the determination of
such additional amount or amounts shall be final, conclusive, and binding,
absent manifest error.
The Borrower agrees to indemnify and hold Seafirst and each Seafirst
Affiliate (an "Indemnitee") harmless from and against any and all (a) Taxes and
other fees payable in connection with Letters of Credit or the provisions of
this Agreement relating thereto, and (b) any and all actions, claims, damages,
losses, liabilities, fines, penalties, costs, and expenses of every nature,
including reasonable attorney's fees, suffered or incurred by the Indemnitee
otherwise arising out of or relating to this Article 4, or any Letter of Credit;
provided, however, said indemnification shall not apply to the extent that any
such action, claim, damage, loss, liability, fine, penalty, cost, or expense
arises solely out of or is based solely upon the Indemnitee's willful misconduct
or gross negligence.
SECTION 4.4 PAYMENT BY BORROWER. The Borrower agrees to fully
reimburse Seafirst and all Seafirst Affiliates for all amounts paid under any
Letter of Credit together with interest thereon at the Prime Rate from the date
such payment is made until the date Seafirst notifies the Borrower that such
payment was made. Such reimbursement shall be made in immediately available
funds at Seafirst's Commercial Loan Processing Center not later than 12:00 noon
(Seattle time) on the date the Borrower is first notified by Seafirst that
payment has been made under the Letter of Credit; provided, that, if Seafirst so
elects pursuant to the terms of Section 9.2, following the occurrence of an
Event of Default, the face amount of each Letter of Credit shall become
immediately due and payable. If the Borrower shall default in its obligations to
reimburse Seafirst or any Seafirst Affiliate or to make any other payment
required hereunder, interest shall accrue on the unpaid amount thereof at
38
<PAGE>
the Default Rate from the date such amount becomes due and payable until payment
in full by the Borrower. Interest on unpaid amounts shall be calculated on the
basis of a year of three hundred sixty (360) days and shall be payable on
demand.
SECTION 4.5 RELATIONSHIP TO PRIOR CREDIT AGREEMENT. All letters of
credit issued by Seafirst or any Seafirst Affiliate in response to requests for
such issuance received under the Prior Credit Agreement which are issued and
outstanding as of the effective date of this Agreement, shall be deemed to be
Letters of Credit issued hereunder.
ARTICLE 5
CONDITIONS
The obligation of any Lender to make any Loan or accept and discount any
draft presented by the Borrower, the obligation of the Agent to disburse the
Loan proceeds and the obligation of Seafirst to issue or to cause a Seafirst
Affiliate to issue a Letter of Credit are subject to the fulfillment of the
following conditions:
SECTION 5.1 NOTICE OF BORROWING, PROMISSORY NOTES, ETC. In respect of any
Loan (other than an Overnight Loan), the Agent shall have received the Notice of
Borrowing and Lenders shall have received their respective Notes each duly
executed and delivered by the Borrower; in respect of any Overnight Loan, U.S.
Bank shall have received the Notice of Borrowing and the Overnight Note each
duly executed and delivered by the Borrower; in respect of any request for
acceptance of a draft, the Agent shall have received an Acceptance Request duly
executed and delivered by the Borrower, and each Lender shall have received a
duly executed draft complying with the terms of Section 3.2; and in respect of
any request for the issuance of a letter of credit, Seafirst shall have received
a written request for the issuance thereof complying with the terms of Section
4.2.
SECTION 5.2 CORPORATE AUTHORITY. The Agent shall have received in form and
substance satisfactory to it certificates of good standing and a certified copy
of a resolution adopted by the Board of Directors of the Borrower authorizing
the execution, delivery and performance of this Agreement and the other Loan
Documents, together with evidence of the authority and specimen signatures of
the persons who have signed this Agreement and such other Loan Documents and
such other evidence of corporate authority as the Agent shall reasonably
require.
39
<PAGE>
SECTION 5.3 LEGAL OPINION. The Agent shall have received a written legal
opinion addressed to the Agent and the Lenders substantially in the form
attached hereto as Exhibit F, of counsel for the Borrower, who shall be selected
by the Borrower and approved by the Agent.
SECTION 5.4 DEFAULTS, ETC. No Default or Event of Default shall have
occurred and be continuing or will have occurred as a result of the making of
the requested Loan, the acceptance and discount of the presented draft or the
issuance of the requested letter of credit; and the representations and
warranties of the Borrower in Article 6 shall be true on and as of the date such
Loan is made, such draft is presented, or such Letter of Credit is issued with
the same force and effect as if made on and as of such date.
SECTION 5.5 PAYMENT OF ALL ACCRUED INTEREST AND FEES. On the date of this
Agreement, the Borrower shall have paid all interest and commitment fees which
accrued prior to the date hereof pursuant to the terms of the Prior Credit
Agreement.
SECTION 5.6 OTHER INFORMATION. Agent and Lenders shall have received such
other statements, opinions, certificates, documents and information with respect
to matters contemplated by this Agreement as Agent or any Lender may reasonably
request.
ARTICLE 6
REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants to the Agent and the Lenders as
follows:
SECTION 6.1 CORPORATE EXISTENCE AND POWER. The Borrower is a corporation
duly incorporated, validly existing and in good standing under the laws of the
State of Oregon. The Borrower is duly qualified to do business in each other
jurisdiction where the nature of its activities or the ownership of its
properties requires such qualification, except to the extent that failure to be
so qualified does not have a material adverse effect on its business, operations
or financial condition. The Borrower has full corporate power, authority and
legal right to carry on its business as presently conducted, to own and operate
its properties and assets, and to execute, deliver and perform this Agreement
and the other Loan Documents.
SECTION 6.2 CORPORATE AUTHORIZATION. The execution, delivery and
performance by the Borrower of this Agreement and the other Loan Documents, any
borrowing hereunder or thereunder,
40
<PAGE>
the presentment of any drafts for acceptance hereunder, and the request for
issuance of letters of credit hereunder have been duly authorized by all
necessary corporate action of the Borrower, do not require any shareholder
approval or the approval or consent of any trustee or the holders of any
Indebtedness of the Borrower, except such as have been obtained (certified
copies thereof having been delivered to the Agent), do not contravene any law,
regulation, rule or order binding on it or its Articles of Incorporation or
Bylaws and do not contravene the provisions of or constitute a default under any
indenture, mortgage, contract or other agreement or instrument to which the
Borrower is a party or by which the Borrower or any of its properties may be
bound or affected.
SECTION 6.3 GOVERNMENT APPROVALS, ETC. No Government Approval or filing or
registration with any Governmental Authority is required for the making and
performance by the Borrower of this Agreement or the other Loan Documents or in
connection with any of the transactions contemplated hereby or thereby, except
such as have been heretofore obtained and are in full force and effect
(certified copies thereof having been delivered to the Agent).
SECTION 6.4 BINDING OBLIGATIONS, ETC. This Agreement has been duly
executed and delivered by the Borrower and constitutes, and the other Loan
Documents when duly executed and delivered will constitute, the legal, valid and
binding obligations of the Borrower enforceable against the Borrower in
accordance with their respective terms except as such enforceability may be
limited by applicable bankruptcy, insolvency, or similar laws affecting the
enforcement of creditors' rights generally.
SECTION 6.5 LITIGATION. Except as reflected in the financial statements
referred to in Section 6.7 or otherwise disclosed to the Agent in writing prior
to the date of this Agreement, there are no actions, proceedings,
investigations, or claims against or affecting the Borrower now pending before
any court, arbitrator or Governmental Authority (nor to the knowledge of the
Borrower has any thereof been threatened nor does any basis exist therefor)
which if determined adversely to the Borrower would be likely to have a material
adverse effect on the business, operations or financial condition of the
Borrower, or which if determined adversely to the Borrower would be likely to
result in a judgment or order against the Borrower for more than One Million
Dollars ($1,000,000) in the aggregate.
SECTION 6.6 INDEBTEDNESS. Borrower is not now in default in the payment of
any Indebtedness in an aggregate amount exceeding One Million Dollars
($1,000,000).
41
<PAGE>
SECTION 6.7 FINANCIAL CONDITION. The balance sheet of the Borrower as at
September 29, 1995 and as at December 29, 1995, and the related statements of
income and retained earnings of the Borrower for the fiscal year and fiscal
quarter then ended, copies of which have been furnished to the Lenders, fairly
present the financial condition of the Borrower as at such date and the results
of operations of the Borrower for the period then ended, all in accordance with
generally accepted accounting principles consistently applied. The Borrower did
not have on such date any material contingent liabilities, unusual forward or
long-term commitments or unrealized or anticipated losses from any unfavorable
commitments, except as referred to or reflected or provided for in that balance
sheet and in the notes to those financial statements and since December 29, 1995
there has been no material adverse change in the business, operations or
financial condition of the Borrower.
SECTION 6.8 TITLE AND LIENS. The Borrower has good and marketable title to
each of the properties and assets reflected in its balance sheet referred to in
Section 6.7 (except such as have been since sold or otherwise disposed of in the
ordinary course of business). No assets or revenues of the Borrower are subject
to any Lien except as permitted by this Agreement. All properties of the
Borrower and its use thereof comply with applicable zoning and use restrictions.
SECTION 6.9 TAXES. The Borrower has filed all tax returns and reports
required of it, has paid all Taxes which are shown to be due and payable on such
returns and reports, and has provided adequate reserves for payment of any Tax
whose payment is being contested. The charges, accruals and reserves on the
books of the Borrower in respect of Taxes for all fiscal periods to date are
accurate in all material respects and there are no material questions or
disputes between the Borrower and any Governmental Authority with respect to any
Taxes except as disclosed in the balance sheet referred to in Section 6.7 or
otherwise disclosed to the Agent in writing prior to the date of this Agreement.
SECTION 6.10 LAWS, ORDERS, OTHER AGREEMENTS. The Borrower is not in
violation of or subject to any contingent liability on account of any laws,
statutes, rules, regulations or orders of any Governmental Authority, except for
violations which in the aggregate do not and will not have a material adverse
effect on the business, operations or financial condition of the Borrower. The
Borrower is not in material breach of or default under any agreement to which it
is a party or which is binding on it or any of its assets.
42
<PAGE>
SECTION 6.11 FEDERAL RESERVE REGULATIONS. The Borrower is not engaged
principally or as one of its important activities in the business of extending
credit for the purpose of purchasing or carrying any margin stock (within the
meaning of Federal Reserve Regulation U), and no part of the proceeds of any
Loan or the proceeds received from the acceptance of any Draft will be used to
purchase or carry any such margin stock or to extend credit to others for the
purpose of purchasing or carrying any such margin stock or for any other purpose
that violates the applicable provisions of any Federal Reserve Regulation. The
Borrower will furnish to any Lender on request a statement conforming with the
requirements of Regulation U.
SECTION 6.12 ERISA.
(a) The present value of all benefits vested under all Pension Plans
did not, as of the most recent valuation date of such Pension Plans, exceed the
value of the assets of the Pension Plans allocable to such vested benefits by an
amount which would represent a potential material liability of the Borrower or
affect materially the ability of the Borrower to perform this Agreement.
(b) To the best of Borrower's knowledge, no Plan or trust created
thereunder, or any trustee or administrator thereof, has engaged in a
"prohibited transaction" (as such term is defined in Section 406 or Section
2003(a) of ERISA) which could subject such Plan or any other Plan, any trust
created thereunder, or any trustee or administrator thereof, or any party
dealing with any Plan or any such trust to any material tax or penalty on
prohibited transactions imposed by Section 502 or Section 2003(a) of ERISA.
(c) No Pension Plan or trust has been terminated, and there have
been no "reportable events" as that term is defined in Section 4043 of ERISA
since the effective date of ERISA.
(d) No Pension Plan or trust created thereunder has incurred any
"accumulated funding deficiency" (as such term is defined in Section 302 of
ERISA) whether or not waived, since the effective date of ERISA.
(e) The required allocations and contributions to Pension Plans will
not violate Section 415 of the Code in any material respect.
SECTION 6.13 SECURITY OFFERINGS. Neither the Borrower nor anyone acting on
its behalf has directly or indirectly offered any Note or any Draft or similar
instrument or security for sale
43
<PAGE>
to any person or solicited from any person any offer to buy any such instrument
or security or approached or negotiated with any person concerning any such
instrument or security in any manner which would violate any applicable state or
federal securities laws, including without limitation, the Securities Act of
1933, as amended.
SECTION 6.14 WARRANTIES WITH RESPECT TO DRAFTS. Each draft which the
Borrower has identified in an Acceptance Request (a) will grow out of one or
more transactions involving the importation or exportation of goods; or (b) will
grow out of one or more transactions involving the domestic shipment of goods.
SECTION 6.15 FURTHER WARRANTIES WITH RESPECT TO DRAFTS. In respect of each
draft which the Borrower has identified in an Acceptance Request (a) completion
of each transaction related to such draft is anticipated to occur on or before
the maturity date of such draft, (b) the maturity of such draft will be
consistent with the period usually and reasonably necessary to finance
transactions of such kind, (c) any amounts received by the Borrower from the
Agent in connection with the acceptance and discount of such draft will be used
by the Borrower to finance the related import, export or distribution
transaction, (d) the proceeds of the related import, export or distribution
transaction will be used by the Borrower to liquidate its obligations to repay
the face amount of the draft on its maturity date, and (e) such draft is an
Eligible Draft.
SECTION 6.16 ACCEPTANCES. No acceptances other than an acceptance of a
Draft by a Lender hereunder have been or shall be outstanding with respect to
the goods covered by or relating to such Draft.
SECTION 6.17 PATENTS, LICENSES, FRANCHISES. The Borrower owns or possesses
all the patents, trademarks, service marks, trade names, copyrights, licenses,
franchises, permits and rights with respect to the foregoing necessary to own
and operate its properties and to carry on its business as presently conducted
and presently planned to be conducted without conflict with the rights of others
except as disclosed in writing to the Agent prior to the date hereof.
SECTION 6.18 INVESTMENT COMPANY; PUBLIC UTILITY HOLDING COMPANY. The
Borrower is not (a) an "investment company" or a company "controlled" by an
investment company within the meaning of the Investment Company Act of 1940, as
amended; or (b) a "holding company" or a "subsidiary company" of a "holding
company" or an "affiliate" of either a "holding company" or a
44
<PAGE>
"subsidiary company" within the meaning of the Public Utility Holding Company
Act of 1935, as amended.
SECTION 6.19 ENVIRONMENTAL AND SAFETY HEALTH MATTERS. To the best of
Borrower's knowledge, Borrower is in compliance with all environmental laws and
Occupational Safety and Health Laws where failure to comply could have a
material adverse effect on the ability of Borrower to perform its obligations
hereunder or on the business, operations, or financial condition of the
Borrower. Borrower has not received notice of any claims that it is not in
compliance in all material respects with the environmental laws where failure to
comply could have a material adverse effect on the ability of Borrower to
perform its obligations hereunder or on the business, operations, or financial
condition of the Borrower.
SECTION 6.20 REAFFIRMATION. As of the date of this Agreement all
representations and warranties made or deemed made pursuant to the Prior Credit
Agreement were true and correct on and as of each date when made or deemed made
thereunder and as of the moment immediately prior to this Agreement becoming
effective, no "Default" or "Incipient Default" (as such words were defined in
the Prior Credit Agreement) had occurred and was continuing.
SECTION 6.21 REPRESENTATIONS AS A WHOLE. This Agreement, the other Loan
Documents, the financial statements referred to in Section 6.7, and all other
instruments, documents, certificates and statements furnished to the Agent or
the Lenders by the Borrower, taken as a whole, do not contain any untrue
statement of a material fact or omit to state any material fact necessary in
order to make the statements contained herein or therein not misleading.
ARTICLE 7
AFFIRMATIVE COVENANTS
So long as any Lender shall have any Commitment hereunder or there shall
be any outstanding Acceptance Advances or Letter or Credit Usage and, until
payment in full of each Loan and performance of all other obligations of the
Borrower under this Agreement and the other Loan Documents, the Borrower agrees
to do all of the following unless the Agent shall otherwise consent in writing.
SECTION 7.1 PRESERVATION OF CORPORATE EXISTENCE, ETC. The Borrower will
preserve and maintain its corporate existence, rights, franchises and privileges
in the jurisdiction of its
45
<PAGE>
incorporation and will qualify and remain qualified as a foreign corporation in
each jurisdiction where such qualification is necessary or advisable in view of
its business and operations or the ownership of its properties.
