<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 6, 1998
REGISTRATION NO. 33-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------------
FORM S-2
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
CERTIFIED GROCERS OF CALIFORNIA, LTD.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C>
CALIFORNIA 95-0615250
(STATE OR OTHER JURISDICTION OF INCORPORATION (I.R.S. EMPLOYER IDENTIFICATION NO.)
OR ORGANIZATION)
</TABLE>
----------------
2601 S. EASTERN AVENUE
LOS ANGELES, CALIFORNIA 90040
(213) 723-7476
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
----------------
ROBERT M. LING, JR., GENERAL COUNSEL
CERTIFIED GROCERS OF CALIFORNIA, LTD.
2601 S. EASTERN AVENUE
LOS ANGELES, CALIFORNIA 90040
(213) 723-7476
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF AGENT FOR SERVICE)
----------------
COPY TO:
JON W. NEWBY, ESQUIRE
SHEPPARD, MULLIN, RICHTER & HAMPTON LLP
333 SOUTH HOPE STREET, 48TH FLOOR
LOS ANGELES, CALIFORNIA 90071
(213) 617-4142
----------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
As soon as practicable after this Registration Statement becomes effective.
IF ANY OF THE SECURITIES BEING REGISTERED ON THIS FORM ARE TO BE OFFERED ON
A DELAYED OR CONTINUOUS BASIS PURSUANT TO RULE 415 UNDER THE SECURITIES ACT OF
1933, CHECK THE FOLLOWING BOX. [X]
IF THE REGISTRANT ELECTS TO DELIVER ITS LATEST ANNUAL REPORT TO SECURITIES
HOLDERS, OR A COMPLETE AND LEGIBLE FACSIMILE THEREOF, PURSUANT TO ITEM
11(A)(1) OF THIS FORM, CHECK THE FOLLOWING BOX. [X]
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
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TITLE OF EACH CLASS OF PROPOSED PROPOSED MAXIMUM
SECURITIES TO BE AMOUNT TO BE MAXIMUM OFFERING AGGREGATE AMOUNT OF
REGISTERED REGISTERED PRICE PER UNIT OFFERING PRICE REGISTRATION FEE
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<S> <C> <C> <C> <C>
$50,000,000 Partially
Subordinated Patrons'
Deposit Accounts...... $50,000,000 none $50,000,000 $14,750
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</TABLE>
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(a) OF THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION
STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(a), MAY DETERMINE.
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<PAGE>
PROSPECTUS
CERTIFIED GROCERS OF CALIFORNIA, LTD.
$50,000,000 PARTIALLY SUBORDINATED
PATRONS' DEPOSIT ACCOUNTS
This Prospectus relates to the Partially Subordinated Patrons' Deposit
Accounts (the "Deposit Accounts") maintained with Certified Grocers of
California, Ltd. ("Certified" or the "Company") by the member-patrons and
associate patrons of the Company and the Deposit Accounts to be maintained
with the Company by such persons or entities who from time to time become
member-patrons or associate patrons of the Company. (Member-patrons and
associate patrons are collectively referred to herein as "patrons"). Patrons
are generally required to maintain deposits with the Company in certain
required amounts and may also maintain deposits in excess of such required
amounts. All such deposits of a patron are maintained in the patron's Deposit
Account. Patrons are required to execute subordination agreements providing
for the pledging of their Deposit Accounts to the Company and the
subordination of that portion of their Deposit Accounts which consists of
required deposits to Senior Indebtedness (as defined herein) of the Company.
The subordination agreements executed by patrons on and after January 14, 1994
differ from the subordination agreements which have been executed by patrons
before January 14, 1994. See "DESCRIPTION OF DEPOSIT ACCOUNTS --
Subordination."
That portion of each Deposit Account consisting of required deposits does
not bear interest. Interest is paid with respect to that portion, if any, of a
Deposit Account which exceeds the required amounts. The rate is 8.5% per annum
at the date of this Prospectus. The Deposit Accounts are not secured by any
lien on any assets of the Company, are nontransferable without the consent of
the Company, which will normally be withheld, and are required to be pledged
to the Company as security for obligations to the Company and its
subsidiaries. On termination of membership of a member-patron or on an
associate patron ceasing to do business with the Company, the patron will be
entitled to the return of its Deposit Account, less all amounts that may be
owing by the patron to the Company or any of its subsidiaries; provided that
return of that portion of the Deposit Account which consists of required
deposits will be governed by the subordination provisions to which it is
subject and will be returned only as and to the extent permitted thereby. That
portion of the Deposit Account which is in excess of the required deposits
will be paid to the patron on its request provided the patron is not in
default in any of its obligations to the Company or any of its subsidiaries.
(See "DESCRIPTION OF DEPOSIT ACCOUNTS").
This prospectus is accompanied by a copy of the Company's latest Form 10-K
and latest Form 10-Q as filed with the Securities and Exchange Commission.
Since the Deposit Accounts are not segregated from the Company's other funds
and are unsecured obligations, and since the Company has not established any
reserves for their repayment, there can be no assurance that the Company would
have the ability to repay the Deposit Accounts in the event of insolvency or
other financial difficulty or in the event the Company were required to return
a substantial amount of the Deposit Accounts at one time or over a brief
period of time. See "DESCRIPTION OF DEPOSIT ACCOUNTS -- Repayment."
------------------
CAREFUL CONSIDERATION SHOULD BE GIVEN TO THE MATTERS DISCUSSED UNDER
"RISK FACTORS," BEGINNING ON PAGE 3 OF THIS PROSPECTUS.
------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
<TABLE>
<CAPTION>
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UNDERWRITING PROCEEDS
PRICE DISCOUNTS AND TO THE
TO PUBLIC COMMISSIONS COMPANY (1)(2)
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<S> <C> <C> <C>
$50,000,000 Partially
Subordinated Patrons' Deposit
Accounts........................ $50,000,000 none $50,000,000
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</TABLE>
(1) As of the date of registration, the expenses payable by the Company were
estimated at $45,000.
(2) Based on the assumption that this amount of Deposit Accounts will be
acquired by patrons. There is no assurance that this amount will be so
acquired.
THIS OFFER IS NOT UNDERWRITTEN.
THE DATE OF THIS PROSPECTUS IS , 1998.
<PAGE>
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, and in accordance therewith, files reports, proxy
statements and other information with the Securities and Exchange Commission
("Commission"). Copies of such materials can be obtained from the Public
Reference Section of the Commission, Washington, D.C. 20549, at prescribed
rates. In addition, such material can be inspected and copied at the public
reference facilities maintained by the Commission and located at the
Northwestern Atrium Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661, and 7 World Trade Center, New York, New York 10048.
ADDITIONAL INFORMATION
As permitted by the rules and regulations of the Commission, this Prospectus
omits certain information and exhibits contained in a Registration Statement
on Form S-2 filed by the Company with the Commission. For further information,
reference is made to the Registration Statement including the exhibits filed
as a part thereof. Copies of the Registration Statement and exhibits may be
obtained from the principal office of the Commission in Washington, D.C. upon
payment of the fee prescribed by the rules and regulations of the Commission.
INCORPORATION BY REFERENCE
The following documents filed with the Commission are incorporated by
reference into this Prospectus: (i) Annual Report on Form 10-K for the fiscal
year ended August 30, 1997, and (ii) all other reports filed pursuant to
Section 13(a) or 15(a) of the Exchange Act since the end of the fiscal year
covered by the Annual Report.
COMPANY INFORMATION
The Company's executive offices are located at 2601 S. Eastern Avenue, Los
Angeles, California 90040 (213/723-7476).
2
<PAGE>
RISK FACTORS
EXCEPT FOR THE HISTORICAL INFORMATION CONTAINED HEREIN, THE MATTERS
DISCUSSED IN THIS PROSPECTUS ARE FORWARD-LOOKING STATEMENTS WHICH INVOLVE
RISKS AND UNCERTAINTIES, INCLUDING BUT NOT LIMITED TO ECONOMIC, COMPETITIVE,
GOVERNMENTAL AND TECHNOLOGICAL FACTORS AFFECTING THE COMPANY'S OPERATIONS,
MARKETS, PRODUCTS, SERVICES AND PRICES, AND OTHER FACTORS DISCUSSED IN THE
COMPANY'S FILINGS WITH THE SECURITIES AND EXCHANGE COMMISSION.
Careful consideration should be given to the following factors concerning
the Company and the securities offered in this Prospectus:
SUBORDINATION
The portion of the Deposit Accounts consisting of required deposits will be
subordinated to the prior payment in full of Senior Indebtedness (as defined
herein) of the Company. Patrons are required to execute subordination
agreements with respect to their Deposit Accounts. The subordination
agreements executed by patrons on and after January 14, 1994 differ from the
subordination agreements which have been executed by patrons before January
14, 1994. The portion of the Deposit Accounts consisting of required deposits
cannot be repaid by the Company in the event of an uncured default by the
Company respecting Senior Indebtedness, or in the event of dissolution,
liquidation or insolvency proceedings involving the Company, until all Senior
Indebtedness has been paid in full or provision made for such payment
satisfactory to the holders of Senior Indebtedness. The total amount of
outstanding Senior Indebtedness to which required deposits are subordinated
aggregated approximately $147,000,000 as of February 28, 1998. There is no
limitation on the Company's creation of additional Senior Indebtedness. See
"DESCRIPTION OF DEPOSIT ACCOUNTS -- Subordination."
UNSECURED OBLIGATIONS
The Deposit Accounts are not secured by any lien upon any assets of the
Company and are unsecured obligations of the Company.
NONTRANSFERABILITY
The Deposit Accounts are nontransferable without the consent of the Company,
which will normally be withheld. Patrons are required to pledge their Deposit
Accounts to the Company as security for their obligations to the Company and
its subsidiaries.
INTEREST
The portion of the Deposit Accounts consisting of required deposits does not
bear interest. See "DESCRIPTION OF DEPOSIT ACCOUNTS -- Interest."
REPAYMENT
Amounts in a patron's Deposit Account in excess of the amount consisting of
required deposits are returnable upon request of the patron if the patron is
not in default of its obligations to the Company or any of its subsidiaries.
Upon termination of membership of a member-patron or on an associate patron
ceasing to do business with the Company, the patron is entitled to the return
of its Deposit Account, less all amounts owing to the Company and its
subsidiaries. In all cases, however, return of the portion of the Deposit
Account consisting of required deposits is governed by the subordination
provisions to which it is subject.
Since the Deposit Accounts are not segregated from the Company's other funds
and are unsecured obligations, and since the Company has not established any
reserves for their repayment, there can be no assurance that the Company would
have the ability to repay the Deposit Accounts in the event of insolvency or
other financial difficulty or in the event the Company were required to return
a substantial amount of the Deposit Accounts at one time or over a brief
period of time. See "DESCRIPTION OF DEPOSIT ACCOUNTS -- Repayment."
3
<PAGE>
VOLUME LOSSES
The Company experienced reductions in sales volume from fiscal 1991 levels
totaling approximately $945 million between fiscal years 1992 and 1995. During
this period, certain of the Company's large member-patrons either grew to the
size where they elected to establish self-distribution programs or were
acquired by chains that had existing self-distribution programs. Additionally,
sales volume was lost as a result of the decision of certain large patrons to
expand their own warehousing and distribution operations in fiscal 1994.
The Company's third and fourth largest customers, Nob Hill General Store,
Inc. ("Nob Hill") and Hughes Markets, Inc. ("Hughes"), respectively, have been
acquired by entities that have self-distribution programs. These acquisitions
were both completed during the first quarter of 1998. The Company's sales to
Nob Hill and Hughes totaled approximately $150 million in fiscal 1997.
There can be no assurance that future sales volume reductions will not
occur, whether by merger or acquisition of patrons or election by patrons to
switch to self-distribution or other supply sources. The Company's largest
customer and ten largest customers accounted for approximately 5% and 31%,
respectively, of net sales in fiscal 1997.
RATIO OF EARNINGS TO FIXED CHARGES
<TABLE>
<CAPTION>
SIX MONTHS FISCAL YEAR
ENDED ----------------------------
2/28/98 1997 1996 1995 1994 1993
---------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Ratio of earnings to
fixed charges(1)....... 2.26x 2.21x 1.94x 1.71x 1.63x 1.78x
</TABLE>
- ---------------------
(1) Earnings used in computing the ratio of earnings to fixed charges consist
of earnings before patronage dividends, provision for income taxes, and
cumulative effect of change in accounting principle in 1994 of $2.5
million, plus fixed charges. Fixed charges consist of interest expense
(including amortization of deferred financing costs) and the portion of
rental expense that is representative of the interest factor.
DESCRIPTION OF DEPOSIT ACCOUNTS
GENERAL
Patrons are generally required to maintain deposits with the Company in
certain required amounts and may also maintain deposits with the Company in
excess of such required amounts. All such deposits of a patron are maintained
in the patron's Deposit Account. Patrons are required to execute subordination
agreements providing for the pledging of their Deposit Accounts to the Company
and the subordination of that portion of their Deposit Accounts which consists
of required deposits to Senior Indebtedness (as defined herein) of the
Company. As described below under the caption "Subordination," the
subordination agreements executed by patrons on and after January 14, 1994
differ from the subordination agreements which have been executed by patrons
before January 14, 1994. Thus, persons or entities who become member-patrons
or associate patrons on or after January 14, 1994 are required to execute the
new subordination agreements. In addition, patrons who executed subordination
agreements before January 14, 1994 may be required to execute the new
subordination agreements if there is a change in the patron's business form.
For example, in the event of a change in a patron which is a proprietorship or
partnership, or a change in the stock ownership of a patron which is a
corporation, the Company may require the execution of a new subordination
agreement.
Amounts in the Deposit Accounts are not segregated from other funds of the
Company. The Deposit Accounts are recorded in the Company's records by means
of book entries, and no note, certificate or other instrument is issued as
evidence of the Deposit Accounts. After the close of each fiscal year, the
Company provides each patron with a statement showing patronage dividends
allocated to the patron's Deposit Account.
4
<PAGE>
In addition, written inquiry concerning the Deposit Accounts and other
additions to the account, as well as withdrawals and charges and the account
balance, may be made at any time, and telephone inquiry may be made at any
time during normal business hours. The Company's policies regarding deposits
are subject to change by the Board of Directors, which may, in its discretion,
add to, increase, decrease, limit, eliminate or otherwise change such
policies.
SUBORDINATION
As described below in this section, the subordination of that portion of the
Deposit Accounts which consists of required deposits will differ depending
upon whether a patron executes a subordination agreement on or after January
14, 1994 or has executed a subordination agreement before that date.