SECTION 7.2 KEEPING OF BOOKS AND RECORDS; VISITATION RIGHTS. The Borrower
will keep adequate records and books of account in which complete entries will
be made, in accordance with generally accepted accounting principles
consistently applied, reflecting all financial transactions of the Borrower. At
any reasonable time and from time to time Borrower will permit the Agent or any
Lender to examine and make copies of and abstracts from Borrower's records and
books and to visit the properties of Borrower and to discuss the affairs,
finances, and accounts of Borrower with any of its officers or directors.
SECTION 7.3 MAINTENANCE OF PROPERTY, ETC. The Borrower will maintain and
preserve all of its properties in good working order and condition, ordinary
wear and tear excepted, and will from time to time make all needed repairs,
renewals or replacements so that the efficiency of such properties shall be
fully maintained and preserved.
SECTION 7.4 COMPLIANCE WITH LAWS, ETC. The Borrower will comply in all
material respects with all laws, regulations, rules, and orders of Governmental
Authorities applicable to the Borrower or to its operations or property, except
any thereof whose validity is being contested in good faith by appropriate
proceedings upon stay of execution of the enforcement thereof, with provision
having been made to the satisfaction of the Agent for the payment thereof in the
event the contest is determined adversely to the Borrower.
SECTION 7.5 OTHER OBLIGATIONS. The Borrower will pay and discharge before
the same shall become delinquent (after giving effect to all applicable grace
periods) all Indebtedness, Taxes and other obligations for which the Borrower is
liable or to which its income or property is subject and all claims for labor
and materials or supplies which, if unpaid, might become by law a Lien upon
assets of the Borrower, except any thereof whose validity or amount is being
contested in good faith by the Borrower in appropriate proceedings upon stay of
execution of the enforcement thereof, with provision having been made to the
satisfaction of the Agent for the payment thereof in the event the contest is
determined adversely to the Borrower; and except
46
<PAGE>
other Indebtedness, Taxes, and other obligations which, in the aggregate do not
exceed One Million Dollars ($1,000,000), provided, however, that the foregoing
exceptions to this covenant shall not extend to any obligation of Borrower
identified in Section 8.4 or 9.1(j).
SECTION 7.6 INSURANCE. The Borrower will keep in force upon all of its
properties and operations policies of insurance carried with responsible
companies in such amounts and covering all such risks as shall be customary in
the industry. The Borrower will on request furnish to the Agent or any Lender
certificates of insurance or duplicate policies evidencing such coverage.
SECTION 7.7 FINANCIAL INFORMATION. The Borrower will deliver to the Agent
and to each Lender:
(a) ANNUAL AUDITED FINANCIAL STATEMENTS. As soon as available and in
any event within one hundred twenty (120) days after the end of each fiscal year
of the Borrower, the consolidated balance sheet of the Borrower as of the end of
such fiscal year and the related consolidated statement of income and retained
earnings and statement of changes in financial position of the Borrower for such
year, accompanied by the audit report thereon by independent certified public
accountants selected by the Borrower and reasonably satisfactory to the Agent
(which report shall be prepared in accordance with generally accepted accounting
principles consistently applied and shall not be qualified by reason of
restricted or limited examination of any material portion of the Borrower's
records and shall contain no disclaimer of opinion or adverse opinion);
(b) QUARTERLY UNAUDITED FINANCIAL STATEMENTS. As soon as available
and in any event within sixty (60) days after the end of each of the Borrower's
first three fiscal quarters, the unaudited consolidated and consolidating
balance sheet and statement of income and retained earnings of the Borrower as
of the end of such fiscal quarter (including the fiscal year to the end of such
fiscal quarter) accompanied by an officer's certificate of the chief financial
officer of the Borrower that such unaudited consolidated and consolidating
balance sheet and statement of income and retained earnings have been prepared
in accordance with generally accepted accounting principles consistently applied
and present fairly the financial position and the results of operations of the
Borrower as of the end of and for such fiscal quarter and that since the fiscal
year-end report referred to in subsection (a) there has been no material adverse
change in the financial condition or operations of the Borrower as shown on the
balance sheet as of said date;
47
<PAGE>
(c) QUARTERLY COMPLIANCE CERTIFICATES. Within sixty (60) days after
the close of each of the Borrower's first three fiscal quarters and within
ninety (90) days after the close of the Borrower's fourth fiscal quarter, an
officer's certificate signed by the chief financial officer of the Borrower
stating that as of the close of such fiscal year no Default or Event of Default
had occurred and was continuing and setting forth calculations evidencing
compliance with Sections 7.11, 7.12, 7.13, 7.14, 7.15, 8.2 and 8.3 hereof;
(d) OTHER. All other statements, reports and other information as
the Agent or any Lender may reasonably request concerning the financial
condition, operations or business affairs of the Borrower.
SECTION 7.8 NOTIFICATION. Promptly after learning thereof, the Borrower
shall notify the Lenders and the Agent of (a) any action, proceeding,
investigation or claim against or affecting the Borrower instituted before any
court, arbitrator or Governmental Authority or, to the Borrower's knowledge
threatened to be instituted, which if determined adversely to the Borrower would
be likely to have a material adverse effect on the business, operations or
financial condition of the Borrower, or to result in a judgment or order against
the Borrower for more than One Million Dollars ($1,000,000); (b) any substantial
dispute between the Borrower and any Governmental Authority; (c) any labor
controversy which has resulted in or, to the Borrower's knowledge, threatens to
result in a strike which would materially affect the business operations of the
Borrower; (d) if the Borrower or any member of the Controlled Group gives or is
required to give notice to the PBGC of any "reportable event" (as defined in
subsections (b)(1),(2),(5) or (6) of Section 4043 of ERISA) with respect to any
Plan (or the Internal Revenue Service gives notice to the PBGC of any
"reportable event" as defined in subsection (c)(2) of Section 4043 of ERISA and
the Borrower obtains knowledge thereof), which might constitute grounds for a
termination of such Plan under Title IV of ERISA, or knows that the plan
administrator of any Plan has given or is required to give notice of any such
reportable event, a copy of the notice of such reportable event given or
required to be given to the PBGC; and (e) the occurrence of any Default or Event
of Default. In the case of the occurrence of a Default or Event of Default, the
Borrower will deliver to the Agent and the Lenders an officer's certificate
specifying the nature thereof, the period of existence thereof, and what action
the Borrower proposes to take with respect thereto.
SECTION 7.9 ADDITIONAL PAYMENTS; ADDITIONAL ACTS. From time to time, the
Borrower will (a) pay or reimburse the Agent
48
<PAGE>
and the Lenders on request for all Taxes (other than Taxes on or measured by
Agent's or a Lender's net income) imposed on any Loan Document and for all
reasonable expenses, including legal fees, actually incurred by the Agent or any
Lender in connection with the preparation or modification of the Loan Documents,
the making of the Loans, the acceptance and discounting of any Draft, the
issuance of any Letter of Credit and the enforcement by judicial proceedings
(including appeals) or otherwise of any of the rights of the Agent or the
Lenders under the Loan Documents; and (b) obtain and promptly furnish to the
Lenders and the Agent evidence of all such Government Approvals as may be
required to enable the Borrower to comply with its obligations under the Loan
Documents.
SECTION 7.10 USE OF PROCEEDS FROM ACCEPTANCES. The proceeds of all Drafts
shall be used by the Borrower solely for the purpose of financing the
transactions to which such Drafts relate, all as specified by the Borrower in
its corresponding Acceptance Request.
SECTION 7.11 FUNDED DEBT. Borrower shall maintain on a consolidated basis
a ratio of Funded Debt to Total Capitalization of not more than 0.8 to 1 and a
ratio of Funded Debt minus Subordinated Debt to Total Capitalization of not more
than .55 to 1. As used in this Agreement, "Funded Debt" means Indebtedness which
matures by its terms more than one year from the date it was originally
incurred, or is unconditionally renewable or extendable at the option of the
Borrower to a date more than one year from such date, or which arises under a
revolving credit or similar agreement obligating the lender or lenders to extend
credit over a period of more than one year from such date and includes the
current portion of such Indebtedness. As used in this Agreement, "Total
Capitalization" means the sum of Members' Equity and Funded Debt. As used in
this Agreement, "Members' Equity" means, as of any date of determination, the
consolidated balance sheet "members equity" of Borrower determined in accordance
with generally accepted accounting principles consistently applied. As used in
this Agreement, "Subordinated Debt" means Indebtedness of Borrower which by its
terms provides that no payments or distributions may be made thereon or in
respect thereto at any time when a default has occurred and is continuing under
a document providing for repayment of Indebtedness of Borrower for borrowed
money (other than such Subordinated Debt) or for the payment by Borrower of the
purchase price of tangible property.
SECTION 7.12 WORKING CAPITAL. Borrower shall maintain, on a consolidated
basis, a ratio of current assets to current liabilities of at least 1.3 to 1.0.
For purposes of this Section
49
<PAGE>
7.12 current assets shall not include (i) any deferred assets other than prepaid
items such as insurance, Taxes, or other similar items; (ii) any amounts due
from corporations which are subsidiaries of Borrower or of any other person
directly or indirectly controlling, controlled by, or under common control with
Borrower; and (iii) an amount equal to the appropriate deduction for
depreciation, depletions, obsolescence, amortization, valuation, contingency, or
other reserves determined in accordance with generally accepted accounting
principles. For purposes of this Section 7.12, current liabilities shall not
include Funded Debt maturing within one year from the date of determination
whether or not extendable at the option of Borrower.
SECTION 7.13 FIXED CHARGE COVERAGE. Borrower shall maintain on a
consolidated basis a ratio of Fixed Charge Coverage (for the four most recent
fiscal quarters) of at least 1.4 to 1.0. As used in this Agreement, "Fixed
Charge Coverage" means for any period the ratio derived by dividing (a) the sum
of net income for such period (before income taxes, patronage dividends, and
extraordinary items) plus Fixed Charges by (b) Fixed Charges. As used in this
Agreement, "Fixed Charges" means the sum of (a) interest expense on all of
Borrower's Indebtedness, (b) the amortization of any discount applied in
advancing Funded Debt to Borrower, and (c) gross rental expense net of
pass-through rental income from Borrower's members.
SECTION 7.14 MINIMUM CAPITAL AND SUBORDINATED DEBT. Borrower shall
maintain the sum of Subordinated Debt and Members' Equity at a total of not less
than Eighty-five Million Dollars ($85,000,000).
SECTION 7.15 MEMBER NOTES RECEIVABLE RATIO. Borrower shall maintain, on a
consolidated basis, a Member Portfolio of not more than one hundred fifty
percent (150%) of Consolidated Tangible Net Worth. As used in this Agreement,
"Member Portfolio" means the sum of (i) all Indebtedness of members owing to
Borrower or any of its subsidiaries which have not been sold; plus (ii) all
investments by Borrower or any of its subsidiaries in Borrower's members; plus
(iii) all Indebtedness of members of Borrower or any of its subsidiaries which
have been sold with recourse to Borrower or any of its subsidiaries at 50% or
greater. As used herein, "Consolidated Tangible Net Worth" means, with respect
to any Person, at any date, Consolidated Net Worth less (i) all assets which
should be classified as intangible assets (such as good will, patents,
trademarks, copyrights, franchises and covenants not to compete) and (ii) to the
extent not already deducted from total assets, all reserves including those for
deferred income taxes, depreciation,
50
<PAGE>
obsolescence or amortization of properties and (iii) all capital stock or other
investments in any direct or indirect subsidiary other than in (x) any offshore
investment subsidiary, or (y) a subsidiary having all or substantially all of
its operations in the United States; provided, however, that, if and to the
extent Buyer consents thereto, for the purpose of determining the recourse
classification of Loans, an Obligor Group's Consolidated Tangible Net Worth
shall be determined without deducting from its Consolidated Net Worth that
portion of the value assigned to covenants not to compete relating to the
purchase of any facilities located in the States of Washington and California,
as shown on such Obligor Group Financial Statements.
SECTION 7.16 RELOCATION OF OFFICES. Borrower shall give Agent at least
sixty (60) days' prior written notice of any relocation of its chief executive
offices or the offices where Borrower's books and records are kept.
SECTION 7.17 USE OF PROCEEDS. Borrower shall use the proceeds of Loans
only for working capital needs provided, however, that the proceeds of
Short-term and Long-term Acquisition Loans may be used as bridge financing for
the acquisition of the wholesale related assets of Bay Area Foods, Inc.
SECTION 7.18 AMENDMENTS TO PRIVATE PLACEMENT; PREPAYMENTS OF PRIVATE
PLACEMENT. Borrower shall promptly provide to Lenders a copy of each Private
Placement Agreement now or hereafter executed by Borrower and, as to any Private
Placement Agreement not executed as of the date hereof, Borrower shall notify
the Lenders at least five (5) days in advance of the execution thereof. Borrower
will not agree to or permit to be made any amendments to nor request any waivers
of the terms of any Private Placement Agreement if such an amendment or waiver
pertains to an increase in the commitment amounts thereunder or to the terms of
repayment thereof or to the terms of any promissory notes issued thereunder.
Borrower shall deliver to Agent and the Lenders, prompt written notice and a
copy of any anticipated amendment to or requested waiver of any financial
covenants contained in or reduction in the commitment amounts under any Private
Placement Agreement, and shall deliver to Agent and Lenders a substantially
contemporaneous confirming notice and a copy of any amendment or waiver actually
made or granted. Borrower shall not make any prepayments in respect of any
Private Placement Agreement or any of the promissory notes issued pursuant
thereto.
SECTION 7.19 INSURANCE COMPANY. Borrower shall cause Grocers Insurance
Company or any successor thereto ("GIC") to (a) comply in all material respects
with all laws, regulations, rules
51
<PAGE>
and orders of any Government Authority applicable to GIC, except any thereof
whose validity is being contested in good faith by appropriate proceedings upon
stay of execution of the enforcement thereof, and (b) keep in force upon all of
its operations policies of reinsurance carried with responsible companies in
such amounts and covering all such risks as shall be customary in the industry.
GIC is a wholly-owned Oregon subsidiary corporation of Grocers Insurance Group,
which in turn is a wholly-owned subsidiary of Borrower.
ARTICLE 8
NEGATIVE COVENANTS
So long as any Lender shall have any Commitment hereunder or there shall
be any outstanding Acceptance Advances or Letter of Credit Usage and until
payment in full of each Loan and performance of all other obligations of the
Borrower under this Agreement and the other Loan Documents, the Borrower agrees
that it will not do any of the following unless the Agent shall otherwise
consent in writing.
SECTION 8.1 LIQUIDATION, MERGER, SALE OF ASSETS. The Borrower shall not
liquidate, dissolve or enter into any merger, consolidation, joint venture,
partnership or other combination or sell, lease, or dispose of all or any
substantial portion of its business or assets (excepting sales of goods in the
ordinary course of business and excepting sales of notes pursuant to note
purchase agreements) as constitutes a substantial portion thereof; provided,
however, so long as no Default or Event of Default shall have occurred and be
continuing or will occur as a result of such merger or consolidation, Borrower
may merge or consolidate with any person provided that the surviving person be a
corporation duly incorporated and validly existing under the laws of any state
of the United States and provided further that such surviving corporation
expressly assumes Borrower's obligations under this Agreement in a writing
delivered to the Agent and the Lenders. Without limiting the foregoing,
Borrower, and its consolidated subsidiaries, shall not in any fiscal year sell
any portion of their business or assets having a value in excess of ten percent
(10%) of their Consolidated Tangible Net Worth unless the proceeds of such sale
or sales are reinvested within twelve (12) months in assets to be owned and
utilized by Borrower in the ordinary course of its business; provided, however,
in determining compliance with the foregoing requirement, sales of the following
assets will be disregarded: (a) individual assets having a book value of less
than Two Hundred Fifty Thousand Dollars ($250,000), not to exceed in the
aggregate One Million Five Hundred Thousand Dollars ($1,500,000)
52
<PAGE>
in any fiscal year, and (b) Indebtedness of Borrower's members owing to Borrower
and incurred in connection with equipment, store or inventory financing provided
by Borrower to such members.
SECTION 8.2 CONTINGENT INDEBTEDNESS. Borrower shall not, at any time, have
outstanding Contingent Indebtedness in an amount exceeding the sum of (a) Six
Million Dollars ($6,000,000) and (b) fifty percent (50%) of Borrower's
consolidated cumulative net income between September 29, 1990 and the date of
determination. "Contingent Indebtedness" shall, as of any date of determination,
mean the sum of (i) guaranties of the obligations of others (including the
guaranty of lease obligations of Borrower's members to the extent such lease
obligations are insured) and (ii) the product of (x) the Portfolio Loss Factor
and (y) the total principal amount of Indebtedness owed by Borrower's members to
Borrower in respect of store and equipment financing which has been sold by
Borrower on a recourse basis. The term "Portfolio Loss Factor" shall mean the
greater of (i) five (5) times the average for the three (3) most recently ended
fiscal years of Borrower of the actual losses incurred during such fiscal year
on the portfolio of Indebtedness owed to Borrower (or to a buyer of such
Indebtedness from Borrower) by members for equipment and store financing divided
by the average principal amount of such portfolio during such fiscal year; or
(ii) three percent (3%).
SECTION 8.3 LIENS. Borrower shall not create, assume or suffer to exist
any Lien upon its assets except (i) liens on Borrower's Milwaukee, Oregon and
Medford, Oregon properties securing mortgage indebtedness relating to such
properties and any extensions, refinancing, or renewals thereof in an amount not
exceeding the amount of such mortgage indebtedness outstanding immediately prior
to such extension, refinancing or renewal; (ii) capital lease obligations; and
(iii) Liens to secure indebtedness for the deferred purchase price of property
acquired after the date hereof, but only if such Liens are limited to such
property and its proceeds. Without limiting the generality of the foregoing,
Borrower shall not pledge, grant a security interest in, or otherwise permit or
suffer a lien to encumber all or any portion of its accounts receivables,
chattel paper, documents, instruments, general intangibles or inventory.
Notwithstanding the foregoing to contrary, the total amount of Indebtedness
secured by (a) all Liens (excluding the Liens described in clause (iii) above;
and (b) all liens described in subclauses (a), (b) and (c) of the definition of
"Liens" set forth in Section 1.1 hereof, shall not at any time exceed fifteen
percent (15%) of Borrower's Consolidated Tangible Net Worth.
53
<PAGE>
SECTION 8.4 ERISA COMPLIANCE. Neither the Borrower nor any member of the
Controlled Group nor any Plan will:
(a) engage in any "prohibited transaction" (as such term is defined
in Section 406 or Section 2003(a) of ERISA) which could result in a material
liability to the Borrower;
(b) incur any "accumulated funding deficiency" (as such term is
defined in Section 302 of ERISA) whether or not waived which could result in a
material liability to the Borrower;
(c) terminate any Pension Plan in a manner which could result in the
imposition of a Lien on any property of the Borrower or any member of the
Controlled Group pursuant to Section 4068 of ERISA; or
(d) violate state or federal securities laws applicable to any Plan
in any material respect.
SECTION 8.5 NO NAME CHANGE, ETC. Borrower shall not change its name,
identity, or corporate structure in any manner.
SECTION 8.6 TRANSACTIONS WITH OR BY AFFILIATES. Borrower will not directly
or indirectly enter into or permit to exist any transaction (including, without
limitation, the purchase, sale, lease, or exchange of any property) with any
Borrower Affiliate on terms that are less favorable to Borrower than those which
might be obtained at the time from persons who are not Borrower Affiliates.
Borrower will not permit the sale or other disposition of, or suffer any
Borrower Affiliate which Borrower directly or indirectly controls to sell or
otherwise dispose of substantially all the assets of such Borrower Affiliate,
except in the ordinary course of such Affiliate's business; and Borrower will
not permit or suffer the sale or issuance by any Borrower Affiliate of any of
its stock of any class, except stock issued to Borrower. A "Borrower Affiliate"
is any person (or group of related persons) that (a) directly or indirectly
controls or is controlled by or under common control with Borrower, or (b) owns
more than five percent (5%) of Borrower's voting stock, or (c) is a director or
officer of Borrower.
ARTICLE 9
EVENTS OF DEFAULT
SECTION 9.1 EVENTS OF DEFAULT. The occurrence of any of the following
events shall constitute an "Event of Default" hereunder.
54
<PAGE>
(a) PAYMENT DEFAULT. The Borrower shall fail to pay for a period of
five (5) Business Days after such payment becomes due any amount of principal of
or interest on any Loan or any other amount payable by it hereunder or under any
other Loan Document; or
(b) BREACH OF WARRANTY. Any representation or warranty made or
deemed made by the Borrower under or in connection with this Agreement or any
other Loan Document shall prove to have been incorrect in any material respect
when made; or
(c) BREACH OF CERTAIN COVENANTS. The Borrower shall fail to comply
with any of the provisions of Sections 7.8(e), 7.11, 7.12, 7.13, 7.14, 7.15,
8.1, 8.2, 8.3 or 8.4 of this Agreement; or
(d) BREACH OF OTHER COVENANT. The Borrower shall fail to perform or
observe any other covenant, obligation or term of any Loan Document and such
failure continues for thirty (30) days after written notice thereof shall have
been given to Borrower by the Agent or, if the failure cannot be remedied either
by the payment of money or with diligent efforts during such 30-day period then,
so long as Borrower has commenced and diligently proceeded to remedy such
failure during such 30-day period, for such longer period as is necessary to
remedy the failure, provided that Borrower continues to use diligent efforts to
remedy the failure within such longer period; or
(e) CROSS-DEFAULT. (i) The Borrower shall fail (A) to pay when due
(whether by scheduled maturity, required prepayment, acceleration, demand or
otherwise) any Indebtedness which in the aggregate exceeds One Million Dollars
($1,000,000) (except any Loans or Drafts) or any interest or premium thereon and
such failure shall continue after the applicable grace period, if any, specified
in the agreement or instrument relating to such Indebtedness, or (B) to perform
any term or covenant on its part to be performed under any agreement or
instrument relating to any such Indebtedness and required to be performed and
such failure shall continue after the applicable grace period, if any, specified
in such agreement or instrument, if the effect of such failure to perform is to
accelerate or to permit the acceleration of the maturity of such Indebtedness;
or (ii) any Indebtedness which in the aggregate exceeds One Million Dollars
($1,000,000) (except any Loans or Drafts) shall be declared to be due and
payable or required to be prepaid (other than by a regularly scheduled required
prepayment) prior to the stated maturity thereof; or (iii) a "Termination Event"
as such term is defined in any note purchase agreement or any other event which
would
55
<PAGE>
entitle any party committed to purchase notes under a note purchase agreement to
terminate such commitment prior to its scheduled expiration shall have occurred;
or
(f) VOLUNTARY BANKRUPTCY, ETC. The Borrower shall: (i) file a
petition seeking relief for itself under Title 11 of the United States Code, as
now constituted or hereafter amended, or file an answer consenting to, admitting
the material allegations of or otherwise not controverting, or fail timely to
controvert a petition filed against it seeking relief under Title 11 of the
United State Code, as now constituted or hereafter amended; or (ii) file such
petition or answer with respect to relief under the provisions of any other now
existing or future applicable bankruptcy, insolvency, or other similar law of
the United States of America or any State thereof or of any other country or
jurisdiction providing for the reorganization, winding-up or liquidation of
corporations or an arrangement, composition, extension or adjustment with
creditors; or
(g) INVOLUNTARY BANKRUPTCY, ETC. An order for relief shall be
entered against the Borrower under Title 11 of the United States Code, as now
constituted or hereafter amended, which order is not stayed; or upon the entry
of an order, judgment or decree by operation of law or by a court having
jurisdiction in the premises which is not stayed adjudging it a bankrupt or
insolvent under, or ordering relief against it under, or approving as properly
filed a petition seeking relief against it under the provisions of any other now
existing or future applicable bankruptcy, insolvency or other similar law of the
United States of America or any State thereof or of any other country or
jurisdiction providing for the reorganization, winding-up or liquidation of
corporations or any arrangement, composition, extension or adjustment with
creditors; or appointing a receiver, liquidator, assignee, sequestrator, trustee
or custodian of the Borrower or of any substantial part of its property, or
ordering the reorganization, winding-up or liquidation of its affairs; or upon
the expiration of sixty (60) days after the filing of any involuntary petition
against it seeking any of the relief specified in Section 9.1(f) or this Section
9.1(g) without the petition being dismissed prior to that time; or
(h) INSOLVENCY, ETC. The Borrower shall (i) make a general
assignment for the benefit of its creditors or (ii) consent to the appointment
of or taking possession by a receiver, liquidator, assignee, trustee, or
custodian of all or a substantial part of the property of the Borrower, or (iii)
admit its insolvency or inability to pay its debts generally as they become due,
or (iv) fail generally to pay its debts as they
56
<PAGE>
become due, or (v) take any action (or suffer any action to be taken by its
directors or shareholders) looking to the dissolution or liquidation of the
Borrower; or
(i) JUDGMENT. A final judgment or order for the payment of money in
excess of One Million Dollars ($1,000,000), shall be rendered against the
Borrower and such judgment or order (a) is not covered by insurance and (b)
shall continue unsatisfied and in effect for a period of thirty (30) consecutive
days following entry, or all or a substantial part of the assets of Borrower are
attached, seized, subject to writ or warrant or are levied on or come into the
possession or control of a receiver, trustee, custodian or assignee for the
benefit of creditors; or
(j) ERISA. The Borrower or any member of the Controlled Group shall
fail to pay when due an amount or amounts aggregating in excess of One Million
Dollars ($1,000,000) which it shall have become liable to pay to the PBGC or to
a Plan under Section 515 of ERISA or Title IV of ERISA; or notice of intent to
terminate a Plan or Plans (other than a multi-employer plan, as defined in
Section 4001(3) of ERISA, having aggregate Unfunded Vested Liabilities in excess
of Five Million Dollars ($5,000,000)) shall be filed under Title IV of ERISA by
the Borrower, any member of the Controlled Group, any plan administrator or any
combination of the foregoing; or the PBGC shall institute proceedings under
Title IV of ERISA to terminate any Plan or Plans which could result in any
liability of the Borrower in excess of One Million Dollars ($1,000,000); or
(k) GOVERNMENT ACTION. Borrower is enjoined or restrained or in any
way prevented by order of a court or other Governmental Authority from
conducting all or a substantial part of its business affairs or operations; or
(l) CHANGE IN CONTROL. Any person, or group of persons directly or
indirectly under common control, shall obtain in excess of fifty percent (50%)
of the outstanding voting stock of Borrower; or
(m) VALIDITY CONTEST. The validity or enforceability of this
Agreement, the Notes, or any other Loan Document is contested by Borrower or
Borrower denies liability in respect of its obligations hereunder or thereunder;
or
(n) INSURANCE CLAIM. A claim or claims that would normally be
covered by insurance according to industry practices is made against GIC for the
payment of more than One Million Dollars ($1,000,000) individually or in the
aggregate and is not
57
<PAGE>
covered by reinsurance; or all or a material part of GIC's reinsurance policies
shall be terminated for any reason.
SECTION 9.2 CONSEQUENCES OF DEFAULT. If an Event of Default described in
Section 9.1(f) or 9.1(g) shall occur and be continuing, then in any such case,
the Commitments shall be immediately terminated and, if any Loans shall have
been made, the principal of and interest on the Loans shall become immediately
due and payable, if any Drafts have been accepted, all outstanding Acceptance
Advances shall become immediately due and payable, and if any Letter of Credit
has been issued, an amount equal to the Letter of Credit Usage shall become
immediately due and payable all without notice or demand of any kind. If any
other Event of Default shall occur and be continuing, then in any such case and
at any time thereafter so long as any such Event of Default shall be continuing,
the Agent may, and shall upon the request of Majority Lenders, immediately
terminate the Commitments, and if Loans shall have been made, the Agent may, and
shall upon the request of Majority Lenders, declare the principal of and the
interest on the Loans and all other sums payable by the Borrower hereunder or
under any other Loan Document to be immediately due and payable, if any Drafts
have been accepted, the Agent may, and shall upon the request of Majority
Lenders, declare the outstanding Acceptance Advances immediately due and
payable, and if any Letter of Credit has been issued the Agent may, and on the
request of Seafirst, shall declare an amount equal to the Letter of Credit Usage
immediately due and payable whereupon the same shall become immediately due and
payable all without protest, presentment, notice, or demand, all of which the
Borrower expressly waives. Amounts paid or received hereunder in respect of
issued and outstanding Letters of Credit which exceed amounts paid by Seafirst
or a Seafirst Affiliate under such Letters of Credit shall be held (and applied)
as cash collateral to secure the performance of all obligations of the Borrower
owing to Seafirst and any Seafirst Affiliate in respect of Letter of Credits.
Agent shall use its best efforts to provide same day notice of acceleration to
Borrower, provided, however, that failure to give such notice shall not affect
the rights of the Agent and Lenders hereunder. The Agent and Lenders may
exercise or pursue any remedy or cause of action permitted by this Agreement,
the Notes, any other Loan Document or applicable law. The rights and remedies
provided by law, this Agreement, the Notes, and the other Loan Documents are
cumulative and not exclusive, and the exercise or partial exercise of any right,
power or remedy hereunder or thereunder shall not preclude any other or further
exercise thereof or the exercise of any other right, power or remedy.
ARTICLE 10
58
<PAGE>
THE AGENT
SECTION 10.1 AUTHORIZATION AND ACTION. Each Lender hereby appoints and
authorizes the Agent to take such action as agent on its behalf and to exercise
such powers under this Agreement as are delegated to the Agent by the terms
hereof, together with such powers as are reasonably incidental thereto. The
Agent shall have no duties or responsibilities except those expressly set forth
in this Agreement. The duties of the Agent shall be mechanical and
administrative in nature; the Agent shall not have by reason of this Agreement a
fiduciary relationship in respect of any Lender; and nothing in this Agreement
or the other Loan Documents, expressed or implied, is intended to or shall be so
construed as to impose upon the Agent any obligations in respect of this
Agreement or the other Loan Documents except as expressly set forth herein. As
to any matters not expressly provided for by this Agreement, including
enforcement or collection of the Loans and Drafts, the Agent shall not be
required to exercise any discretion or take any action, but shall be required to
act or to refrain from acting (and shall be fully protected in so acting or
refraining) upon the instructions of the Majority Lenders, and such instructions
shall be binding upon all the Lenders, provided that the Agent shall not be
required to take any action which exposes the Agent to personal liability or
which is contrary to the Loan Documents or applicable law and provided, further,
that without the consent of all Lenders, the Agent shall not change or modify
any Lender's Commitment, the definition of "Majority Lenders", the timing or
rates of interest payments, the timing or amounts of principal payments due in
respect of Loans and Drafts, and provided, further, that the terms of Article 4
shall not be amended without the consent of Seafirst, and provided, further,
that the terms of Sections 2.3 and 2.10(a), and this Article 10 shall not be
amended without the prior written consent of the Agent (acting for its own
account). In the absence of instructions from the Majority Lenders, the Agent
shall have authority (but no obligation), in its sole discretion, to take or not
to take any action, unless this Agreement specifically requires the consent of
the Lenders or the consent of the Majority Lenders and any such action or
failure to act shall be binding on all the Lenders. Each Lender and each holder
of any Note shall execute and deliver such additional instruments, including
powers of attorney in favor of the Agent, as may be necessary or desirable to
enable the Agent to exercise its powers hereunder.
SECTION 10.2 DUTIES AND OBLIGATIONS.
(a) Neither the Agent nor any of its directors, officers, agents or
employees shall be liable for any action
59
<PAGE>
taken or omitted to be taken by it or any of them under or in connection with
this Agreement or any other Loan Document except for its or their own gross
negligence or willful misconduct. Without limiting the generality of the
foregoing, the Agent (i) may treat each Lender which is a party hereto as the
party entitled to receive payments hereunder until the Agent receives written
notice of the assignment of such Lender's interest herein signed by such Lender
and made in accordance with the terms hereof and a written agreement of the
assignee that it is bound hereby to the same extent as it would have been had it
been an original party hereto, in each case in form satisfactory to the Agent;
(ii) may consult with legal counsel (including counsel for the Borrower),
independent public accountants and other experts selected by it and shall not be
liable for any action taken or omitted to be taken in good faith by it in
accordance with the advice of such experts; (iii) makes no warranty or
representation to any Lender and shall not be responsible to any Lender for any
statements, warranties or representations made in or in connection with this
Agreement, any other Loan Document, or in any instrument or document furnished
pursuant hereto or thereto; (iv) shall not have any duty to ascertain or to
inquire as to the performance of any of the terms, covenants, or conditions of
the Loan Documents, or of any instrument or document furnished pursuant thereto
on the part of the Borrower or as to the use of the proceeds of any Loan or the
proceeds received in respect of any Draft; (v) shall not be responsible to any
Lender for the due execution, legality, validity, enforceability, genuineness,
effectiveness, or value of this Agreement, of any other Loan Document, or of any
instrument or document furnished pursuant hereto or thereto; and (vi) shall
incur no liability under or in respect to this Agreement or any other Loan
Document by acting upon any oral or written notice, consent, certificate or
other instrument or writing (which may be by telex, facsimile transmission,
telegram or cable) believed by it to be genuine and signed, sent or made by the
proper party or parties or by acting upon any representation or warranty of the
Borrower made or deemed to be made in this Agreement or any other Loan Document.