1. SUBORDINATION AGREEMENTS EXECUTED ON OR AFTER JANUARY 14, 1994.
With respect to patrons who execute subordination agreements on or after
January 14, 1994, that portion of the Deposit Account of each such patron
which consists of required deposits will, under the terms of such agreements,
be subordinated and subject in right of payment to all Senior Indebtedness. As
to such patrons, the term "Senior Indebtedness" means all indebtedness,
liabilities or obligations of the Company, contingent or otherwise, whether
existing on the date of execution of the subordination agreement or thereafter
incurred, (A) in respect of borrowed money; (B) evidenced by bonds, notes,
debentures or other instruments of indebtedness; (C) evidenced by letters of
credit, bankers' acceptances or similar credit instruments; (D) in respect of
Capitalized Lease Obligations (as defined herein); (E) in respect of the
deferred purchase price of property or assets (whether real, personal,
tangible or intangible) or in respect of any mortgage, security agreement,
title retention agreement or conditional sale contract; (F) in respect of any
interest rate swap agreement, interest rate collar agreement or other similar
agreement or arrangement designed to provide interest rate protection; (G) in
respect of all indebtedness, liabilities or obligations of others of any of
the types referred to in clauses (A) through (F) for which the Company is
responsible or liable as obligor, guarantor or otherwise or in respect of
which recourse may be had against any of the property or assets (whether real,
personal, tangible or intangible) of the Company; and (H) in respect of all
modifications, renewals, extensions, replacements and refundings of any
indebtedness, liabilities or obligations of any of the types described in
clauses (A) through (G); provided that the term "Senior Indebtedness" shall
not mean any indebtedness, liabilities or obligations of the Company,
contingent or otherwise, whether existing on the date of execution of the
subordination agreement or thereafter incurred, (i) to trade creditors arising
or incurred in the ordinary course of the Company's business, (ii) in respect
of any redemption, repurchase or other payments on capital stock, (iii) in
respect of Patrons' Deposits (as defined herein) or (iv) in respect of
Patronage Dividend Certificates (as defined herein).
For purposes of the foregoing definition, "Capitalized Lease Obligations"
means the discounted present value of the rental obligations of any person or
entity under any lease of any property which, in accordance with generally
accepted accounting principles, has been recorded on the balance sheet of such
person or entity as a capitalized lease; "Patrons' Deposits" means the
deposits from time to time required to be made or maintained with the Company
by its patrons or customers in accordance with the Bylaws of the Company as in
effect from time to time or in accordance with the policies for the servicing
of accounts of patrons or customers established from time to time by the
Company, and any deposits from time to time made or maintained with the
Company by its patrons or customers in excess of such required deposits; and
"Patronage Dividend Certificates" means any notes, revolving fund
certificates, retain certificates, certificates of indebtedness, patronage
dividend certificates or any other written evidences of indebtedness of the
Company at any time outstanding which evidence the indebtedness of the Company
respecting the distribution by the Company of patronage dividends.
The subordination is such that in the event of any insolvency or bankruptcy
proceedings relative to the Company or its property, any receivership,
liquidation, reorganization, arrangement or other similar proceedings in
connection therewith, or in the event of any proceedings for voluntary
liquidation, dissolution or other winding up of the Company, the holders of
Senior Indebtedness shall be entitled to receive payment in full of all Senior
Indebtedness (whether accrued prior or subsequent to the commencement of such
proceedings) before any
5
<PAGE>
payment is made with respect to that portion of the Deposit Accounts which
consists of required deposits. By reason of such subordination, in the event
of insolvency, creditors of the Company who are holders of Senior Indebtedness
may recover more ratably than holders of the Deposit Accounts. In addition,
(i) no payment shall be made with respect to that portion of the Deposit
Accounts which consists of required deposits in the event and during the
continuation of any default in the payment of any Senior Indebtedness; and
(ii) in the event any default (other than those referred to in clause (i))
shall occur and be continuing with respect to any Senior Indebtedness
permitting the holders of such Senior Indebtedness to accelerate the maturity
thereof, no payment shall be made with respect to that portion of the Deposit
Accounts which consists of required deposits during any period (a) of 180 days
after the giving of written notice of such default by the holders of such
Senior Indebtedness to the Company, or (b) in which judicial proceedings shall
be pending in respect of such default, a notice of acceleration of the
maturity of such Senior Indebtedness shall have been transmitted to the
Company in respect of such default and such judicial proceedings shall be
diligently pursued in good faith. With respect to clause (ii)(a) above, only
one such notice shall be given in any twelve consecutive months.
2. SUBORDINATION AGREEMENTS EXECUTED PRIOR TO JANUARY 14, 1994.
With respect to patrons who executed subordination agreements prior to
January 14, 1994 and who do not execute new subordination agreements after
that date, that portion of the Deposit Account of each such patron which
consists of required deposits is, under the terms of such agreements,
subordinated and subject in right of payment to the prior payment in full of
the principal of (and premium, if any) and interest upon all Senior
Indebtedness. As to such patrons, the term "Senior Indebtedness" means (A) any
and all indebtedness of the Company which may from time to time be outstanding
as shall be payable with respect to short-term notes and other commercial
paper issued by the Company and which are rated by a nationally recognized
securities rating agency, (B) any and all indebtedness, whether contingent or
otherwise, of the Company which may from time to time be outstanding and be
payable to any bank, insurance company or other financial institution, and (C)
any and all indebtedness of others which may from time to time be guaranteed
by the Company and is payable to any bank, insurance company or other
financial institution.
The subordination is such that upon any distribution of the assets of the
Company upon any voluntary or involuntary dissolution, winding up or
liquidation, reorganization, readjustment, arrangement or similar proceedings,
relating to the Company or its property, whether or not the Company is a party
thereto, and whether in bankruptcy, insolvency or receivership proceedings or
otherwise, or on any assignment by the Company for the benefit of creditors,
or upon any other marshaling of the assets and liabilities of the Company, all
Senior Indebtedness shall be paid in full, or provision made for such payment
satisfactory to the holders of such Senior Indebtedness, before any payment is
made on account of the principal of or interest, if any, on that portion of
the Deposit Accounts which consists of required deposits. By reason of such
subordination, in the event of insolvency, creditors of the Company who are
holders of Senior Indebtedness may recover more ratably than holders of the
Deposit Accounts. In addition, no payment shall be made on account of the
principal of or interest, if any, on that portion of any Deposit Account which
consists of required deposits, if (i) there shall have occurred a default in
payment in the principal of (or premium, if any) or interest on any Senior
Indebtedness, or (ii) there shall have occurred any other event of default
with respect to any Senior Indebtedness, permitting the holders thereof to
accelerate the maturity thereof and if written notice of election so to
accelerate shall have been given to the Company by the holder or holders of
such Senior Indebtedness or their representative or representatives, or (iii)
payment on account of principal of or interest, if any, on that portion of any
Deposit Account which consists of required deposits would itself constitute an
event of default with respect to any Senior Indebtedness, unless or until such
event of default described in clauses (i), (ii) or (iii) shall have been cured
or waived or shall have ceased to exist.
3. NO LIMIT ON SENIOR INDEBTEDNESS.
There is no limitation on the creation of additional Senior Indebtedness by
the Company. Outstanding Senior Indebtedness to which the required deposits of
patrons is subordinated aggregated approximately $147,000,000 as of February
28, 1998.
6
<PAGE>
INTEREST
That portion of the Deposit Accounts which consists of required deposits is
non-interest-bearing. While the Board of Directors of the Company could, in
its sole discretion, authorize the payment of interest on such portion, it has
no present plans to do so.
Except for deposits under the Company's price reservation program, the
Company currently pays interest on amounts in the Deposit Accounts which are
in excess of required deposits. The rate of interest is 8.5% per annum at the
date of this Prospectus. The rate of interest during each fiscal month of the
Company will be the prime rate established by Bankers Trust Company and as in
effect on the 25th day of the preceding calendar month, or, if not then
available for any reason, on the next succeeding day when such rate is
available. However, if such rate is not available for any reason prior to the
beginning of the applicable fiscal month, the rate used for the previous
fiscal month will continue to be used. Interest for a fiscal month will be
paid only on those amounts which do not consist of required deposits and which
are in the Deposit Accounts during the entire fiscal month. Such interest will
not be compounded. Such interest will be paid to the patron semi-annually by
the Company in March and September of each year. However, upon request of the
patron, such interest will be paid by credit to the patron's Deposit Account.
The payment of interest on that portion of the Deposit Accounts which does
not consist of required deposits may be changed or eliminated at any time in
the discretion of the Board of Directors.
REPAYMENT
Upon request, the Company will return to patrons the amount of their Deposit
Accounts which is in excess of the portion thereof which consists of required
deposits; provided that the patron is not in default in its obligations to the
Company or any of its subsidiaries.
On termination of membership of a member-patron or on an associate patron
ceasing to do business with the Company, the Company will return the Deposit
Account, less all amounts that may be owing to the Company and any of its
subsidiaries. In all cases, however, return of that portion of the Deposit
Account which consists of required deposits will be governed by the
subordination provisions to which it is subject and will be returned only as
and to the extent permitted thereby.
Since the Deposit Accounts are not segregated from the Company's other
funds, the Company's liquidity might be adversely affected if the Company were
required to return a substantial amount of the Deposit Accounts at one time or
over a brief period of time. While the Company's liquidity has not been
adversely affected in the past as a result of the return of deposits to
patrons, there can be no assurance that the Company's liquidity would not be
adversely affected in the future as a result of the return to patrons of a
substantial amount of Deposit Accounts. In addition, the Company has not
established any reserves to provide for the repayment of Deposit Accounts, nor
are the Deposit Accounts secured obligations of the Company. Thus, in the
event a substantial amount of Deposit Accounts were required to be repaid by
the Company at one time or over a brief period of time, or in the event the
Company were to experience financial difficulties or to become insolvent,
there can be no assurance respecting the Company's ability to repay the
Deposit Accounts and respecting the ability of the Company's patrons to
recover the amount of their Deposit Accounts.
OTHER SIGNIFICANT ASPECTS
The Deposit Accounts are not secured by any lien upon any assets of the
Company. They are nontransferable without the consent of the Company, which
will normally be withheld. Patrons will be required to pledge their Deposit
Accounts to the Company as security for their obligations to the Company and
its subsidiaries.
7
<PAGE>
METHOD OF OFFERING
As a condition of doing business with the Company, patrons are required to
have executed subordination agreements providing for the maintenance of
Deposit Accounts with the Company, the pledging of their Deposit Accounts to
the Company to secure their obligations to the Company and its subsidiaries,
and the subordination of that portion of their Deposit Accounts which consists
of required deposits.
Such persons or entities who from time to time may be accepted as new
patrons of the Company will be required, as a condition of such acceptance, to
execute subordination agreements, which subordination agreements will be
effective from and after their date of execution, providing for the
maintenance of Deposit Accounts with the Company, the pledging of their
Deposit Accounts to the Company to secure their obligations to the Company and
its subsidiaries, and the subordination of that portion of their Deposit
Accounts which consists of required deposits. The subordination agreements to
be executed by patrons on and after January 14, 1994 will differ from the
subordination agreements which have been executed by patrons before that date.
See "DESCRIPTION OF DEPOSIT ACCOUNTS -- Subordination."
The offering of the Deposit Accounts is made by the Company only through its
regular employees, who will not receive any additional remuneration in
connection therewith.
USE OF PROCEEDS
To the extent that Deposit Accounts of patrons increase in amount and to the
extent that Deposit Accounts are opened and maintained in connection with the
acceptance of new patrons, proceeds to the Company therefrom will be utilized
as working capital.
LEGAL MATTERS
The validity of the Deposit Accounts has been passed upon for the Company by
Sheppard, Mullin, Richter & Hampton LLP, Los Angeles, California.
EXPERTS
The consolidated financial statements for the years ended August 30, 1997
and August 31, 1996, incorporated in this prospectus by reference from the
Company's Annual Report on Form 10-K have been audited by Deloitte & Touche
LLP, independent auditors, as stated in their report, which is incorporated
herein by reference, and has been so incorporated in reliance upon the report
of such firm given upon their authority as experts in accounting and auditing.
The related consolidated statements of earnings, shareholders' equity, and
cash flow for the fiscal year ended September 2, 1995, included in the Annual
Report on Form 10-K of the Company incorporated by reference into this
Prospectus, have been included herein in reliance on the report of Coopers &
Lybrand L.L.P., independent accountants, given on the authority of said firm
as experts in accounting and auditing.
8
<PAGE>
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NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRE-
SENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, AND, IF GIVEN OR
MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING
BEEN AUTHORIZED. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY ANY SECURITIES OTHER THAN THE SECURITIES TO
WHICH IT RELATES, OR ANY OFFER TO SELL OR THE SOLICITATION OF ANY OFFER TO BUY
ANY SECURITIES IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS UN-
LAWFUL. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER
SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO
CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR THAT THE INFOR-
MATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE OF
SUCH INFORMATION.
-------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
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<S> <C>
Available Information...................................................... 2
Additional Information..................................................... 2
Incorporation By Reference................................................. 2
Company Information........................................................ 2
Risk Factors............................................................... 3
Ratio of Earnings to Fixed Charges......................................... 4
Description of Deposit Accounts............................................ 4
Method of Offering......................................................... 8
Use of Proceeds............................................................ 8
Legal Matters.............................................................. 8
Experts.................................................................... 8
</TABLE>
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$50,000,000 PARTIALLY SUBORDINATED
PATRONS' DEPOSIT ACCOUNTS
CERTIFIED GROCERS OF CALIFORNIA, LTD.
---------------
PROSPECTUS
, 1998
---------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
<TABLE>
<S> <C>
Registration Fee Under Securities Act of 1933................... $14,750
Printing, Engraving and Reproduction............................ 5,000
Expenses of Qualification Under State Blue Sky Laws............. 4,000
Legal Fees and Expenses ........................................ 12,000
Accounting Fees and Expenses.................................... 5,000
Miscellaneous .................................................. 4,250
-------
Total......................................................... $45,000
=======
</TABLE>
All of the expenses listed above will be borne by the Registrant and, except
for the Registration Fee Under Securities Act of 1933, are estimated.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Article V of the Company's Bylaws provides that the Company shall, to the
maximum extent permitted by law, have the power to indemnify its directors,
officers, employees and other agents. Section 317 of the California
Corporations Code provides that a corporation has the power to indemnify
agents of the corporation against expenses, judgments, fines, settlements and
other amounts actually and reasonably incurred in connection with any
proceeding arising by reason of the fact that any such person is or was an
agent of the corporation. The Company has entered into agreements in the form
filed as Exhibit 10.22 with each of its directors and certain of its officers
which provide to such directors and officers the maximum indemnification
allowed under applicable law. In addition, the Company and its subsidiaries
maintain a policy of directors' and officers' liability and company
reimbursement insurance.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
Company pursuant to the foregoing provisions, or otherwise, the Company has
been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Company of expenses
incurred or paid by a director, officer or controlling person of the Company
in the successful defense of any action, suit or proceeding) is asserted by
such director, officer or controlling person in connection with the securities
being registered, the Company will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Act and will be governed by the
final adjudication of such issue.