The Agent may execute any of its duties under this Agreement or any other Loan
Document by or through agents, employees or attorneys-in-fact and shall be
entitled to advice of counsel concerning all matters pertaining to such duties.
The Agent shall not be responsible for the negligence or misconduct of any agent
or attorney-in-fact that it selects with reasonable care.
(b) The Agent will promptly transmit to each Lender copies of all
documents received from the Borrower pursuant to the requirements of this
Agreement other than documents which by the terms of this Agreement, the
Borrower is obligated to deliver directly to Lenders.
60
<PAGE>
(c) Each Lender or its assignee shall furnish to the Agent in a
timely fashion such documentation (including, but not by way of limitation, IRS
Forms Nos. W-8, 1001 and 4224) as may be reasonably requested by the Agent to
establish such Lender's status for tax withholding purposes.
(d) The Agent shall not be deemed to have knowledge or notice of the
occurrence of any Default or Event of Default under any of the Loan Documents
unless the Agent has received written notice from a Lender or the Borrower
referring to one or more of the Loan Documents, describing such Default or Event
of Default and stating that such notice is a "notice of default." In the event
that the Agent receives such a notice, the Agent shall promptly notify each of
the Lenders.
SECTION 10.3 DEALINGS BETWEEN SEAFIRST AND BORROWER. With respect to its
Commitment, the Loans made by it, the Drafts accepted by it, and the Letters of
Credit issued by it, Seafirst shall have the same rights and powers under this
Agreement and the other Loan Documents as any other Lender and may exercise the
same as though it were not the Agent, and the term "Lender" as used herein and
in the other Loan Documents shall unless otherwise expressly indicated include
Seafirst in its individual capacity. Seafirst may accept deposits from, lend
money to, act and generally engage in any kind of business with the Borrower and
any person which may do business with the Borrower, all as if Seafirst were not
the Agent hereunder and without any duty to account therefor to the Lenders.
SECTION 10.4 LENDER CREDIT DECISION. Each Lender acknowledges that it has,
independently and without reliance upon the Agent or the other Lenders and based
upon such documents and information as it has deemed appropriate, made its own
credit analysis and decision to enter into this Agreement and the other Loan
Documents. Each Lender also acknowledges that it will, independently and without
reliance upon the Agent or the other Lenders and based upon such documents and
information as it shall deem appropriate at the time, continue to make its own
credit decisions in taking or not taking action under this Agreement and the
other Loan Documents.
SECTION 10.5 INDEMNIFICATION. Each Lender agrees to indemnify the Agent
(to the extent not reimbursed by the Borrower) ratably, in the same proportion
that its aggregate Commitments bear to the Total Commitment, from and against
any and all liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements of any kind or nature
whatsoever which may be imposed on, incurred by or asserted against the Agent in
any way relating to or
61
<PAGE>
arising out of this Agreement or any other Loan Document or any action taken or
omitted by the Agent under this Agreement or any other Loan Document, except any
such as result from the Agent's gross negligence or willful misconduct. Without
limiting the foregoing, each Lender agrees to reimburse the Agent promptly on
demand ratably, in the same proportion that its aggregate Commitments bear to
the Total Commitment, for any out-of-pocket expenses, including legal fees,
incurred by the Agent in connection with the administration or enforcement or
preservation of any rights under any Loan Document (to the extent that the Agent
is not reimbursed for such expenses by the Borrower).
SECTION 10.6 SUCCESSOR AGENT. The Agent may give written notice of
resignation at any time to the Lenders and may be removed at any time with cause
by the Majority Lenders. The Majority Lenders shall have the right to appoint a
successor Agent. If no successor Agent shall have been so appointed by the
Lenders and shall have accepted such appointment within thirty (30) days after
the retiring Agent's giving of notice of resignation or the Majority Lenders'
removal of the retiring Agent, then the retiring Agent may on behalf of the
Lenders, appoint a successor Agent, which shall be one of the Lenders or a bank
organized under the laws of the United States or of any state thereof, or any
affiliate of such bank, and having a combined capital and surplus of at least
Five Hundred Million Dollars ($500,000,000). Upon the acceptance of any
appointment as Agent hereunder by a successor Agent, such successor Agent shall
thereupon succeed to and become vested with all the rights, powers, privileges
and duties of the retiring Agent, and the retiring Agent shall be discharged
from its duties and obligations under this Agreement. Until the acceptance by
such a successor Agent, the retiring Agent shall continue as "Agent" hereunder.
After any retiring Agent's resignation or removal hereunder as Agent shall
become effective, the provisions of this Agreement shall inure to its benefit as
to any actions taken or omitted to be taken by it while it was Agent under this
Agreement. Any person into which the Agent may be merged or converted or with
which it may be consolidated or any person resulting from any merger, conversion
or consolidation to which it shall be a party or any person to which the Agent
may sell or transfer all or substantially all of its agency relationships shall
be the successor to the Agent hereunder without the execution or filing of any
paper or further act, anything herein to the contrary notwithstanding.
ARTICLE 11
MISCELLANEOUS
62
<PAGE>
SECTION 11.1 NO WAIVER; REMEDIES CUMULATIVE. No failure by the Agent or
any Lender to exercise, and no delay in exercising, any right, power or remedy
under this Agreement or any other Loan Document shall operate as a waiver
thereof, nor shall any single or partial exercise of any right, power or remedy
under this Agreement or any other Loan Document preclude any other or further
exercise thereof or the exercise of any other right, power, or remedy. The
exercise of any right, power, or remedy shall in no event constitute a cure or
waiver of any Event of Default under this Agreement or any other Loan Document
or prejudice the rights of the Agent and the Lenders in the exercise of any
right hereunder or thereunder. The rights and remedies provided herein and
therein are cumulative and not exclusive of any right or remedy provided by law.
SECTION 11.2 RIGHT OF SETOFF. Upon the occurrence of an Event of Default,
the Lenders shall have the right, but not the obligation, to setoff and apply
all deposits of every kind held by the Lenders and their affiliates or
obligations owed by the Lenders and their affiliates to Borrower against the
Indebtedness and obligations of Borrower evidenced by this Agreement, the Notes
and the other Loan Documents.
SECTION 11.3 GOVERNING LAW. This Agreement and the other Loan Documents
shall be governed by and construed in accordance with the internal laws of the
State of Washington, U.S.A.
SECTION 11.4 CONSENT TO JURISDICTION; WAIVER OF IMMUNITIES; ATTORNEYS'
FEES. The Borrower hereby irrevocably submits to the nonexclusive jurisdiction
of any state or federal court sitting in Seattle, King County, Washington, in
any action or proceeding brought to enforce or otherwise arising out of or
relating to this Agreement or any other Loan Document and irrevocably waives to
the fullest extent permitted by law any objection which it may now or hereafter
have to the laying of venue in any such action or proceeding in any such forum,
and hereby further irrevocably waives any claim that any such forum is an
inconvenient forum. The Borrower agrees that a final judgment in any such action
or proceeding shall be conclusive and may be enforced in any other jurisdiction
by suit on the judgment or in any other manner provided by law. Nothing in this
Section 11.4 shall impair the right of the Agent, any Lender or the holder of
any Note to bring any action or proceeding against the Borrower or its property
in the courts of any other jurisdiction, and the Borrower irrevocably submits to
the nonexclusive jurisdiction of the appropriate courts of the jurisdiction in
which the Borrower is incorporated or sitting or of any place where property or
an office of the Borrower is located.
63
<PAGE>
SECTION 11.5 NOTICES. All notices and other communications provided for in
this Agreement shall be in writing or (unless otherwise specified) by telex,
facsimile transmission, telegram or cable and shall be mailed (with first class
postage prepaid) or sent or delivered to each party at the address set forth
under its name on the signature page hereof, or at such other address as shall
be designated by such party in a written notice to each other party. Except as
otherwise specified all notices sent by mail, if duly given, shall be effective
three (3) Business Days after deposit into the mails, all notices sent by a
nationally recognized overnight courier service, if duly given, shall be
effective one (1) Business Day after delivery to such courier service, and all
other notices and communications if duly given or made shall be effective upon
receipt.
SECTION 11.6 MANDATORY ARBITRATION. Any controversy or claim between or
among the parties, including those arising out of or relating to this Agreement
or Loan Documents and any claim based on or arising from an alleged tort, shall
at the request of any party be determined by arbitration. The arbitration shall
be conducted in accordance with the United States Arbitration Act (Title 9, U.S.
Code), notwithstanding any choice of law provision in this Agreement, and under
the Commercial Rules of the AAA. The arbitrator(s) shall give effect to statutes
of limitation in determining any claim. Any controversy concerning whether an
issue is arbitrable shall be determined by the arbitrator(s). Judgment upon the
arbitration award may be entered in any court having jurisdiction. No provision
of this Section 11.6 shall limit the right of any party to this Agreement to
exercise self-help remedies such as setoff, foreclosure against or sale of any
collateral or security, or to obtain provisional or ancillary remedies from a
court of competent jurisdiction before, after, or during the pendency of any
arbitration or other proceeding. The exercise of any such remedy does not waive
the right of either party to resort to arbitration.
SECTION 11.7 ASSIGNMENT AND PARTICIPATIONS. This Agreement shall be
binding upon and inure to the benefit of the parties and their respective
Successors and assigns, provided that the Borrower may not assign or otherwise
transfer all or any part of its rights or obligations hereunder or under any
other Loan Document without the prior written consent of the Agent, and any such
assignment or transfer purported to be made without such consent shall be
ineffective. Any Lender may at any time sell participation interests in its
Loans and Commitments to another bank or financial institution. Such sales may
be made without the consent of the Agent, the Borrower or any other Lender
provided, however, that (a) the selling Lender shall have provided the Borrower
and the Agent with prior written notice of
64
<PAGE>
the proposed sale of any participation interest in any Loan or in such Lender's
Commitment; and (b) that the selling Lender retains the right to vote as a
Lender hereunder in respect of the interest sold without being bound to obtain
the consent of its participant or to exercise its rights in accordance with
instructions received from its participant (except that the participant's
consent can be required for proposed changes to the timing or amount of
principal payments or changes to the timing, rate or amount of payments of
interest or fees). Any Lender may assign or otherwise transfer all or any part
of its interest under the Loan Documents to another bank or financial
institution with the prior written consent of the Agent which consent will not
be unreasonably withheld or delayed. The assignee of any permitted sale or
assignment (including assignments for security and sales of participations)
shall have the same rights and benefits against the Borrower and otherwise under
the Loan Documents (excepting however, in the case of sales of participations,
the right to grant or withhold consents or otherwise vote in respect thereof)
including the right of setoff, and in the case of any outright assignment (as
distinguished from an assignment for security or the sale of a participation)
the same obligations in respect thereof, as if such assignee were an original
Lender. Except to the extent otherwise required by the context of this
Agreement, the word "Lender" where used in this Agreement shall mean and include
any holder of a Note originally issued to a Lender hereunder, and subject to the
terms of this Section 11.7, each such holder shall be bound by and have the
benefits of this Agreement the same as if such holder had been a signatory
hereto. Any outright assignment of a Lender's interest hereunder to another
Lender made in conformance with the terms of this Section 11.7 shall result in a
corresponding adjustment to the selling and purchasing Lenders' Commitments.
SECTION 11.8 SEVERABILITY. Any provision of this Agreement or any other
Loan Document which is prohibited or unenforceable in any jurisdiction shall as
to such jurisdiction be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof or
affecting the validity or enforceability of such provision in any other
jurisdiction. To the extent permitted by applicable law, the parties waive any
provision of law which renders any provision hereof prohibited or unenforceable
in any respect.
SECTION 11.9 SURVIVAL. The representations, warranties and indemnities of
the Borrower in favor of the Agent and Lenders shall survive indefinitely and,
without limiting the foregoing, shall survive the execution and delivery of this
Agreement and the other Loan Documents, the making of any Loan, the acceptance
65
<PAGE>
and discount of any Draft, the issuance of any Letter of Credit, the expiration
of the Commitments and the repayment of all Loans, Acceptance Advances, Letters
of Credit and other amounts due hereunder or under the other Loan Documents.
SECTION 11.10 CONDITIONS NOT FULFILLED. If any Commitment is not borrowed,
any drafts presented are not accepted, or any requested letter of credit is not
issued owing to nonfulfillment of any condition precedent specified in Article 5
or, in the case of drafts, any additional conditions specified in Article 3, or,
in the case of letters of credit, any additional conditions specified in Article
4, no party hereto shall be responsible to any other party for any damage or
loss by reason thereof, except that the Borrower shall in any event be liable to
pay the fees, Taxes, and expenses for which it is obligated hereunder. If for
any other reason the Commitment of any Lender is not borrowed, any presented
draft is not accepted or any requested letter of credit is not issued, neither
the Agent nor any other Lender shall be responsible to the Borrower for any
damage or loss by reason thereof, nor shall any other Lender or the Borrower be
excused from its performance hereunder.
SECTION 11.11 ENTIRE AGREEMENT; AMENDMENT, ETC. This Agreement together
with the exhibits hereto comprises the entire agreement of the parties and may
not be amended or modified except by written agreement of the Borrower and the
Agent. No provision of this Agreement may be waived except in writing and then
only in the specific instance and for the specific purpose for which given.
SECTION 11.12 OTHER DEBT. Borrower expressly agrees that the payment and
performance of the Indebtedness evidenced by this Agreement, the Notes and the
other Loan Documents shall not be inferior or subordinate to, but rather shall
rank no less than pari passu with, all other Indebtedness of Borrower, except to
the extent such other Indebtedness shall be secured by a Lien described in and
permitted under Section 8.3 hereof.
SECTION 11.13 AUTHORIZED OFFICERS. A list of officers and employees
initially authorized to request Loans, present drafts, or request letters of
credit is attached hereto as Schedule 2. Borrower may amend that list from time
to time by supplements executed by the Borrower's president and chief financial
officer. The Agent and Lenders may act in reliance upon any oral, telephonic, or
written request believed in good faith to have been received from or authorized
by any of the persons identified on the list attached hereto as Schedule 2 (as
the same may be supplemented from time to time).
66
<PAGE>
SECTION 11.14 HEADINGS. The headings of the various provisions of this
Agreement are for convenience of reference only, do not constitute a part
hereof, and shall not affect the meaning or construction of any provision
hereof.
SECTION 11.15 COUNTERPARTS. This Agreement may be executed in any number
of counterparts, all of which when taken together shall be deemed a single
original.
SECTION 11.16 ORAL AGREEMENTS NOT ENFORCEABLE.
ORAL AGREEMENTS OR ORAL COMMITMENTS TO LOAN MONEY, EXTEND CREDIT, OR TO FORBEAR
FROM ENFORCING REPAYMENT OF A DEBT ARE NOT ENFORCEABLE UNDER WASHINGTON LAW.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers or agents thereunto duly authorized as of
the date first above written.
BORROWER: UNITED GROCERS, INC.
By /s/ John W. White
Its Vice President
Address:
Facsimile Number:
LENDERS: BANK OF AMERICA NW, N.A.
d/b/a SEAFIRST BANK
By /s/ Gordon A. Gray
Its Vice President
Address: 701 Fifth Ave., Floor 12
Seattle, WA 98104
Facsimile Number: (206) 358-3113
67
<PAGE>
UNITED STATES NATIONAL BANK OF
OREGON
By /s/ William H. Long
Its Vice President
Address: 111 S.W. Fifth, Suite 400
P.O. Box 4412
Portland, Oregon 97208
Facsimile Number: (503) 275-7290
THE HONGKONG AND SHANGHAI BANKING
CORPORATION, LIMITED
By /s/ Randy Todd
Its Senior Vice President
Address: L. Randolph Todd
The Hong Kong and Shanghai
Banking Corporation
900 S.W. Fifth Avenue, Suite 1550
Portland, Oregon 97204
Facsimile Number: (503) 242-2413
AGENT: BANK OF AMERICA NW, N.A.
d/b/a SEAFIRST BANK
By /s/ Dora A. Brown
Its Assistant Vice President
Address: 701 Fifth Ave., Floor 16
Seattle, WA 98104
Facsimile Number: (206) 358-0971
68
<PAGE>
AMENDMENT NUMBER ONE TO
AMENDED AND RESTATED CREDIT AGREEMENT
THIS AMENDMENT NUMBER ONE TO AMENDED AND RESTATED CREDIT AGREEMENT (this
"Amendment") is made as of this 25th day of July, 1996 by and among BANK OF
AMERICA NW, N.A., successor by name change to Seattle-First National Bank, a
national banking association ("Seafirst"), UNITED STATES NATIONAL BANK OF
OREGON, a national banking association ("U.S. Bank"), THE HONGKONG AND SHANGHAI
BANKING CORPORATION, LIMITED, an extra national banking institution ("Hong Kong
Bank") (each individually a "Lender" and collectively the "Lenders"), SEAFIRST,
as agent for the Lenders (the "Agent") and UNITED GROCERS, INC., an Oregon
corporation (the "Borrower").
RECITALS
A. The Lenders, the Borrower and the Agent are parties to that certain
Amended and Restated Credit Agreement dated as of May 31, 1996 (as the same has
been or may be amended, modified or extended from time to time the "Credit
Agreement"). Capitalized terms not otherwise defined in this Amendment shall
have the meanings given in the Credit Agreement.
B. Subject to the terms and conditions of the Credit Agreement, Seafirst
and U.S. Bank have agreed to make Short-term Acquisition Loans to the Borrower
during the period beginning on the date of the Credit Agreement and ending on
the Short-term Acquisition Line Maturity Date.
C. The Borrower has requested that the Agent and the Lenders extend the
Short-term Acquisition Line Maturity Date until September 30, 1996. The Agent
and the Lenders are prepared extend the Short-term Acquisition Line Maturity
Date on the terms and conditions set forth below.
NOW, THEREFORE, the parties agree as follows:
AGREEMENT
1. DEFINITIONS. Capitalized terms not otherwise defined in this Amendment
shall have the meanings given in the Credit Agreement.
2. AMENDMENTS TO CREDIT AGREEMENT. In Section 1.1 of the Credit Agreement,
the definition of "Short-term Acquisition Line Maturity Date" is amended and
restated to read as follows:
"Short-term Acquisition Line Maturity
Date" means September 30, 1996.
- 1 -
<PAGE>
3. PROMISSORY NOTES. All references to the "Short-term Acquisition Line
Maturity Date" contained in the Short-term Acquisition Notes shall mean the
Short-term Acquisition Line Maturity Date as defined in the Credit Agreement, as
hereby amended.
4. CONDITIONS TO EFFECTIVENESS. Notwithstanding anything contained herein
to the contrary, this Amendment shall not become effective until each of the
following conditions is fully and simultaneously satisfied on or before July 31,
1996:
4.1 DELIVERY OF AMENDMENT. The Borrower, the Agent and each Lender
shall have executed and delivered counterparts of this Amendment to Agent.
4.2 REIMBURSEMENT FOR EXPENSES. The Borrower shall have reimbursed
the Agent for all expenses actually incurred by the Agent in connection with the
preparation of the Credit Agreement and the other Loan Documents and shall have
paid all other amounts due and owing under the Loan Documents.
4.3 BORROWER CORPORATE AUTHORITY. The Agent shall have received such
evidence of corporate authority as the Agent shall request.
4.4 REPRESENTATIONS TRUE; NO DEFAULT. The representations of the
Borrower as set forth in Article 6 of the Credit Agreement shall be true on and
as of the date of this Amendment with the same force and effect as if made on
and as of this date. No Event of Default and no event which, with notice or
lapse of time or both, would constitute a Event of Default, shall have occurred
and be continuing or will occur as a result of the execution of this Amendment.
5. REPRESENTATIONS AND WARRANTIES. The Borrower hereby represents and
warrants to the Lenders and the Agent that each of the representations and
warranties set forth in Article 6 of the Credit Agreement is true and correct in
each case as if made on and as of the date of this Amendment and the Borrower
expressly agrees that it shall be an additional Event of Default under the
Credit Agreement if any representation or warranty made hereunder shall prove to
have been incorrect in any material respect when made.
6. NO FURTHER AMENDMENT. Except as expressly modified by the terms of this
Amendment, all of the terms and conditions of the Credit Agreement and the other
Loan Documents shall remain in full force and effect and the parties hereto
expressly reaffirm and ratify their respective obligations thereunder.
7. GOVERNING LAW. This Amendment shall be governed by and construed in
accordance with the laws of the State of Washington.
- 2 -
<PAGE>
8. COUNTERPARTS. This Amendment may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of
which when so executed shall be deemed to be an original, and all of which taken
together shall constitute one and the same agreement.
9. ORAL AGREEMENTS NOT ENFORCEABLE.
ORAL AGREEMENTS OR ORAL COMMITMENTS TO LOAN MONEY,
EXTEND CREDIT, OR TO FORBEAR FROM ENFORCING REPAYMENT
OF A DEBT ARE NOT ENFORCEABLE UNDER WASHINGTON LAW.
IN WITNESS WHEREOF, the parties hereto have executed this Amendment Number
One to Amended and Restated Credit Agreement as of the date first above written.
BORROWER: UNITED GROCERS, INC.
By /s/ John W. White
Its Vice President
LENDERS: BANK OF AMERICA NW, N.A.
By /s/ Gorgon A. Gray
Its Vice President
UNITED STATES NATIONAL BANK OF
OREGON
By /s/ William H. Long
Its Vice President
THE HONGKONG AND SHANGHAI BANKING
CORPORATION, LIMITED
By /s/ Randy Todd
Its Senior Vice President
- 3 -
<PAGE>
AGENT: BANK OF AMERICA NW, N.A.
By /s/
Its Assistant Vice President
- 4 -
<PAGE>
AMENDMENT NUMBER TWO TO
AMENDED AND RESTATED CREDIT AGREEMENT
THIS AMENDMENT NUMBER TWO TO AMENDED AND RESTATED CREDIT AGREEMENT (this
"Amendment") is made as of this 27th day of September, 1996 by and among BANK OF
AMERICA NW, N.A., successor by name change to Seattle-First National Bank, a
national banking association ("Seafirst"), UNITED STATES NATIONAL BANK OF
OREGON, a national banking association ("U.S. Bank"), THE HONGKONG AND SHANGHAI
BANKING CORPORATION, LIMITED, an extra national banking institution ("Hong Kong
Bank") (each individually a "Lender" and collectively the "Lenders"), SEAFIRST,
as agent for the Lenders (the "Agent") and UNITED GROCERS, INC., an Oregon
corporation (the "Borrower").
RECITALS
A. The Lenders, the Borrower and the Agent are parties to that certain
Amended and Restated Credit Agreement dated as of May 31, 1996, as amended by
that certain Amendment Number Two to Amended and Restated Credit Agreement dated
as of July 25, 1996 (as the same has been or may be amended, modified or
extended from time to time the "Credit Agreement"). Capitalized terms not
otherwise defined in this Amendment shall have the meanings given in the Credit
Agreement.
B. Subject to the terms and conditions of the Credit Agreement, Seafirst
and U.S. Bank have agreed to make Short-term Acquisition Loans to the Borrower
during the period beginning on the date of the Credit Agreement and ending on
the Short-term Acquisition Line Maturity Date.
C. The Borrower has requested that the Agent and the Lenders extend the
Short-term Acquisition Line Maturity Date until October 31, 1996 and extend the
Long-term Acquisition Line Maturity Date until October 31, 1997. The Agent and
the Lenders are prepared to extend the Short-term Acquisition Line Maturity Date
and extend the Long-term Acquisition Line Maturity Date on the terms and
conditions set forth below.
NOW, THEREFORE, the parties agree as follows:
AGREEMENT
1. DEFINITIONS. Capitalized terms not otherwise defined in this Amendment
shall have the meanings given in the Credit Agreement.
2. AMENDMENTS TO CREDIT AGREEMENT. In Section 1.1 of the Credit Agreement,
amendments are made to the definitions, as follows:
- 1 -
<PAGE>
2.1 SHORT-TERM ACQUISITION LINE MATURITY DATE. The definition of
"Short-term Acquisition Line Maturity Date" is amended and restated to read as
follows:
"Short-term Acquisition Line Maturity
Date" means October 31, 1996.
2.2 LONG-TERM ACQUISITION LINE MATURITY DATE. The definition of
"Long-term Acquisition Line Maturity Date" is amended and restated to read as
follows:
"Long-term Acquisition Line Maturity
Date" means October 31, 1997.
3. PROMISSORY NOTES.
3.1 SHORT-TERM ACQUISITION NOTES. All references to the "Short-term
Acquisition Line Maturity Date" contained in the Short-term Acquisition Notes
shall mean the Short-term Acquisition Line Maturity Date as defined in the
Credit Agreement, as hereby amended.
3.2 LONG-TERM ACQUISITION NOTES. All references to the "Long-term
Acquisition Line Maturity Date" contained in the Long-term Acquisition Notes
shall mean the Long-term Acquisition Line Maturity Date as defined in the Credit
Agreement, as hereby amended.
4. CONDITIONS TO EFFECTIVENESS. Notwithstanding anything contained herein
to the contrary, this Amendment shall not become effective until each of the
following conditions is fully and simultaneously satisfied on or before
September 30, 1996:
4.1 DELIVERY OF AMENDMENT. The Borrower, the Agent and each Lender
shall have executed and delivered counterparts of this Amendment to Agent.
4.2 REIMBURSEMENT FOR EXPENSES. The Borrower shall have reimbursed
the Agent for all expenses actually incurred by the Agent in connection with the
preparation of the Credit Agreement and the other Loan Documents and shall have
paid all other amounts due and owing under the Loan Documents.
4.3 BORROWER CORPORATE AUTHORITY. The Agent shall have received such
evidence of corporate authority as the Agent shall request.
4.4 REPRESENTATIONS TRUE; NO DEFAULT. The representations of the
Borrower as set forth in Article 6 of the Credit Agreement shall be true on and
as of the date of this Amendment with the same force and effect as if made on
and as of this date. No Event of Default and no event which, with notice or
lapse of time or both, would constitute a Event of Default,
- 2 -
<PAGE>
shall have occurred and be continuing or will occur as a result of the execution
of this Amendment.
5. REPRESENTATIONS AND WARRANTIES. The Borrower hereby represents and
warrants to the Lenders and the Agent that each of the representations and
warranties set forth in Article 6 of the Credit Agreement is true and correct in
each case as if made on and as of the date of this Amendment and the Borrower
expressly agrees that it shall be an additional Event of Default under the
Credit Agreement if any representation or warranty made hereunder shall prove to
have been incorrect in any material respect when made.
6. NO FURTHER AMENDMENT. Except as expressly modified by the terms of this
Amendment, all of the terms and conditions of the Credit Agreement and the other
Loan Documents shall remain in full force and effect and the parties hereto
expressly reaffirm and ratify their respective obligations thereunder.
7. GOVERNING LAW. This Amendment shall be governed by and construed in
accordance with the laws of the State of Washington.
8. COUNTERPARTS. This Amendment may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of
which when so executed shall be deemed to be an original, and all of which taken
together shall constitute one and the same agreement.
9. ORAL AGREEMENTS NOT ENFORCEABLE.
ORAL AGREEMENTS OR ORAL COMMITMENTS TO LOAN MONEY,
EXTEND CREDIT, OR TO FORBEAR FROM ENFORCING REPAYMENT
OF A DEBT ARE NOT ENFORCEABLE UNDER WASHINGTON LAW.
IN WITNESS WHEREOF, the parties hereto have executed this Amendment Number
Two to Amended and Restated Credit Agreement as of the date first above written.
BORROWER: UNITED GROCERS, INC.
By /s/ John W. White
Its Vice President
LENDERS: BANK OF AMERICA NW, N.A.
By /s/ Gordon A. Gray
Its Vice President
- 3 -
<PAGE>
UNITED STATES NATIONAL BANK OF
OREGON
By /s/ William H. Long
Its Vice President
THE HONGKONG AND SHANGHAI BANKING
CORPORATION, LIMITED
By /s/ Randy Todd
Its Senior Vice President
AGENT: BANK OF AMERICA NW, N.A.
By /s/ Dora A. Brown
Its Assistant Vice President
- 4 -
<PAGE>
AMENDMENT NUMBER THREE TO
AMENDED AND RESTATED CREDIT AGREEMENT
THIS AMENDMENT NUMBER THREE TO AMENDED AND RESTATED CREDIT AGREEMENT (this
"Amendment") is made as of this 28th day of October, 1996 by and among BANK OF
AMERICA NW, N.A., successor by name change to Seattle-First National Bank, a
national banking association ("Seafirst"), UNITED STATES NATIONAL BANK OF
OREGON, a national banking association ("U.S. Bank"), THE HONGKONG AND SHANGHAI
BANKING CORPORATION, LIMITED, an extra national banking institution ("Hong Kong
Bank") (each individually a "Lender" and collectively the "Lenders"), SEAFIRST,
as agent for the Lenders (the "Agent") and UNITED GROCERS, INC., an Oregon
corporation (the "Borrower").
RECITALS
A. The Lenders, the Borrower and the Agent are parties to that certain
Amended and Restated Credit Agreement dated as of May 31, 1996, as amended by
that certain Amendment Number One to Amended and Restated Credit Agreement dated
as of July 25, 1996 and by that certain Amendment Number Two to Amended and
Restated Credit Agreement dated as of September 27, 1996 (as the same has been
or may be amended, modified or extended from time to time the "Credit
Agreement"). Capitalized terms not otherwise defined in this Amendment shall
have the meanings given in the Credit Agreement.
B. Subject to the terms and conditions of the Credit Agreement, Seafirst
and U.S. Bank have agreed to make Short-term Acquisition Loans to the Borrower
during the period beginning on the date of the Credit Agreement and ending on
the Short-term Acquisition Line Maturity Date.
C. The Borrower has requested that the Agent and the Lenders extend the
Short-term Acquisition Line Maturity Date until December 31, 1996 and extend the
Long-term Acquisition Line Maturity Date until December 31, 1997. The Agent and
the Lenders are prepared to extend the Short-term Acquisition Line Maturity Date
and extend the Long-term Acquisition Line Maturity Date on the terms and
conditions set forth below.
NOW, THEREFORE, the parties agree as follows:
AGREEMENT
1. DEFINITIONS. Capitalized terms not otherwise defined in this Amendment
shall have the meanings given in the Credit Agreement.
- 1 -
<PAGE>
2. AMENDMENTS TO CREDIT AGREEMENT. In Section 1.1 of the Credit Agreement,
amendments are made to the definitions, as follows:
2.1 SHORT-TERM ACQUISITION LINE MATURITY DATE. The definition of
"Short-term Acquisition Line Maturity Date" is amended and restated to read as
follows:
"Short-term Acquisition Line Maturity
Date" means December 31, 1996.
2.2 LONG-TERM ACQUISITION LINE MATURITY DATE. The definition of
"Long-term Acquisition Line Maturity Date" is amended and restated to read as
follows:
"Long-term Acquisition Line Maturity
Date" means December 31, 1997.
3. PROMISSORY NOTES.
3.1 SHORT-TERM ACQUISITION NOTES. All references to the "Short-term
Acquisition Line Maturity Date" contained in the Short-term Acquisition Notes
shall mean the Short-term Acquisition Line Maturity Date as defined in the
Credit Agreement, as hereby amended.
3.2 LONG-TERM ACQUISITION NOTES. All references to the "Long-term
Acquisition Line Maturity Date" contained in the Long-term Acquisition Notes
shall mean the Long-term Acquisition Line Maturity Date as defined in the Credit
Agreement, as hereby amended.
4. CONDITIONS TO EFFECTIVENESS. Notwithstanding anything contained herein
to the contrary, this Amendment shall not become effective until each of the
following conditions is fully and simultaneously satisfied on or before October
31, 1996:
4.1 DELIVERY OF AMENDMENT. The Borrower, the Agent and each Lender
shall have executed and delivered counterparts of this Amendment to Agent.