S-1
<PAGE>
ITEM 16. EXHIBITS
<TABLE>
<C> <C> <S>
Exhibit 4.1 Retail Grocer Application and Agreement for Continuing
Service Affiliation With Certified Grocers of California,
LTD. And Pledge Agreement (incorporated by reference to
Exhibit 4.7 to Amendment No. 2 to Form S-1 Registration
Statement of the Registrant filed on December 31, 1981, File
No. 2-70069).
Exhibit 4.2 Retail Grocer Application And Agreement For Service
Affiliation With And The Purchase Of Shares Of Certified
Grocers of California, LTD. And Pledge Agreement
(incorporated by reference to Exhibit 4.2 to Post Effective
Amendment No. 7 to Form S-2 Registration Statement of the
Registrant filed on December 13, 1989, File No. 33-19284).
Exhibit 4.3 Agreement respecting directors shares (incorporated by
reference to Exhibit 4.9 to Amendment No. 2 to Form S-1
Registration Statement of the Registrant filed on December
31, 1981, File No. 2-70069).
Exhibit 4.4 Subordination Agreement (Existing Member-Patron)
(incorporated by reference to Exhibit 4.4 to Post-Effective
Amendment No. 4 to Form S-2 Registration Statement of the
Registrant filed on July 15, 1988, File No. 33-19284).
Exhibit 4.5 Subordination Agreement (Existing Associate Patron)
(incorporated by reference to Exhibit 4.5 to Post-Effective
Amendment No. 4 to Form S-2 Registration Statement of the
Registrant filed on July 15, 1988, File No. 33-19284).
Exhibit 4.6 Subordination Agreement (New Member-Patron) (incorporated by
reference to Exhibit 4.6 to Post-Effective Amendment No. 4
to Form S-2 Registration Statement of the Registrant filed
on July 15, 1988, File No. 33-19284).
Exhibit 4.7 Subordination Agreement (New Associate Patron) (incorporated
by reference to Exhibit 4.7 to Post-Effective Amendment No.
4 to Form S-2 Registration Statement of the Registrant filed
on July 15, 1988, File No. 33-19284).
Exhibit 4.8 Form of Class A Share Certificate (incorporated by reference
to Exhibit 4.5 to Post-Effective Amendment No. 6 to Form S-
2 Registration Statement of the Registrant filed on December
15, 1994, File No. 33-38152).
Exhibit 4.9 Form of Class B Share Certificate (incorporated by reference
to Exhibit 4.6 to Post-Effective Amendment No. 6 to Form S-
2 Registration Statement of the Registrant filed on December
15, 1994, File No. 33-38152).
Exhibit 4.10.1 Articles FIFTH and SIXTH of the Registrant's Articles of
Incorporation (See Exhibit 3.1) (incorporated by reference
to Exhibit 4.10.1 to the Registrant's Annual Report on Form
10-K for the fiscal year ended August 30, 1997 filed on
November 28, 1997, File No. 0-10815).
Exhibit 4.10.2 Article I, Section 5, and Article VII of the Registrant's
Bylaws (See Exhibit 3.2) (incorporated by reference to
Exhibit 4.10.2 to the Registrant's Annual Report on Form 10-
K for the fiscal year ended August 30, 1997 filed on
November 28, 1997, File No. 0-10815).
Exhibit 4.11 Indenture between the Registrant and First Interstate Bank
of California, as Trustee, relating to $3,000,000
Subordinated Patronage Dividend Certificates Due December
15, 2001 (incorporated by reference to Exhibit 4.3 to Form
S-2 Registration Statement of the Registrant filed on
October 12, 1994, File No. 33-56005).
</TABLE>
S-2
<PAGE>
<TABLE>
<C> <C> <S>
Exhibit 4.12 Indenture between the Registrant and First Interstate Bank of
California, as Trustee, relating to $5,000,000 Subordinated
Patronage Dividend Certificates due December 15, 2001
(incorporated by reference to Exhibit 4.3 to Form S-2
Registration Statement of the Registrant filed on October 13,
1995, File No. 33-63383).
Exhibit 4.13 Indenture between the Registrant and First Interstate Bank of
California, as Trustee, relating to $3,000,000 Subordinated
Patronage Dividend Certificates due December 15, 2002
(incorporated by reference to Exhibit 4.3 to Form S-2
Registration Statement of the Registrant filed on October 13,
1995, File No. 33-63383).
Exhibit 4.14 Loan Purchase and Service Agreement dated as of August 29,
1996 between Grocers Capital Company and National Consumer
Cooperative Bank (incorporated by reference to Exhibit 4.18 to
the Registrant's Annual Report on Form 10-K for the fiscal
year ended August 31, 1996 filed on November 5, 1996, File No.
0-10815).
Exhibit 4.15 $10,000,000 Credit Agreement and Security Agreement each dated
as of September 20, 1996 between Grocers Capital Company and
National Cooperative Bank as agent (incorporated by reference
to Exhibit 4.19 to the Registrant's Annual Report on
Form 10-K for the fiscal year ended August 31, 1996 filed on
November 5, 1996, File No. 0-10815).
Exhibit 4.16 Note Purchase Agreement dated as of March 15, 1998 among
Certified Grocers of California, Ltd. and the Purchasers named
therein relating to $80,000,000 7.22% Senior Notes due 2008.
Exhibit 4.17 $100,000,000 Revolving Credit Agreement dated as of April 10,
1998 among Certified Grocers of California, Ltd., the Lenders
named therein and Cooperatieve Centrale Raiffeisen-
Boerenleenbank B.A., "Rabobank Nederland", New York Branch, as
agent.
Exhibit 5.1 Opinion of Sheppard, Mullin, Richter & Hampton, LLP.
Exhibit 10.1 Comprehensive Amendment to Retirement Plan for Employees of
Certified Grocers of California, Ltd. dated as of July 27,
1995 (incorporated by reference to Exhibit 10.1 to the
Registrant's Annual Report on Form 10-K for the fiscal year
ended August 30, 1997 filed on November 28, 1997, File No. 0-
10815).
Exhibit 10.3 Comprehensive Amendment to Certified Grocers of California,
Ltd. Employees' Sheltered Savings Plan dated as of July 27,
1995 (incorporated by reference to Exhibit 10.3 to the
Registrant's Annual Report on Form 10-K for the fiscal year
ended August 30, 1997 filed on November 28, 1997, File No. 0-
10815).
Exhibit 10.4 Certified Grocers of California, Ltd., Executive Salary
Protection Plan II ("ESPP II"), Master Plan Document,
effective January 4, 1995 (incorporated by reference to
Exhibit 10.4 to the Registrant's Annual Report on Form 10-K
for the fiscal year ended September 2, 1995 filed on December
1, 1995, File No. 0-10815).
Exhibit 10.5 Master Trust Agreement For Certified Grocers of California,
Ltd. Executive Salary Protection Plan II, dated as of April
28, 1995 (incorporated by reference to Exhibit 10.5 to the
Registrant's Annual Report on Form 10-K for the fiscal year
ended September 2, 1995 filed on December 1, 1995, File No. 0-
10815).
Exhibit 10.6 Certified Grocers of California, Ltd. Executive Insurance Plan
Split Dollar Agreement and Schedule of Executive Officers
party thereto (incorporated by reference to Exhibit 10.6 to
the Registrant's Annual Report on Form 10-K for the fiscal
year ended September 2, 1995 filed on December 1, 1995, File
No. 0-10815).
Exhibit 10.7 Comprehensive Amendment to Certified Grocers of California,
Ltd. Employees' Excess Benefit Plan dated as of December 5,
1995 (incorporated by reference to Exhibit 10.7 to the
Registrant's Annual Report on Form 10-K for the fiscal year
ended August 30, 1997 filed on November 28, 1997, File No. 0-
10815).
</TABLE>
S-3
<PAGE>
<TABLE>
<C> <C> <S>
Exhibit 10.8 Comprehensive Amendment to Certified Grocers of California,
Ltd. Employees' Supplemental Deferred Compensation Plan
dated as of December 5, 1995 (incorporated by reference to
Exhibit 10.8 to the Registrant's Annual Report on Form 10-K
for the fiscal year ended August 30, 1997 filed on November
28, 1997, File No. 0-10815).
Exhibit 10.9 Comprehensive Amendment to Certified Grocers of California,
Ltd. Employee Savings Plan dated as of August 18, 1995
(incorporated by reference to Exhibit 10.9 to the
Registrant's Annual Report on Form 10-K for the fiscal year
ended August 30, 1997 filed on November 28, 1997, File No.
0-10815).
Exhibit 10.10 Joint Venture Agreement of Golden Alliance Distribution,
dated as of April 8, 1992, between Food 4 Less GM, Inc. and
Grocers General Merchandise Company (incorporated by
reference to Exhibit 10.7 to Form S-2 Registration
Statement of the Registrant filed on September 2, 1993,
File No. 33-68288.
Exhibit 10.10.1 Agreement Regarding Termination and Dissolution of Joint
Venture Agreement of Golden Alliance Distribution, dated as
of August 15, 1997, between Food 4 Less GM, Inc. and
Grocers General Merchandise Company (incorporated by
reference to Exhibit 10.10.1 to the Registrant's Annual
Report on Form 10-K for the fiscal year ended August 30,
1997 filed on November 28, 1997, File No. 0-10815).
Exhibit 10.11 Lease, dated as of December 23, 1986, between Cercor
Associates and Grocers Speciality Company (incorporated by
reference to Exhibit 10.8 to Form S-2 Registration
Statement of the Registrant filed on September 2, 1993,
File No. 33-68288).
Exhibit 10.12 Expansion Agreement, dated as of May 1, 1991, and
Industrial Lease, dated as of May 1, 1991, between Dermody
Properties and the Registrant (incorporated by reference to
Exhibit 10.9 to Form S-2 Registration Statement of the
Registrant filed on September 2, 1993, File No. 33-68288).
Exhibit 10.12.1 Lease Amendment, dated June 20, 1991, between Dermody
Properties and the Registrant (incorporated by reference to
Exhibit 10.9.1 to Form S-2 Registration Statement of the
Registrant filed on September 2, 1993, File No. 33-68288).
Exhibit 10.12.2 Lease Amendment, dated October 18, 1991, between Dermody
Properties and the Registrant (incorporated by reference to
Exhibit 10.9.2 to Form S-2 Registration Statement of the
Registrant filed on September 2, 1993, File No. 33-68288).
Exhibit 10.13 Preferred Stock Purchase Agreement by and between Food-4-
Less of Modesto, Inc. and Grocers Capital Company, dated as
of July 1, 1992 (incorporated by reference to Exhibit 10.10
to the Registrant's Annual Report on Form 10-K for the
fiscal year ended August 28, 1993 filed on November 26,
1993, File No. 0-10815).
Exhibit 10.14 Preferred Stock Purchase Agreement by and between SavMax
Foods, Inc. and Grocers Capital Company, dated as of
December 17, 1993 (incorporated by reference to
Exhibit 10.11 to Post-Effective Amendment No. 6 to Form S-2
Registration Statement of the Registrant filed on December
15, 1994, File No. 33-38152).
Exhibit 10.14.1 Forbearance and Debt Restructure Agreement, dated May 15,
1997, between SavMax Foods, Inc., Michael A. Webb, Grocers
Capital Company, and the Registrant (incorporated by
reference to Exhibit 10.14.1 to the Registrant's Annual
Report on Form 10-K for the fiscal year ended August 30,
1997 filed on November 28, 1997, File No. 0-10815).
Exhibit 10.15 Common Stock Purchase Agreement by and between Michael A.
Webb and Grocers Capital Company, dated as of December 17,
1993 (incorporated by reference to Exhibit 10.12 to Post-
Effective Amendment No. 6 to Form S-2 Registration
Statement of the Registrant filed on December 15, 1994,
File No. 33-38152).
</TABLE>
S-4
<PAGE>
<TABLE>
<C> <C> <S>
Exhibit 10.16 Agreement Regarding Common Stock by and between Michael A.
Webb, SavMax Foods, Inc. and Grocers Capital Company, dated
as of December 17, 1993 (incorporated by reference to Exhibit
10.13 to Post-Effective Amendment No. 6 to Form S-2
Registration Statement of the Registrant filed on December
15, 1994, File No. 33-38152).
Exhibit 10.17 Commercial Lease-Net dated December 6, 1994 between TriNet
Essential Facilities XII and the Registrant (incorporated by
reference to Exhibit 10.17 to the Registrant's Annual Report
on Form 10-K for the fiscal year ended September 2, 1995
filed on December 1, 1995, File No. 0-10815).
Exhibit 10.18 Purchase Agreement dated November 21, 1994 between the
Registrant and TriNet Corporate Realty Trust, Inc.
(incorporated by reference to Exhibit 10.18 to the
Registrant's Annual Report on Form 10-K for the fiscal year
ended September 2, 1995 filed on December 1, 1995, File No.
0-10815).
Exhibit 10.19 Form of Employment Agreement between the Company and Alfred
A. Plamann (incorporated by reference to Exhibit 10.19 to the
Registrant's Annual Report on Form 10-K for the fiscal year
ended August 31, 1996 filed on November 5, 1996, File No.
0-10815).
Exhibit 10.20 Severance Agreement between the Company and Daniel T. Bane
(incorporated by reference to Exhibit 10.20 to the
Registrant's Annual Report on Form 10-K for the fiscal year
ended August 30, 1997 filed on November 28, 1997, File No. 0-
10815).
Exhibit 10.21 Severance Agreement between the Company and Charles J.
Pilliter (incorporated by reference to Exhibit 10.21 to the
Registrant's Annual Report on Form 10-K for the fiscal year
ended August 30, 1997 filed on November 28, 1997, File No. 0-
10815).
Exhibit 10.22 Form of Indemnification Agreement between the Company and
each Director and Officer (incorporated by reference to
Exhibit A to the Registrant's Proxy Statement dated February
24, 1997 filed on February 24, 1997, File No. 0-10815).
Exhibit 10.23 Annual Incentive Plan for Chief Executive Officer
(incorporated by reference to Exhibit 10.23 to the
Registrant's Annual Report on Form 10-K for the fiscal year
ended August 30, 1997 filed on November 28, 1997, File No. 0-
10815).
Exhibit 10.24 Annual Incentive Plan for Senior Management (incorporated by
reference to Exhibit 10.24 to the Registrant's Annual Report
on Form 10-K for the fiscal year ended August 30, 1997 filed
on November 28, 1997, File No. 0-10815).
Exhibit 10.25 Agreement to Sell and Purchase Real Property and Escrow
Instructions, dated September 12, 1997 between the Registrant
and Smart & Final Stores Corporation (incorporated by
reference to Exhibit 10.25 to the Registrant's Annual Report
on Form 10-K for the fiscal year ended August 30, 1997 filed
on November 28, 1997, File No. 0-10815).
Exhibit 12.1 Computation of Ratio of Earnings to Fixed Charges.
Exhibit 21 Subsidiaries of the Registrant (incorporated by reference to
Exhibit 21 to the Registrant's Annual Report on Form 10-K for
the fiscal year ended August 30, 1997 filed on November 28,
1997, File No. 0-10815).
Exhibit 23.1 Consent of Sheppard, Mullin, Richter & Hampton LLP (contained
in Exhibit 5.1).
Exhibit 23.2 Consent of Deloitte & Touche LLP.
Exhibit 23.3 Consent of Coopers & Lybrand L.L.P.
</TABLE>
S-5
<PAGE>
ITEM 17. UNDERTAKINGS
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement: (a) to include any
prospectus required by section 10(a)(3) of the Securities Act of 1933, (b)
to reflect in the prospectus any facts or events arising after the
effective date of the registration statement (or the most recent post-
effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
registration statement, (c) to include any material information with
respect to the plan of distribution not previously disclosed in the
registration statement or any material change to such information in the
registration statement;
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof; and
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
S-6
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-2 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Commerce, State of California, on May 1, 1998.
CERTIFIED GROCERS OF CALIFORNIA,
LTD.
/s/ Alfred A. Plamann
By __________________________________
Alfred A. Plamann
President, Chief Executive
Officer and Chief Financial
Officer
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
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<S> <C> <C>
/s/ Alfred A. Plamann President, Chief Executive May 1, 1998
_____________________________________ Officer and Chief Financial
Alfred A. Plamann Officer
/s/ Randall G. Scoville Corporate Controller May 1, 1998
_____________________________________
Randall G. Scoville
/s/ Louis A. Amen Director May 1, 1998
_____________________________________
Louis A. Amen
(Chairman of the Board)
/s/ John Berberian Director May 1, 1998
_____________________________________
John Berberian
/s/ Edmund Kevin Davis Director May 1, 1998
_____________________________________
Edmund Kevin Davis
/s/ Harley J. DeLano Director May 1, 1998
_____________________________________
Harley J. DeLano
/s/ John T. Fujieki Director May 1, 1998
_____________________________________
John T. Fujieki
/s/ Darioush Khaledi Director May 1, 1998
_____________________________________
Darioush Khaledi
/s/ Mark Kidd Director May 1, 1998
_____________________________________
Mark Kidd
/s/ Willard R. "Bill" MacAloney Director May 1, 1998
_____________________________________
Willard R. "Bill" MacAloney
</TABLE>
S-7
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<CAPTION>
SIGNATURE TITLE DATE
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<S> <C> <C>
/s/ Jay McCormack Director May 1, 1998
____________________________________
Jay McCormack
/s/ Morrie Notrica Director May 1, 1998
____________________________________
Morrie Notrica
/s/ Michael A. Provenzano Director May 1, 1998
____________________________________
Michael A. Provenzano
/s/ Gail Gerard Rice Director May 1, 1998
____________________________________
Gail Gerard Rice
/s/ Mimi R. Song Director May 1, 1998
____________________________________
Mimi R. Song
/s/ James R. Stump Director May 1, 1998
____________________________________
James R. Stump
/s/ Kenneth Young Director May 1, 1998
____________________________________
Kenneth Young
</TABLE>
S-8
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<C> <C> <S>
Exhibit 4.1 Retail Grocer Application and Agreement for Continuing Service
Affiliation With Certified Grocers of California, LTD. And
Pledge Agreement (incorporated by reference to Exhibit 4.7 to
Amendment No. 2 to Form S-1 Registration Statement of the
Registrant filed on December 31, 1981, File No. 2-70069).
Exhibit 4.2 Retail Grocer Application And Agreement For Service Affiliation
With And The Purchase Of Shares Of Certified Grocers of
California, LTD. And Pledge Agreement (incorporated by
reference to Exhibit 4.2 to Post Effective Amendment No. 7 to
Form S-2 Registration Statement of the Registrant filed on
December 13, 1989, File No. 33-19284).
Exhibit 4.3 Agreement respecting directors shares (incorporated by
reference to Exhibit 4.9 to Amendment No. 2 to Form S-1
Registration Statement of the Registrant filed on December 31,
1981, File No. 2-70069).
Exhibit 4.4 Subordination Agreement (Existing Member-Patron) (incorporated
by reference to Exhibit 4.4 to Post-Effective Amendment No. 4
to Form S-2 Registration Statement of the Registrant filed on
July 15, 1988, File No. 33-19284).
Exhibit 4.5 Subordination Agreement (Existing Associate Patron)
(incorporated by reference to Exhibit 4.5 to Post-Effective
Amendment No. 4 to Form S-2 Registration Statement of the
Registrant filed on July 15, 1988, File No. 33-19284).
Exhibit 4.6 Subordination Agreement (New Member-Patron) (incorporated by
reference to Exhibit 4.6 to Post-Effective Amendment No. 4 to
Form S-2 Registration Statement of the Registrant filed on July
15, 1988, File No. 33-19284).
Exhibit 4.7 Subordination Agreement (New Associate Patron) (incorporated by
reference to Exhibit 4.7 to Post-Effective Amendment No. 4 to
Form S-2 Registration Statement of the Registrant filed on July
15, 1988, File No. 33-19284).
Exhibit 4.8 Form of Class A Share Certificate (incorporated by reference to
Exhibit 4.5 to Post-Effective Amendment No. 6 to Form S-2
Registration Statement of the Registrant filed on December 15,
1994, File No. 33-38152).
Exhibit 4.9 Form of Class B Share Certificate (incorporated by reference to
Exhibit 4.6 to Post-Effective Amendment No. 6 to Form S-2
Registration Statement of the Registrant filed on December 15,
1994, File No. 33-38152).
Exhibit 4.10.1 Articles FIFTH and SIXTH of the Registrant's Articles of
Incorporation (See Exhibit 3.1) (incorporated by reference to
Exhibit 4.10.1 to the Registrant's Annual Report on Form 10-K
for the fiscal year ended August 30, 1997 filed on November 28,
1997, File No. 0-10815).
Exhibit 4.10.2 Article I, Section 5, and Article VII of the Registrant's
Bylaws (See Exhibit 3.2) (incorporated by reference to Exhibit
4.10.2 to the Registrant's Annual Report on Form 10-K for the
fiscal year ended August 30, 1997 filed on November 28, 1997,
File No. 0-10815).
Exhibit 4.11 Indenture between the Registrant and First Interstate Bank of
California, as Trustee, relating to $3,000,000 Subordinated
Patronage Dividend Certificates Due December 15, 2001
(incorporated by reference to Exhibit 4.3 to Form S-2
Registration Statement of the Registrant filed on October 12,
1994, File No. 33-56005).
Exhibit 4.12 Indenture between the Registrant and First Interstate Bank of
California, as Trustee, relating to $5,000,000 Subordinated
Patronage Dividend Certificates due December 15, 2001
(incorporated by reference to Exhibit 4.3 to Form S-2
Registration Statement of the Registrant filed on October 13,
1995, File No. 33-63383).
</TABLE>
<PAGE>
<TABLE>
<C> <C> <S>
Exhibit 4.13 Indenture between the Registrant and First Interstate Bank of
California, as Trustee, relating to $3,000,000 Subordinated
Patronage Dividend Certificates due December 15, 2002
(incorporated by reference to Exhibit 4.3 to Form S-2
Registration Statement of the Registrant filed on October 13,
1995, File No. 33-63383).
Exhibit 4.14 Loan Purchase and Service Agreement dated as of August 29, 1996
between Grocers Capital Company and National Consumer Cooperative
Bank (incorporated by reference to Exhibit 4.18 to the
Registrant's Annual Report on Form 10-K for the fiscal year ended
August 31, 1996 filed on November 5, 1996, File No. 0-10815).
Exhibit 4.15 $10,000,000 Credit Agreement and Security Agreement each dated as
of September 20, 1996 between Grocers Capital Company and
National Cooperative Bank as agent (incorporated by reference to
Exhibit 4.19 to the Registrant's Annual Report on Form 10-K for
the fiscal year ended August 31, 1996 filed on November 5, 1996,
File No. 0-10815).
Exhibit 4.16 Note Purchase Agreement dated as of March 15, 1998 among
Certified Grocers of California, Ltd. and the Purchasers named
therein relating to $80,000,000 7.22% Senior Notes due 2008.
Exhibit 4.17 $100,000,000 Revolving Credit Agreement dated as of April 10,
1998 among Certified Grocers of California, Ltd., the Lenders
named therein and Cooperatieve Centrale Raiffeisen-Boerenleenbank
B.A., "Rabobank Nederland", New York Branch, as agent.
Exhibit 5.1 Opinion of Sheppard, Mullin, Richter & Hampton, LLP.
Exhibit 10.1 Comprehensive Amendment to Retirement Plan for Employees of
Certified Grocers of California, Ltd. dated as of July 27, 1995
(incorporated by reference to Exhibit 10.1 to the Registrant's
Annual Report on Form 10-K for the fiscal year ended August 30,
1997 filed on November 28, 1997, File No. 0-10815).
Exhibit 10.3 Comprehensive Amendment to Certified Grocers of California, Ltd.
Employees' Sheltered Savings Plan dated as of July 27, 1995
(incorporated by reference to Exhibit 10.3 to the Registrant's
Annual Report on Form 10-K for the fiscal year ended August 30,
1997 filed on November 28, 1997, File No. 0-10815).
Exhibit 10.4 Certified Grocers of California, Ltd., Executive Salary
Protection Plan II ("ESPP II"), Master Plan Document, effective
January 4, 1995 (incorporated by reference to Exhibit 10.4 to the
Registrant's Annual Report on Form 10-K for the fiscal year ended
September 2, 1995 filed on December 1, 1995, File No. 0-10815).
Exhibit 10.5 Master Trust Agreement For Certified Grocers of California, Ltd.
Executive Salary Protection Plan II, dated as of April 28, 1995
(incorporated by reference to Exhibit 10.5 to the Registrant's
Annual Report on Form 10-K for the fiscal year ended September 2,
1995 filed on December 1, 1995, File No. 0-10815).
Exhibit 10.6 Certified Grocers of California, Ltd. Executive Insurance Plan
Split Dollar Agreement and Schedule of Executive Officers party
thereto (incorporated by reference to Exhibit 10.6 to the
Registrant's Annual Report on Form 10-K for the fiscal year ended
September 2, 1995 filed on December 1, 1995, File No. 0-10815).
Exhibit 10.7 Comprehensive Amendment to Certified Grocers of California, Ltd.
Employees' Excess Benefit Plan dated as of December 5, 1995
(incorporated by reference to Exhibit 10.7 to the Registrant's
Annual Report on Form 10-K for the fiscal year ended August 30,
1997 filed on November 28, 1997, File No. 0-10815).
Exhibit 10.8 Comprehensive Amendment to Certified Grocers of California, Ltd.
Employees' Supplemental Deferred Compensation Plan dated as of
December 5, 1995 (incorporated by reference to Exhibit 10.8 to
the Registrant's Annual Report on Form 10-K for the fiscal year
ended August 30, 1997 filed on November 28, 1997, File No. 0-
10815).
</TABLE>
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<TABLE>
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Exhibit 10.9 Comprehensive Amendment to Certified Grocers of California,
Ltd. Employee Savings Plan dated as of August 18, 1995
(incorporated by reference to Exhibit 10.9 to the Registrant's
Annual Report on Form 10-K for the fiscal year ended August
30, 1997 filed on November 28, 1997, File No. 0-10815).
Exhibit 10.10 Joint Venture Agreement of Golden Alliance Distribution, dated
as of April 8, 1992, between Food 4 Less GM, Inc. and Grocers
General Merchandise Company (incorporated by reference to
Exhibit 10.7 to Form S-2 Registration Statement of the
Registrant filed on September 2, 1993, File No. 33-68288.
Exhibit 10.10.1 Agreement Regarding Termination and Dissolution of Joint
Venture Agreement of Golden Alliance Distribution, dated as of
August 15, 1997, between Food 4 Less GM, Inc. and Grocers
General Merchandise Company (incorporated by reference to
Exhibit 10.10.1 to the Registrant's Annual Report on Form 10-K
for the fiscal year ended August 30, 1997 filed on November
28, 1997, File No. 0-10815).
Exhibit 10.11 Lease, dated as of December 23, 1986, between Cercor
Associates and Grocers Speciality Company (incorporated by
reference to Exhibit 10.8 to Form S-2 Registration Statement
of the Registrant filed on September 2, 1993,
File No. 33-68288).
Exhibit 10.12 Expansion Agreement, dated as of May 1, 1991, and Industrial
Lease, dated as of May 1, 1991, between Dermody Properties and
the Registrant (incorporated by reference to Exhibit 10.9 to
Form S-2 Registration Statement of the Registrant filed on
September 2, 1993, File No. 33-68288).
Exhibit 10.12.1 Lease Amendment, dated June 20, 1991, between Dermody
Properties and the Registrant (incorporated by reference to
Exhibit 10.9.1 to Form S-2 Registration Statement of the
Registrant filed on September 2, 1993, File No. 33-68288).
Exhibit 10.12.2 Lease Amendment, dated October 18, 1991, between Dermody
Properties and the Registrant (incorporated by reference to
Exhibit 10.9.2 to Form S-2 Registration Statement of the
Registrant filed on September 2, 1993, File No. 33-68288).
Exhibit 10.13 Preferred Stock Purchase Agreement by and between Food-4-Less
of Modesto, Inc. and Grocers Capital Company, dated as of July
1, 1992 (incorporated by reference to Exhibit 10.10 to the
Registrant's Annual Report on Form 10-K for the fiscal year
ended August 28, 1993 filed on November 26, 1993, File No. 0-
10815).