4.2 REIMBURSEMENT FOR EXPENSES. The Borrower shall have reimbursed
the Agent for all expenses actually incurred by the Agent in connection with the
preparation of the Credit Agreement and the other Loan Documents and shall have
paid all other amounts due and owing under the Loan Documents.
4.3 BORROWER CORPORATE AUTHORITY. The Agent shall have received such
evidence of corporate authority as the Agent shall request.
- 2 -
<PAGE>
4.4 REPRESENTATIONS TRUE; NO DEFAULT. The representations of the
Borrower as set forth in Article 6 of the Credit Agreement shall be true on and
as of the date of this Amendment with the same force and effect as if made on
and as of this date. No Event of Default and no event which, with notice or
lapse of time or both, would constitute a Event of Default, shall have occurred
and be continuing or will occur as a result of the execution of this Amendment.
5. REPRESENTATIONS AND WARRANTIES. The Borrower hereby represents and
warrants to the Lenders and the Agent that each of the representations and
warranties set forth in Article 6 of the Credit Agreement is true and correct in
each case as if made on and as of the date of this Amendment and the Borrower
expressly agrees that it shall be an additional Event of Default under the
Credit Agreement if any representation or warranty made hereunder shall prove to
have been incorrect in any material respect when made.
6. NO FURTHER AMENDMENT. Except as expressly modified by the terms of this
Amendment, all of the terms and conditions of the Credit Agreement and the other
Loan Documents shall remain in full force and effect and the parties hereto
expressly reaffirm and ratify their respective obligations thereunder.
7. GOVERNING LAW. This Amendment shall be governed by and construed in
accordance with the laws of the State of Washington.
8. COUNTERPARTS. This Amendment may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of
which when so executed shall be deemed to be an original, and all of which taken
together shall constitute one and the same agreement.
9. ORAL AGREEMENTS NOT ENFORCEABLE.
ORAL AGREEMENTS OR ORAL COMMITMENTS TO LOAN MONEY,
EXTEND CREDIT, OR TO FORBEAR FROM ENFORCING REPAYMENT
OF A DEBT ARE NOT ENFORCEABLE UNDER WASHINGTON LAW.
IN WITNESS WHEREOF, the parties hereto have executed this Amendment Number
Three to Amended and Restated Credit Agreement as of the date first above
written.
BORROWER: UNITED GROCERS, INC.
By /s/ John W. White
Its Vice President
- 3 -
<PAGE>
LENDERS: BANK OF AMERICA NW, N.A.
By /s/ Gordon A. Gray
Its Vice President
UNITED STATES NATIONAL BANK OF
OREGON
By /s/ William H. Long
Its Vice President
THE HONGKONG AND SHANGHAI BANKING
CORPORATION, LIMITED
By /s/ Randy Todd
Its Senior Vice President
AGENT: BANK OF AMERICA NW, N.A.
By /s/ Dora A. Brown
Its Assistant Vice President
- 4 -
<PAGE>
Amendment No. 4 to Credit Agreement
SEAFIRST
Dora A. Brown
Assistant Vice President
Seafirst Agency Services
November 29, 1996
Gordon Gray, V.P. William Long, V.P.
Seafirst Bank U.S. National Bank of Oregon
701 Fifth Avenue, Floor 12 111 SW 5th Avenue, Suite 400
Seattle, WA 98104 Portland, OR 97208
Randy Todd, S.V.P. John White, V.P. & C.F.O.
The Hongkong & Shanghai Banking Corp. Ltd. United Grocers, Inc.
900 SW Fifth Avenue, Suite 1550 6433 SE Lake Road
Portland, OR 97204 Portland, OR 97222-2198
RE: United Grocers, Inc. (the "Borrower")
Amended and Restated Credit Agreement dated May 31, 1996
Gentlemen:
This letter, if agreed to by all parties, shall be deemed Amendment Number Four
to the above referenced Amended and Restated Credit Agreement.
Pursuant to Section 2.2 Manner of Borrowing of the credit agreement, the
Borrower is to deliver to the Agent a Notice of Borrowing no later than 10:00
a.m., Seattle time for same day Prime Rate advances or, in the case of LIBOR
advances, no later than 10:00 a.m., Seattle time three days prior to the
requested date of borrowing. Notices received after the designated hour will be
deemed received on the next succeeding Business Day.
The Borrower has notified the Agent that due to its new lock box service, the
earliest it can deliver its Notice of Borrowing to the Agent is 12:00 p.m. Each
Lender's operations department have confirmed to the Agent that the later
designated hour would not be a problem for meeting wire transfer deadlines.
Your signature below is evidence of your agreement to the above amendment.
Please fax (206-358-0971) your signature to me by Thursday, December 5, 1996,
and return your original by mail.
- 1 -
<PAGE>
Please call me (206-358-0101) if I can be of further assistance.
Sincerely,
Seafirst Bank, as Agent AGREED TO
/s/ Dora Brown U. S. National Bank of Oregon
Dora Brown Name of Institution
A.V.P./Senior Agency Services
By /s/ William H. Long
Its Vice President
The Hongkong & Shanghai Banking Corp. Ltd.
Name of Institution
By /s/ Randy Todd
Its Senior Vice President
United Grocers, Inc.
Name of Institution
By /s/ John W. White
Its Vice President
Seafirst Bank
Name of Institution
By /s/ Gordon Gray
Its Vice President
cc: Brenda Little, Seafirst Agency Services
Seafirst Bank Post Office Box 34620/Seattle, Washington 98124-1620
701 Fifth Avenue/Floor 16/Seattle, Washington 98104
Telephone (206)358-0101 FAX (206)368-0971
- 2 -
<PAGE>
AMENDMENT NUMBER FIVE TO
AMENDED AND RESTATED CREDIT AGREEMENT
THIS AMENDMENT NUMBER FIVE TO AMENDED AND RESTATED CREDIT AGREEMENT (this
"Amendment") is made as of this 26th day of December, 1996 by and among BANK OF
AMERICA NW, N.A., successor by name change to Seattle-First National Bank, a
national banking association ("Seafirst"), UNITED STATES NATIONAL BANK OF
OREGON, a national banking association ("U.S. Bank"), HONGKONG BANK OF CANADA,
assignee in interest to the Hongkong and Shanghai Banking Corporation, Limited,
an extra national banking institution ("Hongkong Bank") (each individually a
"Lender" and collectively the "Lenders"), SEAFIRST, as agent for the Lenders
(the "Agent") and UNITED GROCERS, INC., an Oregon corporation (the "Borrower").
RECITALS
A. The Lenders, the Borrower and the Agent are parties to that certain
Amended and Restated Credit Agreement dated as of May 31, 1996, as amended by
that certain Amendment Number One to Amended and Restated Credit Agreement dated
as of July 25, 1996, by that certain Amendment Number Two to Amended and
Restated Credit Agreement dated as of September 27, 1996 , by that certain
Amendment Number Three to Amended and Restated Credit Agreement dated as of
October 28, 1996 and by that certain Amendment Number Four to Amended and
Restated Credit Agreement dated as of November 29, 1996 (as the same has been or
may be amended, modified or extended from time to time the "Credit Agreement").
Capitalized terms not otherwise defined in this Amendment shall have the
meanings given in the Credit Agreement.
B. Subject to the terms and conditions of the Credit Agreement, Seafirst
and U.S. Bank have agreed to make Short-term Acquisition Loans to the Borrower
during the period beginning on the date of the Credit Agreement and ending on
the Short-term Acquisition Line Maturity Date.
C. The Borrower has requested that the Agent and the Lenders extend the
Short-term Acquisition Line Maturity Date until January 31, 1997 and extend the
Long-term Acquisition Line Maturity Date until January 31, 1998. The Agent and
the Lenders are prepared to extend the Short-term Acquisition Line Maturity Date
and extend the Long-term Acquisition Line Maturity Date on the terms and
conditions set forth below.
NOW, THEREFORE, the parties agree as follows:
- 1 -
<PAGE>
AGREEMENT
1. DEFINITIONS. Capitalized terms not otherwise defined in this Amendment
shall have the meanings given in the Credit Agreement.
2. AMENDMENTS TO CREDIT AGREEMENT. In Section 1.1 of the Credit Agreement,
amendments are made to the definitions, as follows:
2.1 SHORT-TERM ACQUISITION LINE MATURITY DATE. The definition of
"Short-term Acquisition Line Maturity Date" is amended and restated to read as
follows:
"Short-term Acquisition Line Maturity
Date" means January 31, 1997.
2.2 LONG-TERM ACQUISITION LINE MATURITY DATE. The definition of
"Long-term Acquisition Line Maturity Date" is amended and restated to read as
follows:
"Long-term Acquisition Line Maturity
Date" means January 31, 1998.
3. PROMISSORY NOTES.
3.1 SHORT-TERM ACQUISITION NOTES. All references to the "Short-term
Acquisition Line Maturity Date" contained in the Short-term Acquisition Notes
shall mean the Short-term Acquisition Line Maturity Date as defined in the
Credit Agreement, as hereby amended.
3.2 LONG-TERM ACQUISITION NOTES. All references to the "Long-term
Acquisition Line Maturity Date" contained in the Long-term Acquisition Notes
shall mean the Long-term Acquisition Line Maturity Date as defined in the Credit
Agreement, as hereby amended.
4. CONDITIONS TO EFFECTIVENESS. Notwithstanding anything contained herein
to the contrary, this Amendment shall not become effective until each of the
following conditions is fully and simultaneously satisfied on or before December
31, 1996:
4.1 DELIVERY OF AMENDMENT. The Borrower, the Agent and each Lender
shall have executed and delivered counterparts of this Amendment to Agent.
4.2 REIMBURSEMENT FOR EXPENSES. The Borrower shall have reimbursed
the Agent for all expenses actually incurred by the Agent in connection with the
preparation of the Credit Agreement and the other Loan Documents and shall have
paid all other amounts due and owing under the Loan Documents.
- 2 -
<PAGE>
4.3 BORROWER CORPORATE AUTHORITY. The Agent shall have received such
evidence of corporate authority as the Agent shall request.
4.4 REPRESENTATIONS TRUE; NO DEFAULT. The representations of the
Borrower as set forth in Article 6 of the
Credit Agreement shall be true on and as of the date of this Amendment with the
same force and effect as if made on and as of this date. No Event of Default and
no event which, with notice or lapse of time or both, would constitute a Event
of Default, shall have occurred and be continuing or will occur as a result of
the execution of this Amendment.
5. REPRESENTATIONS AND WARRANTIES. The Borrower hereby represents and
warrants to the Lenders and the Agent that each of the representations and
warranties set forth in Article 6 of the Credit Agreement is true and correct in
each case as if made on and as of the date of this Amendment and the Borrower
expressly agrees that it shall be an additional Event of Default under the
Credit Agreement if any representation or warranty made hereunder shall prove to
have been incorrect in any material respect when made.
6. NO FURTHER AMENDMENT. Except as expressly modified by the terms of this
Amendment, all of the terms and conditions of the Credit Agreement and the other
Loan Documents shall remain in full force and effect and the parties hereto
expressly reaffirm and ratify their respective obligations thereunder.
7. GOVERNING LAW. This Amendment shall be governed by and construed in
accordance with the laws of the State of Washington.
8. COUNTERPARTS. This Amendment may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of
which when so executed shall be deemed to be an original, and all of which taken
together shall constitute one and the same agreement.
9. ORAL AGREEMENTS NOT ENFORCEABLE.
ORAL AGREEMENTS OR ORAL COMMITMENTS TO LOAN MONEY,
EXTEND CREDIT, OR TO FORBEAR FROM ENFORCING REPAYMENT
OF A DEBT ARE NOT ENFORCEABLE UNDER WASHINGTON LAW.
IN WITNESS WHEREOF, the parties hereto have executed this Amendment Number
Five to Amended and Restated Credit Agreement as of the date first above
written.
- 3 -
<PAGE>
BORROWER: UNITED GROCERS, INC.
By /s/ John W. White*
Its Vice President
* Except for noncompliance of fixed charges as of 9/27/96
LENDERS: BANK OF AMERICA NW, N.A.
By /s/ Gordon A. Gray
Its Vice President
UNITED STATES NATIONAL BANK OF
OREGON
By /s/ William H. Long
Its Vice President
HONGKONG BANK OF CANADA
By /s/ Randy Todd
Its Senior Vice President
AGENT: BANK OF AMERICA NW, N.A.
By /s/ Dora A. Brown
Its Assistant Vice President
- 4 -
<PAGE>
WAIVER AND AMENDMENT NUMBER SIX TO
AMENDED AND RESTATED CREDIT AGREEMENT
THIS WAIVER AND AMENDMENT NUMBER SIX TO AMENDED AND RESTATED CREDIT
AGREEMENT (this "Amendment") is made as of this 31st day of January, 1997 by and
among BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION d/b/a SEAFIRST
BANK, successor by merger to Bank of America NW, N.A., successor by name change
to Seattle-First National Bank, a national banking association ("Seafirst"),
UNITED STATES NATIONAL BANK OF OREGON, a national banking association ("U.S.
Bank"), HONGKONG BANK OF CANADA, assignee in interest to The Hongkong and
Shanghai Banking Corporation, Limited, an extra national banking institution
("Hongkong Bank") (each individually a "Lender" and collectively the "Lenders"),
SEAFIRST, as agent for the Lenders (the "Agent") and UNITED GROCERS, INC., an
Oregon corporation (the "Borrower").
RECITALS
A. The Lenders, the Borrower and the Agent are parties to that certain
Amended and Restated Credit Agreement dated as of May 31, 1996, as amended by
that certain Amendment Number One to Amended and Restated Credit Agreement dated
as of July 25, 1996, by that certain Amendment Number Two to Amended and
Restated Credit Agreement dated as of September 27, 1996 , by that certain
Amendment Number Three to Amended and Restated Credit Agreement dated as of
October 28, 1996, by that certain Amendment Number Four to Amended and Restated
Credit Agreement dated as of November 29, 1996 ("Amendment Four") and by that
certain Amendment Number Five to Amended and Restated Credit Agreement dated as
of December 26, 1996 (as the same has been or may be amended, modified or
extended from time to time the "Credit Agreement"). Capitalized terms not
otherwise defined in this Amendment shall have the meanings given in the Credit
Agreement.
B. Subject to the terms and conditions of the Credit Agreement, Seafirst
and U.S. Bank have agreed to make Short-term Acquisition Loans to the Borrower
during the period beginning on the date of the Credit Agreement and ending on
the Short-term Acquisition Line Maturity Date.
C. The Credit Agreement contains certain financial covenants binding upon
the Borrower. It is known that the Borrower was in breach of the fixed charge
coverage ratio set forth in the Loan Agreement as of its fiscal year ended
September 27, 1996 and based on operating experience it is anticipated that the
Borrower's financial statements will disclose that the Borrower will be in
breach of such fixed charge coverage ratio as of its fiscal quarter ended
December 27, 1996.
- 1 -
<PAGE>
D. The Borrower has requested that the Agent and the Lenders waive their
rights to exercise remedies in respect of such defaults and has requested the
Lenders to extend the Short-term Acquisition Line Maturity Date until April 30,
1997 and extend the Long-term Acquisition Line Maturity Date until April 30,
1998. The Agent and the Lenders are prepared to grant such waivers and extend
the Short-term Acquisition Line Maturity Date and extend the Long-term
Acquisition Line Maturity Date on the terms and conditions set forth below.
NOW, THEREFORE, the parties agree as follows:
AGREEMENT
1. DEFINITIONS. Capitalized terms not otherwise defined in this Amendment
shall have the meanings given in the Credit Agreement.
2. WAIVER OF DEFAULTS.
2.1 ON OR BEFORE SEPTEMBER 27, 1996. Subject to the terms and
conditions of this Amendment, the Agent and the Lenders hereby waive their
respective rights to exercise remedies under the Credit Agreement in respect of
a breach occurring on or before September 27, 1996 of the Borrower's obligations
under Section 7.13 of the Credit Agreement.
2.2 ON OR BEFORE DECEMBER 27, 1996. Subject to the terms and
conditions of this Amendment, the Agent and the Lenders hereby waive their
respective rights to exercise remedies under the Credit Agreement in respect of
a breach occurring on or before December 27, 1996 of the Borrower's obligations
under Section 7.13 of the Credit Agreement provided, however, that the waiver
provided for in this Section 2.2 shall not become effective unless Borrower
shall have maintained, on a consolidated basis for the four consecutive fiscal
quarters ended December 27, 1996, a ratio of Fixed Charge Coverage of at least
1.0 to 1.0.