Exhibit 10.14 Preferred Stock Purchase Agreement by and between SavMax
Foods, Inc. and Grocers Capital Company, dated as of December
17, 1993 (incorporated by reference to Exhibit 10.11 to Post-
Effective Amendment No. 6 to Form S-2 Registration Statement
of the Registrant filed on December 15, 1994, File No. 33-
38152).
Exhibit 10.14.1 Forbearance and Debt Restructure Agreement, dated May 15,
1997, between SavMax Foods, Inc., Michael A. Webb, Grocers
Capital Company, and the Registrant (incorporated by reference
to Exhibit 10.14.1 to the Registrant's Annual Report on Form
10-K for the fiscal year ended August 30, 1997 filed on
November 28, 1997, File No. 0-10815).
Exhibit 10.15 Common Stock Purchase Agreement by and between Michael A. Webb
and Grocers Capital Company, dated as of December 17, 1993
(incorporated by reference to Exhibit 10.12 to Post-Effective
Amendment No. 6 to Form S-2 Registration Statement of the
Registrant filed on December 15, 1994, File No. 33-38152).
Exhibit 10.16 Agreement Regarding Common Stock by and between Michael A.
Webb, SavMax Foods, Inc. and Grocers Capital Company, dated as
of December 17, 1993 (incorporated by reference to Exhibit
10.13 to Post-Effective Amendment No. 6 to Form S-2
Registration Statement of the Registrant filed on December 15,
1994, File No. 33-38152).
</TABLE>
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<TABLE>
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Exhibit 10.17 Commercial Lease-Net dated December 6, 1994 between TriNet
Essential Facilities XII and the Registrant (incorporated by
reference to Exhibit 10.17 to the Registrant's Annual Report on
Form 10-K for the fiscal year ended September 2, 1995 filed on
December 1, 1995, File No. 0-10815).
Exhibit 10.18 Purchase Agreement dated November 21, 1994 between the
Registrant and TriNet Corporate Realty Trust, Inc. (incorporated
by reference to Exhibit 10.18 to the Registrant's Annual Report
on Form 10-K for the fiscal year ended September 2, 1995 filed
on December 1, 1995, File No. 0-10815).
Exhibit 10.19 Form of Employment Agreement between the Company and Alfred A.
Plamann (incorporated by reference to Exhibit 10.19 to the
Registrant's Annual Report on Form 10-K for the fiscal year
ended August 31, 1996 filed on November 5, 1996,
File No. 0-10815).
Exhibit 10.20 Severance Agreement between the Company and Daniel T. Bane
(incorporated by reference to Exhibit 10.20 to the Registrant's
Annual Report on Form 10-K for the fiscal year ended August 30,
1997 filed on November 28, 1997, File No. 0-10815).
Exhibit 10.21 Severance Agreement between the Company and Charles J. Pilliter
(incorporated by reference to Exhibit 10.21 to the Registrant's
Annual Report on Form 10-K for the fiscal year ended August 30,
1997 filed on November 28, 1997, File No. 0-10815).
Exhibit 10.22 Form of Indemnification Agreement between the Company and each
Director and Officer (incorporated by reference to Exhibit A to
the Registrant's Proxy Statement dated February 24, 1997 filed
on February 24, 1997, File No. 0-10815).
Exhibit 10.23 Annual Incentive Plan for Chief Executive Officer (incorporated
by reference to Exhibit 10.23 to the Registrant's Annual Report
on Form 10-K for the fiscal year ended August 30, 1997 filed on
November 28, 1997, File No. 0-10815).
Exhibit 10.24 Annual Incentive Plan for Senior Management (incorporated by
reference to Exhibit 10.24 to the Registrant's Annual Report on
Form 10-K for the fiscal year ended August 30, 1997 filed on
November 28, 1997, File No. 0-10815).
Exhibit 10.25 Agreement to Sell and Purchase Real Property and Escrow
Instructions, dated September 12, 1997 between the Registrant
and Smart & Final Stores Corporation (incorporated by reference
to Exhibit 10.25 to the Registrant's Annual Report on Form 10-K
for the fiscal year ended August 30, 1997 filed on November 28,
1997, File No. 0-10815).
Exhibit 12.1 Computation of Ratio of Earnings to Fixed Charges.
Exhibit 21 Subsidiaries of the Registrant (incorporated by reference to
Exhibit 21 to the Registrant's Annual Report on Form 10-K for
the fiscal year ended August 30, 1997 filed on November 28,
1997, File No. 0-10815).
Exhibit 23.1 Consent of Sheppard, Mullin, Richter & Hampton LLP (contained in
Exhibit 5.1).
Exhibit 23.2 Consent of Deloitte & Touche LLP.
Exhibit 23.3 Consent of Coopers & Lybrand L.L.P.
</TABLE>
<PAGE>
EXECUTION COPY
- --------------------------------------------------------------------------------
CERTIFIED GROCERS OF CALIFORNIA, LTD.
$80,000,000
7.22% Senior Notes due 2008
----------------------------------
NOTE PURCHASE AGREEMENT
----------------------------------
Dated as of March 15, 1998
- --------------------------------------------------------------------------------
Exhibit 4.16
<PAGE>
CERTIFIED GROCERS OF CALIFORNIA, LTD.
2601 SOUTH EASTERN AVENUE
LOS ANGELES, CA 90040
7.22% Senior Notes due 2008
Dated as of March 15, 1998
TO EACH OF THE PURCHASERS LISTED IN
THE ATTACHED SCHEDULE A (THE "PURCHASERS"):
Ladies and Gentlemen:
Certified Grocers of California, Ltd., a California corporation (the
"COMPANY"), agrees with you as follows:
1. AUTHORIZATION OF NOTES; DEFINITIONS.
The Company will authorize the issue and sale of $80,000,000 aggregate
principal amount of its 7.22% Senior Notes due 2008 (the "NOTES", such term to
include any such notes issued in substitution therefor pursuant to Section 13).
The Notes shall be substantially in the form set out in Exhibit 1, with such
changes therefrom, if any, as may be approved by the Company and the Purchasers.
Certain capitalized terms used in this Agreement are defined in the Glossary
attached hereto, and references to a "Schedule" or an "Exhibit" are, unless
otherwise specified, to a Schedule or an Exhibit attached to this Agreement.
2. SALE AND PURCHASE OF NOTES.
Subject to the terms and conditions of this Agreement, the Company
will issue and sell to you and you will purchase from the Company, at the
Closing provided for in Section 3, Notes in the principal amount specified under
your name in Schedule A at the purchase price of 100% of the principal amount
thereof. The obligations of the Purchasers hereunder are several and not joint
obligations, and no Purchaser shall have any obligation hereunder and no
liability to any Person for the performance or nonperformance by any other
Purchaser thereunder.
3. CLOSING.
The sale and purchase of the Notes to be purchased by you shall occur
at the offices of Orrick, Herrington & Sutcliffe LLP, Old Federal Reserve Bank
Building, 400 Sansome Street, San Francisco, CA 94111, at 10:00 a.m., San
Francisco time, at a closing (the "CLOSING") on April 3, 1998, or on such other
Business Day thereafter on or prior to April 14, 1998, as may be agreed upon by
the Company and the Purchasers. At the Closing the Company will deliver to you
the Notes to be purchased by you in the form of a single Note (or such greater
number of Notes in denominations of at least $500,000 as specified under your
name in Schedule A or as
<PAGE>
you may otherwise request) dated the Closing Date and registered in your name
(or in the name of your nominee), against delivery by you to the Company or its
order of immediately available funds in the amount of the purchase price
therefor by wire transfer of immediately available funds for the account of the
Company to account number 0700424464 at Union Bank of California, 445 South
Figueroa Street, Los Angeles, California 90071, ABA No. 122000496, for credit to
Certified Grocers of California, Ltd. If at the Closing the Company shall fail
to tender such Notes to you as provided above in this Section 3, or any of the
conditions specified in Section 4 shall not have been fulfilled to your
satisfaction, you shall, at your election, be relieved of all further
obligations under this Agreement, without thereby waiving any rights you may
have by reason of such failure or such nonfulfillment.
4. CONDITIONS TO CLOSING.
Your obligation to purchase and pay for the Notes to be sold to you at
the Closing is subject to the fulfillment to your satisfaction, prior to or at
the Closing, of the following conditions:
4.1. REPRESENTATIONS AND WARRANTIES.
The representations and warranties of the Company in this Agreement
shall be correct when made and at the time of the Closing.
4.2. PERFORMANCE; NO DEFAULT.
The Company shall have performed and complied with all agreements and
conditions contained in this Agreement required to be performed or complied with
by it prior to or at the Closing and after giving effect to the issue and sale
of the Notes (and the application of the proceeds thereof as contemplated by
Section 5.14) no Default or Event of Default shall have occurred and be
continuing. Except as disclosed in Schedule 4.2, since the date of the most
recent financial statements listed in Schedule 5.5, neither the Company nor any
Subsidiary shall have entered into any transaction that would have been
prohibited by Section 10 had such Section applied since such date.
4.3. COMPLIANCE CERTIFICATES.
(a) Officer's Certificate. The Company shall have delivered to you
---------------------
an Officer's Certificate, dated the Closing Date, certifying that the
conditions specified in Sections 4.1, 4.2 and 4.9 have been fulfilled.
(b) Secretary's Certificate. The Company shall have delivered to you
-----------------------
a certificate certifying (i) the resolutions attached thereto and other
corporate proceedings relating to the authorization, execution and delivery
of the Notes and this Agreement, (ii) its Articles of Incorporation and
Bylaws attached thereto as then in effect, and (iii) the incumbency and
specimen signatures of the persons authorized to execute the Notes and this
Agreement.
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<PAGE>
4.4. OPINIONS OF COUNSEL.
You shall have received opinions in form and substance satisfactory to
you, dated the Closing Date (a) from Sheppard, Mullin, Richter & Hampton, LLP,
counsel for the Company, covering the matters set forth in Exhibit 4.4(a) and
covering such other matters incident to the transactions contemplated hereby as
you or your counsel may reasonably request (and the Company hereby instructs its
counsel to deliver such opinion to you) and (b) from Orrick, Herrington &
Sutcliffe LLP, your special counsel in connection with such transactions,
substantially in the form set forth in Exhibit 4.4(b) and covering such other
matters incident to such transactions as you may reasonably request.
4.5. PURCHASE PERMITTED BY APPLICABLE LAW, ETC.
On the Closing Date your purchase of Notes shall (a) be permitted by
the laws and regulations of each jurisdiction to which you are subject, without
recourse to provisions (such as Section 1405(a)(8) of the New York Insurance
Law) permitting limited investments by insurance companies without restriction
as to the character of the particular investment, (b) not violate any applicable
law or regulation (including, without limitation, Regulation G, T or X of the
Board of Governors of the Federal Reserve System) and (c) not subject you to any
tax, penalty or liability under or pursuant to any applicable law or regulation,
which law or regulation was not in effect on the date hereof. If requested by
you, you shall have received an Officer's Certificate certifying as to such
matters of fact as you may reasonably specify to enable you to determine whether
such purchase is so permitted.
4.6. SALE OF ALL NOTES.
Contemporaneously with the Closing, the Company shall sell to the each
Purchaser, and such Purchaser shall purchase, the Notes to be purchased by it at
the Closing as specified in Schedule A.
4.7. PAYMENT OF SPECIAL COUNSEL FEES.
Without limiting the provisions of Section 15.1, the Company shall
have paid on or before the Closing the fees, charges and disbursements of your
special counsel referred to in Section 4.4 to the extent reflected in a
statement of such counsel rendered to the Company at least one Business Day
prior to the Closing.
4.8. PRIVATE PLACEMENT NUMBER.
A Private Placement number issued by Standard & Poor's CUSIP Service
Bureau (in cooperation with the Securities Valuation Office of the National
Association of Insurance Commissioners) shall have been obtained for the Notes.
4.9. CHANGES IN CORPORATE STRUCTURE.
Except as specified in Schedule 4.9, the Company shall not have
changed its jurisdiction of incorporation or been a party to any merger or
consolidation and shall not have
3
<PAGE>
succeeded to all or any substantial part of the liabilities of any other entity,
at any time following the date of the most recent financial statements listed in
Schedule 5.5.
4.10. CHANGES IN INDEBTEDNESS.
Since the date of the most recent financial statements listed in
Schedule 5.5, there has been no Material change in the principal amounts (other
than as a result of scheduled amortization payments), interest rates, sinking
funds, installment payments or maturities of the Indebtedness of the Company or
its Subsidiaries.
4.11. INSURANCE.
The Company shall have furnished to you a certificate of an insurance
broker, dated the Closing Date, which certificate shall be satisfactory in
substance to you, certifying to the insurance carried by the Company and its
Subsidiaries with respect to their respective properties and businesses.
4.12. PROCEEDINGS AND DOCUMENTS.
All corporate and other proceedings in connection with the
transactions contemplated by this Agreement and all documents and instruments
incident to such transactions shall be satisfactory to you and your special
counsel, and you and your special counsel shall have received all such
counterpart originals or certified or other copies of such documents as you or
they may reasonably request.
4.13. SUBSIDIARY GUARANTIES.
The Company shall have executed and delivered to you a Subsidiary
Guaranty substantially in the form of Exhibit 2 from each of the Subsidiary
Guarantors.
5. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company represents and warrants to you that:
5.1. ORGANIZATION; POWER AND AUTHORITY.
The Company is a corporation duly organized, validly existing and in
good standing under the laws of its jurisdiction of incorporation, and is duly
qualified as a foreign corporation and is in good standing in each jurisdiction
in which such qualification is required by law, other than those jurisdictions
as to which the failure to be so qualified or in good standing could not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect. The Company has the corporate power and authority to own or
hold under lease the properties it purports to own or hold under lease, to
transact the business it transacts and proposes to transact, to execute and
deliver this Agreement and the Notes and to perform the provisions hereof and
thereof.
4
<PAGE>
5.2. AUTHORIZATION, ETC.
This Agreement and the Notes have been duly authorized by all
necessary corporate action on the part of the Company, and this Agreement
constitutes, and upon execution and delivery thereof each Note will constitute,
a legal, valid and binding obligation of the Company enforceable against the
Company in accordance with its terms, except as such enforceability may be
limited by (a) applicable bankruptcy, insolvency, reorganization, moratorium or
other similar laws affecting the enforcement of creditors' rights generally and
(b) general principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law).
5.3. DISCLOSURE.
Except as disclosed in Schedule 5.3, this Agreement, the documents,
certificates or other writings delivered to you by or on behalf of the Company
in connection with the transactions contemplated hereby and the financial
statements listed in Schedule 5.5, taken as a whole, do not contain any untrue
statement of a material fact or omit to state any material fact necessary to
make the statements therein not misleading in light of the circumstances under
which they were made. Except as expressly described in Schedule 5.3, or in one
of the documents, certificates or other writings identified therein, or in the
financial statements listed in Schedule 5.5, since the date of the most recent
financial statements listed in Schedule 5.5, there has been no change in the
financial condition, operations, business, properties or prospects of the
Company or any Subsidiary except changes that individually or in the aggregate
could not reasonably be expected to have a Material Adverse Effect. There is no
fact known to the Company that could reasonably be expected to have a Material
Adverse Effect that has not been set forth herein or in the other documents,
certificates and other writings delivered to you by or on behalf of the Company
specifically for use in connection with the transactions contemplated hereby.
5.4. ORGANIZATION AND OWNERSHIP OF SHARES OF SUBSIDIARIES; AFFILIATES.
(a) Schedule 5.4 contains complete and correct lists (i) of the
Company's Subsidiaries, showing, as to each Subsidiary, the correct name
thereof, the jurisdiction of its organization and the percentage of shares of
each class of its capital stock or similar equity interests outstanding owned by
the Company and each other Subsidiary, (ii) of the Company's Affiliates, other
than Subsidiaries, and (iii) of the Company's directors and senior officers.
(b) All of the outstanding shares of capital stock or similar equity
interests of each Subsidiary shown in Schedule 5.4 as being owned by the Company
and its Subsidiaries have been validly issued, are fully paid and nonassessable
and are owned by the Company or another Subsidiary free and clear of any Lien
(except as otherwise disclosed in Schedule 5.4).
(c) Each Subsidiary identified in Schedule 5.4 is a corporation or
other legal entity duly organized, validly existing and in good standing under
the laws of its jurisdiction of organization, and is duly qualified as a foreign
corporation or other legal entity and is in good standing in each jurisdiction
in which such qualification is required by law, other than those jurisdictions
as to which the failure to be so qualified or in good standing could not,
individually
5
<PAGE>
or in the aggregate, reasonably be expected to have a Material Adverse Effect.
Each such Subsidiary has the corporate or other power and authority to own or
hold under lease the properties it purports to own or hold under lease and to
transact the business it transacts and proposes to transact.
(d) No Subsidiary is a party to, or otherwise subject to any legal
restriction or any agreement (other than this Agreement, the agreements listed
on Schedule 5.4 and customary limitations imposed by corporate law statutes and,
in the case of the Insurance Subsidiaries, restrictions imposed by insurance law
statutes and regulations) restricting the ability of such Subsidiary to pay
dividends out of profits or make any other similar distributions of profits to
the Company or any of its Subsidiaries that owns outstanding shares of capital
stock or similar equity interests of such Subsidiary.
5.5. FINANCIAL STATEMENTS.
The Company has delivered to each Purchaser copies of the financial
statements of the Company and its Subsidiaries listed in Schedule 5.5. All of
said financial statements (including in each case the related schedules and
notes) fairly present in all material respects the consolidated financial
position of the Company and its Subsidiaries as of the respective dates
specified in such Schedule and the consolidated results of their operations and
cash flows for the respective periods so specified and have been prepared in
accordance with GAAP consistently applied throughout the periods involved except
as set forth in the notes thereto (subject, in the case of any interim financial
statements, to normal year-end adjustments).
5.6. COMPLIANCE WITH LAWS, OTHER INSTRUMENTS, ETC.
The execution, delivery and performance by the Company of this
Agreement and the Notes will not (a) except as set forth in Schedule 5.6,
contravene, result in any breach of, or constitute a default under, or result in
the creation of any Lien in respect of any property of the Company or any
Subsidiary under (i) any indenture, mortgage, deed of trust, loan, purchase or
credit agreement, lease or corporate charter or by-laws, or (ii) any Material
agreement or instrument to which the Company or any Subsidiary is bound or by
which the Company or any Subsidiary or any of their respective properties may be
bound or affected, (b) conflict with or result in a breach of any of the terms,
conditions or provisions of any order, judgment, decree, or ruling of any court,
arbitrator or Governmental Authority applicable to the Company or any Subsidiary
or (c) violate any provision of any statute or other rule or regulation of any
Governmental Authority applicable to the Company or any Subsidiary.
5.7. GOVERNMENTAL AUTHORIZATIONS, ETC.
No consent, approval or authorization of, or registration, filing or
declaration with, any Governmental Authority is required in connection with the
execution, delivery or performance by the Company of this Agreement or the
Notes.
5.8. LITIGATION; OBSERVANCE OF AGREEMENTS, STATUTES AND ORDERS.
(a) Except as disclosed in the financial statements listed in
Schedule 5.5 or as disclosed in Schedule 5.8, there are no actions, suits or
proceedings pending or, to the knowledge
6
<PAGE>
of the Company, threatened against or affecting the Company or any Subsidiary or
any property of the Company or any Subsidiary in any court or before any
arbitrator of any kind or before or by any Governmental Authority that,
individually or in the aggregate, could reasonably be expected to have a
Material Adverse Effect.
(b) Neither the Company nor any Subsidiary is in default under any
term of any agreement or instrument to which it is a party or by which it is
bound, or any order, judgment, decree or ruling of any court, arbitrator or
Governmental Authority or is in violation of any applicable law, ordinance, rule
or regulation (including without limitation Environmental Laws) of any
Governmental Authority, which default or violation, individually or in the
aggregate, could reasonably be expected to have a Material Adverse Effect.
5.9. TAXES.
The Company and its Subsidiaries have filed all tax returns that are
required to have been filed in any jurisdiction, and have paid all taxes shown
to be due and payable on such returns and all other taxes and assessments levied
upon them or their properties, assets, income or franchises, to the extent such
taxes and assessments have become due and payable and before they have become
delinquent, except for any taxes and assessments (a) the amount of which is not
individually or in the aggregate Material or (b) the amount, applicability or
validity of which is currently being contested in good faith by appropriate
proceedings and with respect to which the Company or a Subsidiary, as the case
may be, has established adequate reserves in accordance with GAAP. The Company
knows of no basis for any other tax or assessment that could reasonably be
expected to have a Material Adverse Effect. The charges, accruals and reserves
on the books of the Company and its Subsidiaries in respect of Federal, state or
other taxes for all fiscal periods are adequate. The Federal income tax
liabilities of the Company and its Subsidiaries have been determined by the
Internal Revenue Service and paid for all fiscal years up to and including the
fiscal year ended August 28, 1993.
5.10. TITLE TO PROPERTY; LEASES.
The Company and its Subsidiaries have good and sufficient title to
their respective properties that individually or in the aggregate are Material,
including all such properties reflected in the most recent audited balance sheet
listed in Section 5.5 or purported to have been acquired by the Company or any
Subsidiary after said date (except as sold or otherwise disposed of in the
ordinary course of business), in each case free and clear of Liens prohibited by
this Agreement. All leases that individually or in the aggregate are Material
are valid and subsisting and are in full force and effect in all material
respects.
5.11. LICENSES, PERMITS, ETC.
(a) Except as disclosed in Schedule 5.11,
(b) the Company and its Subsidiaries own or possess all licenses,
permits, franchises, authorizations, patents, copyrights, service marks,
trademarks and trade names, or rights thereto, that individually or in the
aggregate are Material, without known conflict with the rights of others;
7
<PAGE>
(c) to the best knowledge of the Company, neither the Company nor any
of its Subsidiaries is in Material violation of any license, permit, franchise,
authorization, patent, copyright, service mark, trademark, trade name or other
right owned by any other Person; and
(d) to the best knowledge of the Company, there is no Material
violation by any Person of any right of the Company or any of its Subsidiaries
with respect to any patent, copyright, service mark, trademark, trade name or
other right owned or used by the Company or any of its Subsidiaries.
5.12. COMPLIANCE WITH ERISA; MULTIEMPLOYER PLANS.
(a) Neither (i) the execution and delivery of this Agreement by the
Company, (ii) the offer, issuance, sale and delivery of the Notes by the
Company, (iii) the acquisition of the Notes by you, (iv) the application by the
Company of the proceeds of the sale of the Notes nor (v) the consummation of any
of the other transactions contemplated by this Agreement constitutes or will
result in a non-exempt "prohibited transaction" under Section 4975 of the Code
or Section 406 of ERISA. The representation by the Company in the preceding
sentence is made in reliance upon and subject to the accuracy of the
representations made by you in Section 6.2. Schedule 5.12 is a complete and
correct list of all Plans with respect to which the Company or any ERISA
Affiliate is a "party in interest" (within the meaning of Section 3(14) of
ERISA) or with respect to which its securities are "employer securities" (within
the meaning of Section 407(d)(1) of ERISA).
(b) Each Plan is in Material compliance in all respects with
applicable provisions of ERISA and the Code. Each of the Company and any ERISA
Affiliate has made all contributions to each Plan required to be made by it.
(c) Except for liabilities to make contributions and to pay PBGC
premiums and administrative costs, neither the Company nor any ERISA Affiliate
has incurred any Material liability to or on account of any Pension Plan under
applicable provisions of ERISA or the Code, and no condition exists which
presents a Material risk to the Company or any ERISA Affiliate of incurring any
such liability. No Pension Plan has an "accumulated funding deficiency" (within
the meaning of Section 412 of the Code), whether or not waived. None of the
Company or any ERISA Affiliate, the PBGC or any other Person has instituted any
proceedings or taken any other action to terminate any Pension Plan.
(d) Except as disclosed in Note 10 to the Company's financial
statements for the fiscal year ended August 30, 1997, the actuarial present
value of all accumulated benefit obligations under each Pension Plan (based on
the assumptions used in the funding of such Pension Plan, which assumptions are
reasonable, and determined as of the last day of the most recent plan year of
such Pension Plan for which an annual report has been filed with the Internal
Revenue Service) did not exceed the current value of the assets of such Pension
Plan as of such last day.
(e) The Company and its ERISA Affiliates have not incurred withdrawal
liabilities (and are not subject to contingent withdrawal liabilities) under
Section 4201 or 4204 of ERISA in respect of Multiemployer Plans that
individually or in the aggregate are Material. The
8
<PAGE>
expected post-retirement benefit obligation (determined as of the last day of
the Company's most recently ended fiscal year in accordance with Financial
Accounting Standards Board Statement No. 106, without regard to continuation
coverage mandated by Section 4980B of the Code) of the Company and its
Subsidiaries has been accurately reflected in Note 11 to the Company's financial
statements for the fiscal year ended August 30, 1997.
5.13. PRIVATE OFFERING BY THE COMPANY.
Neither the Company nor anyone acting on its behalf has offered the
Notes or any similar securities for sale to, or solicited any offer to buy any
of the same from, or otherwise approached or negotiated in respect thereof with,
any person other than the Purchasers, each of which has been offered the Notes
at a private sale for investment. Neither the Company nor anyone acting on its
behalf has taken, or will take, any action that would subject the issuance or
sale of the Notes to the registration requirements of Section 5 of the
Securities Act.
5.14. USE OF PROCEEDS; MARGIN REGULATIONS.
The Company will apply the proceeds of the sale of the Notes (a) to
repay outstanding Indebtedness of the Company and its Subsidiaries as set forth
on Schedule 5.14, (b) to pay transactions costs incurred in connection with this
Note Purchase Agreement, (c) to pay all other expenses relating to the
consummation of the transactions contemplated hereby and (d) to finance working
capital needs of the Company. No part of the proceeds from the sale of the
Notes hereunder will be used, directly or indirectly, for the purpose of buying
or carrying any margin stock within the meaning of Regulation G of the Board of
Governors of the Federal Reserve System (12 CFR 207), or for the purpose of
buying or carrying or trading in any securities under such circumstances as to
involve the Company in a violation of Regulation X of said Board (12 CFR 224) or
to involve any broker or dealer in a violation of Regulation T of said Board (12
CFR 220). Margin stock does not constitute more than 5% of the value of the
consolidated assets of the Company and its Subsidiaries and the Company does not
have any present intention that margin stock will constitute more than 5% of the
value of such assets. As used in this Section, the terms "margin stock" and
"purpose of buying or carrying" shall have the meanings assigned to them in said
Regulation G.
5.15. EXISTING INDEBTEDNESS; FUTURE LIENS.
(a) Except as described therein, Schedule 5.15 sets forth a complete
and correct list of all outstanding Indebtedness of the Company and its
Subsidiaries as of the date set forth therein, including the amounts, interest
rates, sinking funds, installment payments and maturities of the Indebtedness of
the Company and its Subsidiaries. Neither the Company nor any Subsidiary is in
default and no waiver of default is currently in effect, in the payment of any
principal or interest on any Indebtedness of the Company or such Subsidiary and
no event or condition exists with respect to any Indebtedness of the Company or
any Subsidiary that would permit (or that with notice or the lapse of time, or
both, would permit) one or more Persons to cause such Indebtedness to become due
and payable before its stated maturity or before its regularly scheduled dates
of payment.
9
<PAGE>
(b) Except as disclosed in Schedule 5.15, neither the Company nor any
Subsidiary has agreed or consented to cause or permit in the future (upon the
happening of a contingency or otherwise) any of its property, whether now owned
or hereafter acquired, to be subject to a Lien not permitted by Section 10.5.
5.16. FOREIGN ASSETS CONTROL REGULATIONS, ETC.
Neither the sale of the Notes by the Company hereunder nor its use of
the proceeds thereof will violate the Trading with the Enemy Act, as amended, or
any of the foreign assets control regulations of the United States Treasury
Department (31 CFR, Subtitle B, Chapter V, as amended) or any enabling
legislation or executive order relating thereto.
5.17. STATUS UNDER CERTAIN STATUTES.
Neither the Company nor any Subsidiary is subject to regulation under
the Investment Company Act of 1940, as amended, the Public Utility Holding
Company Act of 1935, as amended, the Interstate Commerce Act, as amended, or the
Federal Power Act, as amended.