3. AMENDMENTS TO CREDIT AGREEMENT.
3.1 AMENDMENTS TO SECTION 1.1. In Section 1.1 of the Credit
Agreement, amendments are made to the definitions, as follows:
(a) INTERIM RATE. The definition of "Interim Rate" is amended
and restated to read as follows:
"Interim Rate" means, a per annum rate of interest equal to
the sum of (a) the per annum rate of interest established from time
to time by U.S. Bank as its "overnight money
- 2 -
<PAGE>
market rate" for loans of comparable amounts; and (b) one hundred
twenty-five (125) basis points (one and one-quarter percent)
changing as such "overnight money market rate" changes from time to
time.
(b) SHORT-TERM ACQUISITION LINE MATURITY DATE. The definition
of "Short-term Acquisition Line Maturity Date" is amended and restated to read
as follows:
"Short-term Acquisition Line Maturity
Date" means April 30, 1997.
(c) LONG-TERM ACQUISITION LINE MATURITY DATE. The definition
of "Long-term Acquisition Line Maturity Date" is amended and restated to read as
follows:
"Long-term Acquisition Line Maturity
Date" means April 30, 1998.
3.2 AMENDMENT TO SECTION 2.5. In Section 2.5(a) of the Credit
Agreement, the definition of "LIBOR Rate" is amended and restated to read as
follows:
"LIBOR Rate" means, with respect to any LIBOR Loan for any
Applicable Interest Period, an interest rate per annum equal to the
sum of (a) one hundred twenty-five (125) basis points (one and
one-quarter percent) and (b) the product of (i) the Euro-dollar Rate
in effect for such Applicable Interest Period and (ii) the
Euro-dollar Reserves in effect on the first day of such Applicable
Interest Period.
3.3 AMENDMENT TO SECTION 3.3. In Section 3.3 of the Credit
Agreement, clause (b)(i) is hereby deleted and the following substituted in its
stead:
(i) one hundred twenty-five (125) basis
points (one and one-quarter percent) and the
Applicable Acceptance Rate; and
4. PROMISSORY NOTES.
4.1 SHORT-TERM ACQUISITION NOTES. All references to the "Short-term
Acquisition Line Maturity Date" contained in the Short-term Acquisition Notes
shall mean the Short-term Acquisition Line Maturity Date as defined in the
Credit Agreement, as hereby amended.
- 3 -
<PAGE>
4.2 LONG-TERM ACQUISITION NOTES. All references to the "Long-term
Acquisition Line Maturity Date" contained in the Long-term Acquisition Notes
shall mean the Long-term Acquisition Line Maturity Date as defined in the Credit
Agreement, as hereby amended.
5. CONDITIONS TO EFFECTIVENESS. Notwithstanding anything contained herein
to the contrary, this Amendment shall not become effective until each of the
following conditions is fully and simultaneously satisfied on or before January
31, 1997:
5.1 DELIVERY OF AMENDMENTS. The Borrower, the Agent and each Lender
shall have executed and delivered counterparts of this Amendment and Amendment
Four to Agent.
5.2 REIMBURSEMENT FOR EXPENSES. The Borrower shall have reimbursed
the Agent for all expenses actually incurred by the Agent in connection with the
preparation of the Credit Agreement and the other Loan Documents and shall have
paid all other amounts due and owing under the Loan Documents.
5.3 BORROWER CORPORATE AUTHORITY. The Agent shall have received such
evidence of corporate authority as the Agent shall request.
5.4 REPRESENTATIONS TRUE; NO DEFAULT. The representations of the
Borrower as set forth in Article 6 of the Credit Agreement shall be true on and
as of the date of this Amendment with the same force and effect as if made on
and as of this date. No Event of Default and no event which, with notice or
lapse of time or both, would constitute a Event of Default, shall have occurred
and be continuing or will occur as a result of the execution of this Amendment.
6. REPRESENTATIONS AND WARRANTIES. The Borrower hereby represents and
warrants to the Lenders and the Agent that each of the representations and
warranties set forth in Article 6 of the Credit Agreement is true and correct in
each case as if made on and as of the date of this Amendment and the Borrower
expressly agrees that it shall be an additional Event of Default under the
Credit Agreement if any representation or warranty made hereunder shall prove to
have been incorrect in any material respect when made.
7. NO FURTHER AMENDMENT. Except as expressly modified by the terms of this
Amendment, all of the terms and conditions of the Credit Agreement and the other
Loan Documents shall remain in full force and effect and the parties hereto
expressly reaffirm and ratify their respective obligations thereunder.
8. GOVERNING LAW. This Amendment shall be governed by and
construed in accordance with the laws of the State of Washington.
- 4 -
<PAGE>
9. COUNTERPARTS. This Amendment may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of
which when so executed shall be deemed to be an original, and all of which taken
together shall constitute one and the same agreement.
10. ORAL AGREEMENTS NOT ENFORCEABLE.
ORAL AGREEMENTS OR ORAL COMMITMENTS TO LOAN MONEY,
EXTEND CREDIT, OR TO FORBEAR FROM ENFORCING REPAYMENT
OF A DEBT ARE NOT ENFORCEABLE UNDER WASHINGTON LAW.
IN WITNESS WHEREOF, the parties hereto have executed this Waiver and
Amendment Number Six to Amended and Restated Credit Agreement as of the date
first above written.
BORROWER: UNITED GROCERS, INC.
By /s/ John W. White
Its Vice President
LENDERS: BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION
By /s/ Gordon A. Gray
Its Vice President
UNITED STATES NATIONAL BANK OF
OREGON
By /s/ William H. Long
Its Vice President
HONGKONG BANK OF CANADA
By /s/ Randy Todd
Its Senior Vice President
- 5 -
<PAGE>
AGENT: BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION
By /s/ Dora A. Brown
Its Assistant Vice President
By /s/ Ronald A. Parsons
Its Vice President
- 6 -
<PAGE>
AMENDMENT NUMBER SEVEN TO
AMENDED AND RESTATED CREDIT AGREEMENT
THIS AMENDMENT NUMBER SEVEN TO AMENDED AND RESTATED CREDIT AGREEMENT (this
"Amendment") is made as of this 28th day of February, 1997 by and among BANK OF
AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION d/b/a SEAFIRST BANK, successor by
merger to Bank of America NW, N.A., successor by name change to Seattle-First
National Bank, a national banking association ("Seafirst"), UNITED STATES
NATIONAL BANK OF OREGON, a national banking association ("U.S. Bank"), HONGKONG
BANK OF CANADA, assignee in interest to The Hongkong and Shanghai Banking
Corporation, Limited, an extra national banking institution ("Hongkong Bank")
(each individually a "Lender" and collectively the "Lenders"), SEAFIRST, as
agent for the Lenders (the "Agent") and UNITED GROCERS, INC., an Oregon
corporation (the "Borrower").
RECITALS
A. The Lenders, the Borrower and the Agent are parties to that certain
Amended and Restated Credit Agreement dated as of May 31, 1996, as amended by
that certain Amendment Number One to Amended and Restated Credit Agreement dated
as of July 25, 1996, by that certain Amendment Number Two to Amended and
Restated Credit Agreement dated as of September 27, 1996 , by that certain
Amendment Number Three to Amended and Restated Credit Agreement dated as of
October 28, 1996, by that certain Amendment Number Four to Amended and Restated
Credit Agreement dated as of November 29, 1996, by that certain Amendment Number
Five to Amended and Restated Credit Agreement dated as of December 26, 1996 and
by that certain Waiver and Amendment Number Six to Amended and Restated Credit
Agreement dated as of January 31, 1997 (as the same has been or may be amended,
modified or extended from time to time the "Credit Agreement"). Capitalized
terms not otherwise defined in this Amendment shall have the meanings given in
the Credit Agreement.
B. The Credit Agreement contains certain financial covenants binding upon
the Borrower. The Borrower has requested that the Agent and the Lenders modify
the required fixed charge coverage ratio set forth in Section 7.13 of the Credit
Agreement through its fiscal quarter ending March 25, 1998. The Agent and the
Lenders are prepared to modify the fixed charge coverage ratio on the terms and
conditions set forth below.
NOW, THEREFORE, the parties agree as follows:
- 1 -
<PAGE>
AGREEMENT
1. DEFINITIONS. Capitalized terms not otherwise defined in this Amendment
shall have the meanings given in the Credit Agreement.
2. AMENDMENT TO CREDIT AGREEMENT. Section 7.13 of the Credit Agreement is
hereby deleted and the following substituted in its stead:
SECTION 7.13 FIXED CHARGE COVERAGE. Borrower shall maintain on a
consolidated basis a Fixed Charge Coverage ratio (for the four most recent
fiscal quarters) as follows:
PERIOD RATIO
December 28, 1996 through at least 1.0 to 1.0
June 27, 1997
June 28, 1997 through at least 1.15 to 1.0
September 26, 1997
September 27, 1997 through at least 1.2 to 1.0
December 26, 1997
December 27, 1997 through at least 1.25 to 1.0
March 25, 1998
As used in this Agreement, "Fixed Charge Coverage" means for any period
the ratio derived by dividing (a) the sum of net income for such period
(before income taxes, patronage dividends, and extraordinary items) plus
Fixed Charges by (b) Fixed Charges. As used in this Agreement, "Fixed
Charges" means the sum of (a) interest expense on all of Borrower's
Indebtedness, (b) the amortization of any discount applied in advancing
Funded Debt to Borrower, and (c) gross rental expense net of pass-through
rental income from Borrower's members.
3. CONDITIONS TO EFFECTIVENESS. Notwithstanding anything contained herein
to the contrary, this Amendment shall not become effective until each of the
following conditions is fully and simultaneously satisfied on or before February
28, 1997:
3.1 DELIVERY OF AMENDMENT. The Borrower, the Agent and each Lender
shall have executed and delivered counterparts of this Amendment to Agent.
3.2 REIMBURSEMENT FOR EXPENSES. The Borrower shall have reimbursed
the Agent for all expenses actually incurred by
- 2 -
<PAGE>
the Agent in connection with the preparation of the Credit Agreement and the
other Loan Documents and shall have paid all other amounts due and owing under
the Loan Documents.
3.3 BORROWER CORPORATE AUTHORITY. The Agent shall have received such
evidence of corporate authority as the Agent shall request.
3.4 REPRESENTATIONS TRUE; NO DEFAULT. The representations of the
Borrower as set forth in Article 6 of the Credit Agreement shall be true on and
as of the date of this Amendment with the same force and effect as if made on
and as of this date. No Event of Default and no event which, with notice or
lapse of time or both, would constitute a Event of Default, shall have occurred
and be continuing or will occur as a result of the execution of this Amendment.
4. REPRESENTATIONS AND WARRANTIES. The Borrower hereby represents and
warrants to the Lenders and the Agent that each of the representations and
warranties set forth in Article 6 of the Credit Agreement is true and correct in
each case as if made on and as of the date of this Amendment and the Borrower
expressly agrees that it shall be an additional Event of Default under the
Credit Agreement if any representation or warranty made hereunder shall prove to
have been incorrect in any material respect when made.
5. NO FURTHER AMENDMENT. Except as expressly modified by the terms of this
Amendment, all of the terms and conditions of the Credit Agreement and the other
Loan Documents shall remain in full force and effect and the parties hereto
expressly reaffirm and ratify their respective obligations thereunder.
6. GOVERNING LAW. This Amendment shall be governed by and construed in
accordance with the laws of the State of Washington.
7. COUNTERPARTS. This Amendment may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of
which when so executed shall be deemed to be an original, and all of which taken
together shall constitute one and the same agreement.
8. ORAL AGREEMENTS NOT ENFORCEABLE.
ORAL AGREEMENTS OR ORAL COMMITMENTS TO LOAN MONEY,
EXTEND CREDIT, OR TO FORBEAR FROM ENFORCING REPAYMENT
OF A DEBT ARE NOT ENFORCEABLE UNDER WASHINGTON LAW.
- 3 -
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Amendment Number
Seven to Amended and Restated Credit Agreement as of the date first above
written.
BORROWER: UNITED GROCERS, INC.
By /s/ John W. white
Its Vice President
LENDERS: BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION
By /s/ Gordon A. Gray
Its Vice President
UNITED STATES NATIONAL BANK OF
OREGON
By /s/ William H. Long
Its Vice President
HONGKONG BANK OF CANADA
By /s/ Randy Todd
Its Senior Vice President
AGENT: BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION
By /s/ Ronald R. Parsons
Its Vice President
By /s/ Dora A. Brown
Its Assistant Vice President
- 4 -
<PAGE>
AMENDMENT NUMBER EIGHT TO
AMENDED AND RESTATED CREDIT AGREEMENT
THIS AMENDMENT NUMBER EIGHT TO AMENDED AND RESTATED CREDIT AGREEMENT (this
"Amendment") is made as of this 30th day of April, 1997 by and among BANK OF
AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION d/b/a SEAFIRST BANK, successor by
merger to Bank of America NW, N.A., successor by name change to Seattle-First
National Bank, a national banking association ("Seafirst"), UNITED STATES
NATIONAL BANK OF OREGON, a national banking association ("U.S. Bank"), HONGKONG
BANK OF CANADA, assignee in interest to The Hongkong and Shanghai Banking
Corporation, Limited, an extra national banking institution ("Hongkong Bank")
(each individually a "Lender" and collectively the "Lenders"), SEAFIRST, as
agent for the Lenders (the "Agent") and UNITED GROCERS, INC., an Oregon
corporation (the "Borrower").
RECITALS
A. The Lenders, the Borrower and the Agent are parties to that certain
Amended and Restated Credit Agreement dated as of May 31, 1996, as amended by
that certain Amendment Number One to Amended and Restated Credit Agreement dated
as of July 25, 1996, by that certain Amendment Number Two to Amended and
Restated Credit Agreement dated as of September 27, 1996, by that certain
Amendment Number Three to Amended and Restated Credit Agreement dated as of
October 28, 1996, by that certain Amendment Number Four to Amended and Restated
Credit Agreement dated as of November 29, 1996, by that certain Amendment Number
Five to Amended and Restated Credit Agreement dated as of December 26, 1996, by
that certain Waiver and Amendment Number Six to Amended and Restated Credit
Agreement dated as of January 31, 1997 and by that certain Amendment Number
Seven to Amended and Restated Credit Agreement dated as of February 28, 1997 (as
the same has been or may be amended, modified or extended from time to time the
"Credit Agreement"). Capitalized terms not otherwise defined in this Amendment
shall have the meanings given in the Credit Agreement.
B. Subject to the terms and conditions of the Credit Agreement, Lenders
have agreed to make Operating Loans to the Borrower and U.S. Bank has agreed to
make Overnight Loans to the Borrower during the period beginning on the date of
the Credit Agreement and ending on the Short-term Maturity Date. Lenders have
also agreed to make Revolving Loans to the Borrower, as provided therefor in the
Credit Agreement, during the period beginning on the date of the Credit
Agreement and ending on the Long-term Maturity Date.
C. Subject to the terms and conditions of the Credit Agreement, Seafirst
and U.S. Bank have agreed to make Short-term
- 1 -
<PAGE>
Acquisition Loans to the Borrower during the period beginning on the date of the
Credit Agreement and ending on the Short-term Acquisition Line Maturity Date.
Seafirst and U.S. Bank have also agreed to make Long-term Acquisition Loans to
the Borrower, as provided therefor in the Credit Agreement, during the period
beginning on the date of the Credit Agreement and ending on the Long-term
Acquisition Line Maturity Date.
D. The Borrower has requested that the Agent and the Lenders extend the
Short-term Maturity Date and the Short-term Acquisition Line Maturity Date until
May 30, 1997, and the Long-term Maturity Date and the Long-term Acquisition Line
Maturity Date until May 30, 1998. The Agent and the Lenders are prepared to
extend the Maturity Dates on the terms and conditions set forth below.
NOW, THEREFORE, the parties agree as follows:
AGREEMENT
1. DEFINITIONS. Capitalized terms not otherwise defined in this Amendment
shall have the meanings given in the Credit Agreement.