5.18. ENVIRONMENTAL MATTERS.
Except as disclosed in Schedule 5.18,
(a) neither the Company nor any Subsidiary has knowledge of any claim
or has received any notice of any claim, and no proceeding has been instituted
raising any claim against the Company or any of its Subsidiaries or any of their
respective real properties now or formerly owned, leased or operated by any of
them or other assets, alleging any damage to the environment or violation of any
Environmental Laws, except, in each case, such as could not reasonably be
expected to result in a Material Adverse Effect;
(b) neither the Company nor any Subsidiary has knowledge of any facts
which would give rise to any claim, public or private, of violation of
Environmental Laws or damage to the environment emanating from, occurring on or
in any way related to real properties now or formerly owned, leased or operated
by any of them or to other assets or their use, except, in each case, such as
could not reasonably be expected to result in a Material Adverse Effect;
(c) neither the Company nor any of its Subsidiaries has stored any
Hazardous Materials on real properties now or formerly owned, leased or operated
by any of them and has not disposed of any Hazardous Materials in a manner
contrary to any Environmental Laws in each case in any manner that could
reasonably be expected to result in a Material Adverse Effect; and
(d) all buildings on all real properties now owned, leased or
operated by the Company or any of its Subsidiaries are in compliance with
applicable Environmental Laws, except where failure to comply could not
reasonably be expected to result in a Material Adverse Effect.
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<PAGE>
5.19. EVENT OF DEFAULT.
No Event of Default or Default has occurred and is continuing.
5.20. RANK OF INDEBTEDNESS.
The obligations of the Company to pay the principal of and interest on
the Notes and all other amounts which may become due thereunder or hereunder
will rank at least pari passu in priority of payment with all other Indebtedness
of the Company, except any such Indebtedness secured by Liens permitted by
Section 10.5.
5.21. SOLVENCY.
The Company is not, and immediately after giving effect to the issue
and sale of the Notes and the consummation of the other transactions
contemplated by this Agreement will not be, insolvent as defined under any
applicable federal or state law. For purposes of this Section 5.21, "insolvent"
means:
(a) having, at a fair valuation, total liabilities (including
unliquidated, contingent, subordinated, unmatured, disputed, legal, equitable,
secured or unsecured liabilities) that exceed total assets;
(b) generally not paying debts as they become due;
(c) based on current projections that are themselves based on
underlying assumptions providing a reasonable basis for the projections and
reflecting present circumstances and the most likely course of action for the
period projected, having insufficient cash flow to pay debts as they mature;
(d) having unreasonably small capital with which to engage in
anticipated business; or
(e) being "insolvent" as defined under any applicable federal or
state law.
For purposes of this Section 5.21, the "fair valuation" of the assets of any
Person shall be determined on the basis of the amount which may be realized
within a reasonable time, either through collection or sale of such assets at
the regular market value, conceiving the latter as the amount which could be
obtained for the property in question within such period by a capable and
diligent seller from an interested buyer who is willing to purchase under
ordinary selling conditions.
6. REPRESENTATIONS OF THE PURCHASERS.
6.1. PURCHASE FOR INVESTMENT.
You represent that you are purchasing the Notes for your own account
or for one or more separate accounts maintained by you or for the account of one
or more pension or trust funds and not with a view to the distribution thereof,
provided that the disposition of your or
11
<PAGE>
their property shall at all times be within your or their control. You further
represent that you are an "accredited investor" within the meaning of Regulation
D of the Securities Exchange Commission. You understand that the Notes have not
been registered under the Securities Act and may be resold only if registered
pursuant to the provisions of the Securities Act or if an exemption from
registration is available, except under circumstances where neither such
registration nor such an exemption is required by law, and that the Company is
not required to register the Notes.
6.2. SOURCE OF FUNDS.
You represent and warrant that, with respect to each source of funds
to be used by you to purchase the Notes (respectively, the "SOURCE"), at least
one of the following statements is accurate as of the Closing Date:
(a) The Source consists of assets of an "insurance company general
account" as such term is defined in Section V(e) of Prohibited Transaction Class
Exemption ("PTCE") 95-60 (issued July 12, 1995), and such general account
satisfies the conditions set forth in Section I(a) of PTCE 95-60;
(b) The Source is a "governmental plan" (within the meaning of
Section 3(32) of ERISA);
(c) The Source is either (i) an "insurance company pooled separate
account" (within the meaning of PTCE 90-1 (issued January 20, 1990)) or (ii) a
"bank collective investment fund" (within the meaning of PTCE 91-38 (issued July
12, 1991)); and you have identified in writing to the Company each "employee
benefit plan" (within the meaning of Section 3(3) of ERISA) or group of such
employee benefit plans that comprises 10% of the assets of such account or fund;
(d) The Source is an "investment fund" managed by a "qualified
professional asset manager" or "QPAM" (as defined in Part V of PTCE 84-14
(issued March 13, 1984)) which QPAM has been identified in writing; and no other
party to the transactions described in this Agreement and no "affiliate" of such
other party (as defined in Section V(c) of PTCE 84-14) has at this time, or has
exercised at any time during the immediately preceding year, the authority to
appoint or terminate said QPAM as manager of the assets of any Plan identified
in writing pursuant to this paragraph (d) or to negotiate the terms of said
QPAM's management agreement on behalf of any such identified Plans;
(e) The Source is one or more Plans, or a separate account or trust
fund comprised of one or more Plans, each of which has been identified in
writing pursuant to this paragraph (e); or
(f) The Source includes no assets which are subject to ERISA or
Section 4975 of the Code.
12
<PAGE>
7. INFORMATION AS TO COMPANY.
7.1. FINANCIAL AND BUSINESS INFORMATION.
The Company shall deliver to each holder of Notes that is an
Institutional Investor:
(a) Quarterly Statements -- within 45 days after the end of each
--------------------
quarterly fiscal period in each fiscal year of the Company (other than the last
quarterly fiscal period of each such fiscal year), duplicate copies of,
(i) a consolidated balance sheet of the Company and its
Subsidiaries as at the end of such quarter, and
(ii) consolidated statements of income and cash flows of the
Company and its Subsidiaries for such quarter and (in the case of the
second and third quarters) for the portion of the fiscal year ending
with such quarter,
setting forth, in the case of the balance sheet, in comparative form the figures
as of the end of the preceding fiscal year and, in the case of the statements of
income and cash flows, in comparative form the figures for the corresponding
periods in the previous fiscal year, all in reasonable detail, prepared in
accordance with GAAP applicable to quarterly financial statements generally, and
certified by a Senior Financial Officer as fairly presenting, in all material
respects, the consolidated financial position of the Company and its
Subsidiaries and their results of operations and cash flows, subject to changes
resulting from yearend adjustments, provided, however, that delivery within the
-------- -------
time period specified above of copies of the Company's Quarterly Report on Form
10-Q prepared in compliance with the requirements therefor and filed with the
Securities and Exchange Commission shall be deemed to satisfy the requirements
of this Section 7.1(a);
(b) Annual Statements -- within 90 days after the end of each fiscal
-----------------
year of the Company, duplicate copies of,
(i) a consolidated balance sheet of the Company and its
Subsidiaries as at the end of such year, and
(ii) consolidated statements of income, changes in shareholders'
equity and cash flows of the Company and its Subsidiaries for such year,
setting forth in each case in comparative form the figures for the previous
fiscal year, all in reasonable detail, prepared in accordance with GAAP, and
accompanied
(A) by an opinion thereon of independent certified public
accountants of recognized national standing, stating that such financial
statements present fairly, in all material respects, the financial position
of the companies being reported upon and their results of operations and
cash flows and have been prepared in conformity with GAAP, and that the
examination of such accountants in connection with such financial
statements has been made in accordance with
13
<PAGE>
generally accepted auditing standards, and that such audit provides a
reasonable basis for such opinion in the circumstances, and
(B) to the extent not reflected or disclosed in such financial
statements or the notes thereto, a detailed report of all Guaranties of the
Company and its Subsidiaries including, without limitation, the aggregate
annual payments due under such Guaranties, excluding, in the case of
Guaranties of lease obligations, "percentage" rent or other contingent rent
and payments made by the lessee for property taxes, insurance, utilities,
common area maintenance charges and the like,
provided, however, that the delivery within the time period specified above of
- -------- -------
the Company's Annual Report on Form 10-K for such fiscal year (together with the
Company's annual report to shareholders, if any, prepared pursuant to Rule 14a-3
under the Exchange Act) prepared in accordance with the requirements therefor
and filed with the Securities and Exchange Commission, together with the
detailed report described in clause (B) above, shall be deemed to satisfy the
requirements of this Section 7.1(b);
(c) Reports to Management -- promptly after the submission thereof to the
---------------------
Company, one copy of each detailed report submitted to the Audit Committee of
the Board of Directors of the Company by its independent auditors in connection
with each annual or interim audit of the accounts of the Company made by such
accountants (including the auditors' comment letter to management, if any such
letter is prepared);
(d) SEC and Other Reports -- promptly upon their becoming available, one
---------------------
copy of (i) each financial statement, report, notice or proxy statement sent by
the Company or any Subsidiary to public securities holders generally, and (ii)
each regular or periodic report, each registration statement (without exhibits
except as expressly requested by such holder), and each prospectus and all
amendments thereto filed by the Company or any Subsidiary with the Securities
and Exchange Commission and of all press releases and other statements made
available generally by the Company or any Subsidiary to the public concerning
developments that are Material;
(e) Notice of Default or Event of Default -- immediately, and in any event
-------------------------------------
within 5 days after a Responsible Officer's becoming aware of the existence of
any Default or Event of Default or that any Person has given any notice or taken
any action with respect to a claimed default hereunder or that any Person has
given any notice or taken any action with respect to a claimed default of the
type referred to in Section 11(f), a written notice specifying the nature and
period of existence thereof and what action the Company is taking or proposes to
take with respect thereto;
(f) ERISA Matters -- promptly, and in any event within 5 days after a
-------------
Responsible Officer's becoming aware of any of the following that could result
in the imposition of a tax or other penalty on the Company or any ERISA
Affiliate in connection with any Plan, a written notice specifying the nature
thereof, what action the Company is taking or proposes to take with respect
thereto, and, when known, any action taken by the Internal Revenue Service, the
U.S. Department of Labor, the PBGC or any foreign governmental entity with
respect
14
<PAGE>
thereto: (i) an ERISA Termination Event, (ii) a "prohibited transaction" (within
the meaning of Section 4975 of the Code or Section 406 of ERISA), other than one
to which an exemption applies, (iii) a failure to make a timely contribution to
any Pension Plan, if such failure has given rise to a lien under Section 412(n)
of the Code or any comparable provision of applicable foreign law, or (iv) an
actual, asserted or alleged violation of ERISA, the Code or applicable foreign
law;
(g) Notices from Governmental Authority -- promptly, and in any event
-----------------------------------
within 30 days of receipt thereof, copies of any notice to the Company or any
Subsidiary from any Federal or state Governmental Authority relating to any
order, ruling, statute or other law or regulation that could reasonably be
expected to have a Material Adverse Effect;
(h) Reports to Other Lenders -- without duplication, concurrently with the
------------------------
delivery therewith, promptly upon their becoming available, one copy of each
income statement (including consolidating income statements), report, notice or
other information (other than routine notices of borrowings and repayments) sent
by the Company or any Subsidiary to any Person that holds Indebtedness of the
Company or any Subsidiary;
(i) Payments under Guarantees -- promptly, and in any event within 5 days
-------------------------
after the Company has, paid $250,000 or more under any Guaranty, notice of such
payment and the circumstances giving rise to such payment;
(j) GCC's Tangible Net Worth -- promptly, and in any event within 5 days
------------------------
after a Responsible Officer's becoming aware that GCC's Tangible Net Worth (as
defined in Section 2 of the Operating Agreement) is equal to or less than
$15,000,000, notice of such event;
(k) Financial Reports of GCC and Insurance Subsidiaries -- promptly, and
---------------------------------------------------
in any event within 30 days of receipt thereof, copies of the financial
statements (balance sheet, statement of income and statement of cash flows) of
GCC and the financial statements (balance sheet and statement of income) of the
Insurance Subsidiaries for each fiscal year of such Subsidiary prepared in such
Subsidiary's ordinary course of business;
(l) Information Required by Rule 144A -- with reasonable promptness, upon
---------------------------------
the request of the holder of any Note, provide such holder, and any "qualified
institutional buyer" (as such term is defined in Rule 144A under the Securities
Act as in effect on the date of this Agreement) designated by such holder, such
financial and other information as such holder may reasonably determine to be
necessary in order to permit compliance with the information requirements of
such Rule 144A in connection with the resale of Notes; and
(m) Requested Information -- with reasonable promptness, such other data
---------------------
and information relating to the Company or any of its Subsidiaries or relating
to the ability of the Company to perform its obligations hereunder and under the
Notes as from time to time may be reasonably requested by any such holder of
Notes.
7.2. OFFICER'S CERTIFICATE.
Each set of financial statements delivered to a holder of Notes
pursuant to Section 7.2 or Section 7.17.1(b) hereof shall be accompanied by a
certificate of a Senior Financial Officer setting forth:
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<PAGE>
(a) Covenant Compliance -- the information (including detailed
-------------------
calculations) required in order to establish whether the Company and its
Subsidiaries were in compliance with the requirements of Section 10.4 through
Section 10.6, inclusive, during the quarterly or annual period covered by the
statements then being furnished including, with respect to each such Section,
where applicable, the calculations of the maximum or minimum amount, ratio or
percentage, as the case may be, permissible under the terms of such Sections,
and the calculation of the amount, ratio or percentage then in existence; and
(b) Event of Default -- a statement that such officer has reviewed the
----------------
relevant terms hereof and has made, or caused to be made, under his or her
supervision, a review of the transactions and conditions of the Company and its
Subsidiaries from the beginning of the quarterly or annual period covered by the
statements then being furnished to the date of the certificate and that such
review shall not have disclosed the existence during such period of any
condition or event that constitutes a Default or an Event of Default or, if any
such condition or event existed or exists (including, without limitation, any
such event or condition resulting from the failure of the Company or any
Subsidiary to comply with any Environmental Law), specifying the nature and
period of existence thereof and what action the Company shall have taken or
proposes to take with respect thereto.
7.3. INSPECTION.
The Company shall permit the representatives of each holder of Notes
that is an Institutional Investor:
(a) No Default -- if no Default or Event of Default then exists, at the
----------
expense of such holder and upon reasonable prior notice to the Company, to visit
the principal executive office of the Company, to examine its books of account,
records, reports and other papers, to make copies and extracts therefrom, to
discuss the affairs, finances and accounts of the Company and its Subsidiaries
with the Company's officers, employees and (with the consent of the Company,
which consent will not be unreasonably withheld) its independent public
accountants, and (with the consent of the Company, which consent will not be
unreasonably withheld) to visit the other offices and properties of the Company
and each Subsidiary, all at such reasonable times and as often as may be
reasonably requested in writing; and
(b) Default -- if a Default or Event of Default then exists, at the
-------
expense of the Company to visit and inspect any of the offices or properties of
the Company or any Subsidiary, to examine all their respective books of account,
records, reports and other papers, to make copies and extracts therefrom, and to
discuss their respective affairs, finances and accounts with their respective
officers, employees and independent public accountants (and by this provision
the Company authorizes said accountants to discuss the affairs, finances and
accounts of the Company and its Subsidiaries), all at such times and as often as
may be requested.