2. AMENDMENTS TO CREDIT AGREEMENT.
2.1 AMENDMENTS TO SECTION 1.1. In Section 1.1 of the Credit
Agreement, amendments are made to the definitions, as follows:
(A) INTERIM RATE. The definition of "Interim Rate" is amended
and restated to read as follows:
"Interim Rate" means, a per annum rate of
interest equal to the sum of (a) the per annum rate
of interest established from time to time by U.S.
Bank as its "overnight money market rate" for loans
of comparable amounts; and (b) one hundred fifty
(150) basis points (one and one-half percent)
changing as such "overnight money market rate"
changes from time to time.
(B) LONG-TERM ACQUISITION LINE MATURITY DATE. The definition
of "Long-term Acquisition Line Maturity Date" is amended and restated to read as
follows:
"Long-term Acquisition Line Maturity Date"
means May 30, 1998.
- 2 -
<PAGE>
(C) LONG-TERM MATURITY DATE. The definition of "Long-term
Maturity Date" is amended and restated to read as follows:
"Long-term Maturity Date" means May 30, 1998.
(D) SHORT-TERM ACQUISITION LINE MATURITY DATE. The definition
of "Short-term Acquisition Line Maturity Date" is amended and restated to read
as follows:
"Short-term Acquisition Line Maturity Date"
means May 30, 1997.
(E) SHORT-TERM MATURITY DATE. The definition of "Short-term
Maturity Date" is amended and restated to read as follows:
"Short-term Maturity Date" means May 30, 1997.
2.2 AMENDMENT TO SECTION 2.5. In Section 2.5(a) of the Credit
Agreement, the definition of "LIBOR Rate" is amended and restated to read as
follows:
"LIBOR Rate" means, with respect to any LIBOR
Loan for any Applicable Interest Period, an interest
rate per annum equal to the sum of (a) one hundred
fifty (150) basis points (one and one-half percent)
and (b) the product of (i) the Euro-dollar Rate in
effect for such Applicable Interest Period and (ii)
the Euro-dollar Reserves in effect on the first day
of such Applicable Interest Period.
2.3 AMENDMENT TO SECTION 3.3. In Section 3.3 of the Credit
Agreement, clause (b)(i) is hereby deleted and the following substituted in its
stead:
(i) one hundred fifty (150) basis points (one and
one-half percent) and the Applicable Acceptance Rate;
and
3. PROMISSORY NOTES.
3.4 REVOLVING NOTES. All references to the "Long-term Maturity Date"
contained in the Revolving Notes shall mean the Long-term Maturity Date as
defined in the Credit Agreement, as hereby amended.
- 3 -
<PAGE>
3.3 OPERATING NOTES. All references to the "Short-term Maturity
Date" contained in the Operating Notes shall mean the Short-term Maturity Date
as defined in the Credit Agreement, as hereby amended.
3.1 LONG-TERM ACQUISITION NOTES. All references to the "Long-term
Acquisition Line Maturity Date" contained in the Long-term Acquisition Notes
shall mean the Long-term Acquisition Line Maturity Date as defined in the Credit
Agreement, as hereby amended.
3.2 SHORT-TERM ACQUISITION NOTES. All references to the "Short-term
Acquisition Line Maturity Date" contained in the Short-term Acquisition Notes
shall mean the Short-term Acquisition Line Maturity Date as defined in the
Credit Agreement, as hereby amended.
3.5 OVERNIGHT NOTE. All references to the "Short-term Maturity Date"
contained in the Overnight Note shall mean the Short-term Maturity Date as
defined in the Credit Agreement, as hereby amended.
4. CONDITIONS TO EFFECTIVENESS. Notwithstanding anything contained herein
to the contrary, this Amendment shall not become effective until each of the
following conditions is fully and simultaneously satisfied on or before April
30, 1997:
4.1 DELIVERY OF AMENDMENT. The Borrower, the Agent and each Lender
shall have executed and delivered counterparts of this Amendment to Agent.
4.2 EXTENSION FEE. The Borrower shall have paid to the Agent for the
account of the Lenders, in proportion to the percentage that aggregate of such
Lender's Commitments bears to the Total Commitment, an extension fee in an
amount equal to one-twelfth of one-eighth percent of the Total Commitment.
4.3 REIMBURSEMENT FOR EXPENSES. The Borrower shall have reimbursed
the Agent for all expenses actually incurred by the Agent in connection with the
preparation of the Credit Agreement and the other Loan Documents and shall have
paid all other amounts due and owing under the Loan Documents.
4.4 BORROWER CORPORATE AUTHORITY. The Agent shall have received such
evidence of corporate authority as the Agent shall request.
4.5 REPRESENTATIONS TRUE; NO DEFAULT. The representations of the
Borrower as set forth in Article 6 of the Credit Agreement shall be true on and
as of the date of this Amendment with the same force and effect as if made on
and as of this date. No Event of Default and no event which, with notice or
- 4 -
<PAGE>
lapse of time or both, would constitute a Event of Default, shall have occurred
and be continuing or will occur as a result of the execution of this Amendment.
5. REPRESENTATIONS AND WARRANTIES. The Borrower hereby represents and
warrants to the Lenders and the Agent that each of the representations and
warranties set forth in Article 6 of the Credit Agreement is true and correct in
each case as if made on and as of the date of this Amendment and the Borrower
expressly agrees that it shall be an additional Event of Default under the
Credit Agreement if any representation or warranty made hereunder shall prove to
have been incorrect in any material respect when made.
6. NO FURTHER AMENDMENT. Except as expressly modified by the terms of this
Amendment, all of the terms and conditions of the Credit Agreement and the other
Loan Documents shall remain in full force and effect and the parties hereto
expressly reaffirm and ratify their respective obligations thereunder.
7. GOVERNING LAW. This Amendment shall be governed by and construed in
accordance with the laws of the State of Washington.
8. COUNTERPARTS. This Amendment may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of
which when so executed shall be deemed to be an original, and all of which taken
together shall constitute one and the same agreement.
9. ORAL AGREEMENTS NOT ENFORCEABLE.
ORAL AGREEMENTS OR ORAL COMMITMENTS TO LOAN MONEY, EXTEND CREDIT, OR TO
FORBEAR FROM ENFORCING REPAYMENT OF A DEBT ARE NOT ENFORCEABLE UNDER
WASHINGTON LAW.
IN WITNESS WHEREOF, the parties hereto have executed this Amendment Number
Eight to Amended and Restated Credit Agreement as of the date first above
written.
BORROWER: UNITED GROCERS, INC.
By
Its
- 5 -
<PAGE>
LENDERS: BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION
By
Its
UNITED STATES NATIONAL BANK OF
OREGON
By
Its
HONGKONG BANK OF CANADA
By
Its
AGENT: BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION
By
Its
- 6 -
<PAGE>
AMENDMENT NUMBER NINE TO
AMENDED AND RESTATED CREDIT AGREEMENT
THIS AMENDMENT NUMBER NINE TO AMENDED AND RESTATED CREDIT AGREEMENT (this
"Amendment") is made as of this 30th day of May, 1997 by and among BANK OF
AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION d/b/a SEAFIRST BANK, successor by
merger to Bank of America NW, N.A., successor by name change to Seattle-First
National Bank, a national banking association ("Seafirst"), UNITED STATES
NATIONAL BANK OF OREGON, a national banking association ("U.S. Bank"), HONGKONG
BANK OF CANADA, assignee in interest to The Hongkong and Shanghai Banking
Corporation, Limited, an extra national banking institution ("Hongkong Bank")
(each individually a "Lender" and collectively the "Lenders"), SEAFIRST, as
agent for the Lenders (the "Agent") and UNITED GROCERS, INC., an Oregon
corporation (the "Borrower").
RECITALS
A. The Lenders, the Borrower and the Agent are parties to that certain
Amended and Restated Credit Agreement dated as of May 31, 1996, as amended by
that certain Amendment Number One to Amended and Restated Credit Agreement dated
as of July 25, 1996, by that certain Amendment Number Two to Amended and
Restated Credit Agreement dated as of September 27, 1996, by that certain
Amendment Number Three to Amended and Restated Credit Agreement dated as of
October 28, 1996, by that certain Amendment Number Four to Amended and Restated
Credit Agreement dated as of November 29, 1996, by that certain Amendment Number
Five to Amended and Restated Credit Agreement dated as of December 26, 1996, by
that certain Waiver and Amendment Number Six to Amended and Restated Credit
Agreement dated as of January 31, 1997, by that certain Amendment Number Seven
to Amended and Restated Credit Agreement dated as of February 28, 1997 and by
that certain Amendment Number Eight to Amended and Restated Credit Agreement
dated as of April 30, 1997 (as the same has been or may be amended, modified or
extended from time to time the "Credit Agreement"). Capitalized terms not
otherwise defined in this Amendment shall have the meanings given in the Credit
Agreement.
B. Subject to the terms and conditions of the Credit Agreement, Lenders
have agreed to make Operating Loans to the Borrower and U.S. Bank has agreed to
make Overnight Loans to the Borrower during the period beginning on the date of
the Credit Agreement and ending on the Short-term Maturity Date. Lenders have
also agreed to make Revolving Loans to the Borrower, as provided therefor in the
Credit Agreement, during the period beginning on the date of the Credit
Agreement and ending on the Long-term Maturity Date.
- 1 -
<PAGE>
C. Subject to the terms and conditions of the Credit Agreement, Seafirst
and U.S. Bank have agreed to make Short-term Acquisition Loans to the Borrower
during the period beginning on the date of the Credit Agreement and ending on
the Short-term Acquisition Line Maturity Date. Seafirst and U.S. Bank have also
agreed to make Long-term Acquisition Loans to the Borrower, as provided therefor
in the Credit Agreement, during the period beginning on the date of the Credit
Agreement and ending on the Long-term Acquisition Line Maturity Date.
D. The Borrower has requested that the Agent and the Lenders extend the
Short-term Acquisition Line Maturity Date and the Short Term Maturity Date until
June 30, 1997 and extend the Long-term Acquisition Line Maturity Date and the
Long Term Maturity Date until June 30, 1998. The Agent and the Lenders are
prepared to extend the Short-term Acquisition Line Maturity Date and extend the
Long-term Acquisition Line Maturity Date on the terms and conditions set forth
below.
NOW, THEREFORE, the parties agree as follows:
AGREEMENT
1. DEFINITIONS. Capitalized terms not otherwise defined in this Amendment
shall have the meanings given in the Credit Agreement.
2. AMENDMENTS TO CREDIT AGREEMENT. In Section 1.1 of the Credit Agreement,
amendments are made to the definitions, as follows:
2.1 LONG-TERM ACQUISITION LINE MATURITY DATE. The definition of
"Long-term Acquisition Line Maturity Date" is amended and restated to read as
follows:
"Long-term Acquisition Line Maturity Date"
means June 30, 1998.
2.2 LONG-TERM MATURITY DATE. The definition of "Long- term Maturity
Date" is amended and restated to read as follows:
"Long-term Maturity Date" means June 30, 1998.
2.3 SHORT-TERM ACQUISITION LINE MATURITY DATE. The definition of
"Short-term Acquisition Line Maturity Date" is amended and restated to read as
follows:
"Short-term Acquisition Line Maturity Date"
means June 30, 1997.
- 2 -
<PAGE>
2.4 SHORT-TERM MATURITY DATE. The definition of "Short-term Maturity
Date" is amended and restated to read as follows:
"Short-term Maturity Date" means June 30, 1997.
3. PROMISSORY NOTES.
3.1 REVOLVING NOTES. All references to the "Long-term Maturity Date"
contained in the Revolving Notes shall mean the Long-term Maturity Date as
defined in the Credit Agreement, as hereby amended.
3.2 OPERATING NOTES. All references to the "Short-term Maturity
Date" contained in the Operating Notes shall mean the Short-term Maturity Date
as defined in the Credit Agreement, as hereby amended.
3.3 SHORT-TERM ACQUISITION NOTES. All references to the "Short-term
Acquisition Line Maturity Date" contained in the Short-term Acquisition Notes
shall mean the Short-term Acquisition Line Maturity Date as defined in the
Credit Agreement, as hereby amended.
3.4 LONG-TERM ACQUISITION NOTES. All references to the "Long-term
Acquisition Line Maturity Date" contained in the Long-term Acquisition Notes
shall mean the Long-term Acquisition Line Maturity Date as defined in the Credit
Agreement, as hereby amended.
3.5 OVERNIGHT NOTE. All references to the "Short-term Maturity Date"
contained in the Overnight Note shall mean the Short-term Maturity Date as
defined in the Credit Agreement, as hereby amended.
4. CONDITIONS TO EFFECTIVENESS. Notwithstanding anything contained herein
to the contrary, this Amendment shall not become effective until each of the
following conditions is fully and simultaneously satisfied on or before May 30,
1997:
4.1 DELIVERY OF AMENDMENT. The Borrower, the Agent and each Lender
shall have executed and delivered counterparts of this Amendment to Agent.
4.2 REIMBURSEMENT FOR EXPENSES. The Borrower shall have reimbursed
the Agent for all expenses actually incurred by the Agent in connection with the
preparation of the Credit Agreement and the other Loan Documents and shall have
paid all other amounts due and owing under the Loan Documents.
4.3 BORROWER CORPORATE AUTHORITY. The Agent shall have received such
evidence of corporate authority as the Agent shall request.
4.4 REPRESENTATIONS TRUE; NO DEFAULT. The representations of the
Borrower as set forth in Article 6 of the
- 3 -
<PAGE>
Credit Agreement shall be true on and as of the date of this Amendment with the
same force and effect as if made on and as of this date. No Event of Default and
no event which, with notice or lapse of time or both, would constitute a Event
of Default, shall have occurred and be continuing or will occur as a result of
the execution of this Amendment.
5. REPRESENTATIONS AND WARRANTIES. The Borrower hereby represents and
warrants to the Lenders and the Agent that each of the representations and
warranties set forth in Article 6 of the Credit Agreement is true and correct in
each case as if made on and as of the date of this Amendment and the Borrower
expressly agrees that it shall be an additional Event of Default under the
Credit Agreement if any representation or warranty made hereunder shall prove to
have been incorrect in any material respect when made.
6. NO FURTHER AMENDMENT. Except as expressly modified by the terms of this
Amendment, all of the terms and conditions of the Credit Agreement and the other
Loan Documents shall remain in full force and effect and the parties hereto
expressly reaffirm and ratify their respective obligations thereunder.
7. GOVERNING LAW. This Amendment shall be governed by and construed in
accordance with the laws of the State of Washington.
8. COUNTERPARTS. This Amendment may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of
which when so executed shall be deemed to be an original, and all of which taken
together shall constitute one and the same agreement.
9. ORAL AGREEMENTS NOT ENFORCEABLE.
ORAL AGREEMENTS OR ORAL COMMITMENTS TO LOAN MONEY, EXTEND CREDIT, OR TO
FORBEAR FROM ENFORCING REPAYMENT OF A DEBT ARE NOT ENFORCEABLE UNDER
WASHINGTON LAW.
- 4 -
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Amendment Number
Nine to Amended and Restated Credit Agreement as of the date first above
written.
BORROWER: UNITED GROCERS, INC.
By
Its
LENDERS: BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION
By
Its
UNITED STATES NATIONAL BANK OF
OREGON
By
Its
HONGKONG BANK OF CANADA
By
Its
AGENT: BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION
By
Its
- 5 -
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
consolidated financial statements of United Grocers, Inc., for the
year-to-date period ended June 27, 1997 and is qualified in its entirety
by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> OCT-03-1997
<PERIOD-START> SEP-28-1996
<PERIOD-END> JUN-27-1997
<CASH> 9,876,536
<SECURITIES> 51,195,901
<RECEIVABLES> 79,467,366
<ALLOWANCES> 3,211,195
<INVENTORY> 95,246,365
<CURRENT-ASSETS> 243,262,194
<PP&E> 117,741,481
<DEPRECIATION> 48,305,991
<TOTAL-ASSETS> 373,429,198
<CURRENT-LIABILITIES> 200,437,011
<BONDS> 133,508,342
0
0
<COMMON> 3,018,745
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 373,429,198
<SALES> 973,651,940
<TOTAL-REVENUES> 973,651,940
<CGS> 838,192,007
<TOTAL-COSTS> 942,197,262
<OTHER-EXPENSES> 14,303,464
<LOSS-PROVISION> 1,716,500
<INTEREST-EXPENSE> 12,115,194
<INCOME-PRETAX> (4,721,032)
<INCOME-TAX> 2,600,000
<INCOME-CONTINUING> (2,121,032)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (2,121,032)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