8. PREPAYMENT OF THE NOTES.
8.1. REQUIRED PREPAYMENTS.
(a) Generally. On the first (1st) day of the twenty-fifth (25th) calendar
---------
month following the Closing Date and on the first of each month thereafter
to and including the month
16
<PAGE>
immediately preceding the Maturity Date, the Company will prepay principal
of the Notes together with accrued interest on the Notes in the aggregate
amount of $832,116.62 without payment of the Make-Whole Amount or any
premium. Notwithstanding anything to the contrary contained herein or in
any Note, however, the final payment due under each Note (whether at
maturity, by acceleration or otherwise) shall be in an amount sufficient to
pay in full all outstanding principal thereon together with all accrued
interest and premium due hereon.
(b) Reduction of Prepayment Amount. Upon any partial prepayment of the
------------------------------
Notes pursuant to Section 8.2 or purchase of the Notes permitted by Section 8.5,
the principal amount of each required payment of principal of and accrued
interest on Notes becoming due under this Section 8.1 on and after the date of
such prepayment or purchase shall be reduced in the same proportion as the
aggregate unpaid principal amount of the Notes is reduced as a result of such
prepayment or purchase.
(c) Prepayment of Interest. Unless the Closing Date is on the first day
----------------------
of the calendar month, the Company will prepay on the Closing Date interest to
accrue on the Notes from the Closing Date to the first (1st) day of the calendar
month following the Closing Date.
8.2. OPTIONAL PREPAYMENTS WITH MAKE-WHOLE AMOUNT.
On and after the first (1st) day of the calendar month following the
Closing Date, the Company may, at its option, upon notice as provided below,
prepay at any time all, or from time to time, any part of the Notes, in an
amount not less than $3,000,000 in aggregate principal amount of the Notes then
outstanding in the case of a partial prepayment, at 100% of the principal amount
so prepaid, plus interest accrued to the date of prepayment, plus the Make-Whole
Amount determined for the prepayment date with respect to such principal amount.
The Company will give each holder of Notes written notice of each optional
prepayment under this Section 8.2 not less than 30 days and not more than 60
days prior to the date fixed for such prepayment. Each such notice shall
specify such date, the aggregate principal amount of the Notes to be prepaid on
such date, the principal amount of each Note held by such holder to be prepaid
(determined in accordance with Section 8.3), and the interest to be paid on the
prepayment date with respect to such principal amount being prepaid, and shall
be accompanied by a certificate of a Senior Financial Officer as to the
estimated Make-Whole Amount due in connection with such prepayment (calculated
as if the date of such notice were the date of the prepayment), setting forth
the details of such computation. Two Business Days prior to such prepayment,
the Company shall deliver to each holder of Notes a certificate of a Senior
Financial Officer specifying the calculation of such Make-Whole Amount as of the
specified prepayment date.
8.3. ALLOCATION OF PARTIAL PREPAYMENTS.
In the case of each partial prepayment of the Notes, the principal
amount of the Notes to be prepaid shall be allocated among all of the Notes at
the time outstanding in proportion, as nearly as practicable, to the respective
unpaid principal amounts thereof not theretofore called for prepayment.
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<PAGE>
8.4. MATURITY; SURRENDER, ETC.
In the case of each prepayment of Notes pursuant to this Section 8,
the principal amount of each Note to be prepaid shall mature and become due and
payable on the date fixed for such prepayment, together with interest on such
principal amount accrued to such date and the applicable Make-Whole Amount, if
any. From and after such date, unless the Company shall fail to pay such
principal amount when so due and payable, together with the interest and Make-
Whole Amount, if any, as aforesaid, interest on such principal amount shall
cease to accrue. Any Note paid or prepaid in full shall be surrendered to the
Company and cancelled and shall not be reissued, and no Note shall be issued in
lieu of any prepaid principal amount of any Note.
8.5. PURCHASE OF NOTES.
The Company will not and will not permit any Affiliate to purchase,
redeem, prepay or otherwise acquire, directly or indirectly, any of the
outstanding Notes except upon the payment or prepayment of the Notes in
accordance with the terms of this Agreement and the Notes. The Company will
promptly cancel all Notes acquired by it or any Affiliate pursuant to any
payment, prepayment or purchase of Notes pursuant to any provision of this
Agreement and no Notes may be issued in substitution or exchange for any such
Notes.
8.6. MAKE-WHOLE AMOUNT.
The term "MAKE-WHOLE AMOUNT" means, with respect to any Note, an
amount equal to the excess, if any, of the Discounted Value of the Remaining
Scheduled Payments with respect to the Called Principal of such Note over the
amount of such Called Principal, provided that the Make-Whole Amount may in no
--------
event be less than zero. For the purposes of determining the Make-Whole Amount,
the following terms have the following meanings:
"CALLED PRINCIPAL" means, with respect to any Note, the principal of
such Note that is to be prepaid pursuant to Section 8.2 or has become or is
declared to be immediately due and payable pursuant to Section 12.1, as the
context requires.
"DISCOUNTED VALUE" means, with respect to the Called Principal of any
Note, the amount obtained by discounting all Remaining Scheduled Payments
with respect to such Called Principal from their respective scheduled due
dates to the Settlement Date with respect to such Called Principal, in
accordance with accepted financial practice and at a discount factor
(applied on the same periodic basis as that on which interest on the Notes
is payable) equal to the Reinvestment Yield with respect to such Called
Principal.
"REINVESTMENT YIELD" means, with respect to the Called Principal of
any Note, 0.25%, in the case of Called Principal payable prior to the fifth
(5th) anniversary of the Closing Date, and 0.75%, in the case of Called
Principal payable after the fifth (5th) anniversary of the Closing Date, in
each case over the yield to maturity implied by (i) the yields reported, as
-
of 10:00 A.M. (New York City time) on the second Business Day preceding the
Settlement Date with respect to such Called Principal, on the display
designated as the applicable PX page of the Bloomberg Financing Markets
Service (or such other display as may replace such display) for actively
traded U.S. Treasury securities having a maturity equal to the Remaining
Average Life of such Called
18
<PAGE>
Principal as of such Settlement Date, or (ii) if such yields are not
reported as of such time or the yields reported as of such time are not
ascertainable, the Treasury Constant Maturity Series Yields reported, for
the latest day for which such yields have been so reported as of the second
Business Day preceding the Settlement Date with respect to such Called
Principal, in Federal Reserve Statistical Release H.15 (519) (or any
comparable successor publication) for actively traded U.S. Treasury
securities having a constant maturity equal to the Remaining Average Life
of such Called Principal as of such Settlement Date. Such implied yield
will be determined, if necessary, by (a) converting U.S. Treasury bill
quotations to bond-equivalent yields in accordance with accepted financial
practice and (b) interpolating linearly between (1) the actively traded
U.S. Treasury security with the constant maturity closest to and greater
than the Remaining Average Life and (2) the actively traded U.S. Treasury
security with the constant maturity closest to and less than the Remaining
Average Life.
"REMAINING AVERAGE LIFE" means, with respect to any Called Principal,
the number of years (calculated to the nearest one-twelfth year) obtained
by dividing (i) such Called Principal into (ii) the sum of the products
obtained by multiplying (a) the principal component of each Remaining
Scheduled Payment with respect to such Called Principal by (b) the number
of years (calculated to the nearest one-twelfth year) that will elapse
between the Settlement Date with respect to such Called Principal and the
scheduled due date of such Remaining Scheduled Payment.
"REMAINING SCHEDULED PAYMENTS" means, with respect to the Called
Principal of any Note, all payments of such Called Principal and interest
thereon that would be due after the Settlement Date with respect to such
Called Principal if no payment of such Called Principal were made prior to
its scheduled due date, provided that if such Settlement Date is not a date
on which interest payments are due to be made under the terms of the Notes,
then the amount of the next succeeding scheduled interest payment will be
reduced by the amount of interest accrued to such Settlement Date and
required to be paid on such Settlement Date pursuant to Section 8.2 or
Section 12.1.
"SETTLEMENT DATE" means, with respect to the Called Principal of any
Note, the date on which such Called Principal is to be prepaid pursuant to
Section 8.2 or has become or is declared to be immediately due and payable
pursuant to Section 12.1, as the context requires.
8.7. LATE CHARGES.
If the Company does not pay when due any amount of principal, premium,
interest or any other obligation hereunder or under the Notes, the Company shall
pay in addition to such amount a late charge equal to 2% of such overdue amount.
9. AFFIRMATIVE COVENANTS.
The Company covenants that so long as any of the Notes are
outstanding:
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9.1. COMPLIANCE WITH LAW.
The Company will and will cause each of its Subsidiaries to comply
with all laws, ordinances or governmental rules or regulations to which each of
them is subject, including, without limitation, Environmental Laws, and will
obtain and maintain in effect all licenses, certificates, permits, franchises
and other governmental authorizations necessary to the ownership of their
respective properties or to the conduct of their respective businesses, in each
case to the extent necessary to ensure that noncompliance with such laws,
ordinances or governmental rules or regulations or failures to obtain or
maintain in effect such licenses, certificates, permits, franchises and other
governmental authorizations could not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect.
9.2. INSURANCE.
The Company will and will cause each of its Subsidiaries to maintain,
with financially sound and reputable insurers, insurance with respect to their
respective properties and businesses against such casualties and contingencies,
of such types, on such terms and in such amounts (including deductibles,
coinsurance and self-insurance, if adequate reserves are maintained with respect
thereto) as is customary in the case of entities of established reputations
engaged in the same or a similar business and similarly situated.
9.3. MAINTENANCE OF PROPERTIES.
The Company will and will cause each of its Subsidiaries to maintain
and keep, or cause to be maintained and kept, their respective properties in
good repair, working order and condition (other than ordinary wear and tear), so
that the business carried on in connection therewith may be properly conducted
at all times, provided that this Section shall not prevent the Company or any
Subsidiary from discontinuing the operation and the maintenance of any of its
properties if such discontinuance is desirable in the conduct of its business
and the Company has concluded that such discontinuance could not, individually
or in the aggregate, reasonably be expected to have a Material Adverse Effect.
9.4. PAYMENT OF TAXES AND CLAIMS.
The Company will and will cause each of its Subsidiaries to file all
tax returns required to be filed in any jurisdiction and to pay and discharge
all taxes shown to be due and payable on such returns and all other taxes,
assessments, governmental charges, or levies imposed on them or any of their
properties, assets, income or franchises, to the extent such taxes and
assessments have become due and payable and before they have become delinquent
and all claims for which sums have become due and payable that have or might
become a Lien on properties or assets of the Company or any Subsidiary, provided
that neither the Company nor any Subsidiary need pay any such tax or assessment
or claims if (i) the amount, applicability or validity thereof is contested by
the Company or such Subsidiary on a timely basis in good faith and in
appropriate proceedings, and the Company or a Subsidiary has established
adequate reserves therefor in accordance with GAAP on the books of the Company
or such Subsidiary or (ii) the nonpayment of all such taxes and assessments in
the aggregate could not reasonably be expected to have a Material Adverse
Effect.
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9.5. CORPORATE EXISTENCE, DESIGNATION OF SUBSIDIARIES, ETC.
Subject to Section 10.2, the Company will at all times preserve and
keep in full force and effect its corporate existence and the corporate
existence of each of its Subsidiaries and all rights and franchises of the
Company and its Subsidiaries unless, in the good faith judgment of the Company,
the termination of or failure to preserve and keep in full force and effect such
corporate existence, right or franchise could not, individually or in the
aggregate, have a Material Adverse Effect.
9.6. KEEPING OF RECORDS AND BOOKS OF ACCOUNT.
The Company shall keep, and cause each of its Subsidiaries to keep,
adequate records and books of accounts, in which complete entries will be made
and which in the case of financial statements referred to in Section 7.1 will be
prepared (except as otherwise expressly provided in this Agreement) in
accordance with GAAP, consistently applied, reflecting all financial
transactions of the Company and each of its Subsidiaries on a consolidated
basis.
9.7. ERISA.
(a) The Company and the ERISA Affiliates each will take all actions
and fulfill all conditions necessary to maintain any and all Plans in
substantial compliance with applicable requirements of ERISA and the Code until
such Plans are terminated, and the liabilities thereof discharged, in accordance
with applicable law.
(b) No Pension Plan will have any "accumulated funding deficiency"
(within the meaning of Section 412 of the Code), which deficiency could
reasonably be expected to have a Material Adverse Effect.
9.8. ADDITIONAL SUBSIDIARY GUARANTORS.
In the event that the Company acquires or capitalizes any Subsidiary
after the Closing Date with assets in excess of $30,000, or any existing
Subsidiary acquires total assets in excess of $30,000, the Company shall cause
such Subsidiary to execute a Subsidiary Guaranty.
10. NEGATIVE COVENANTS.
The Company covenants that so long as any of the Notes are
outstanding:
10.1. TRANSACTIONS WITH AFFILIATES.
The Company will not and will not permit any Subsidiary to (i) enter
into, directly or indirectly, any transaction (including without limitation the
purchase, lease, sale or exchange of properties of any kind or the rendering of
any service) with any Affiliate of the Company or any Subsidiary (other than the
Company or another Subsidiary), or (ii) amend, modify or supplement any such
transaction with such an Affiliate, except, in each case, in the ordinary course
and pursuant to the reasonable requirements of the Company's or such
Subsidiary's business and upon fair and reasonable terms no less favorable to
the Company or such Subsidiary than would be obtainable in an arm's-length
transaction with a Person not an Affiliate
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of the Company or a Subsidiary that is reasonably comparable to the Affiliate
transaction, based on the totality of the applicable circumstances.
10.2. MERGER, CONSOLIDATION, ETC.
The Company will not and will not permit any Subsidiary to consolidate
with or merge with any other corporation unless:
(a) as to a Subsidiary, the successor formed by such consolidation or
the survivor of such merger, as the case may be, shall be the Company or a
Wholly-Owned Subsidiary; or
(b) as to the Company,
(i) the successor formed by such consolidation or the survivor
of such merger, as the case may be, shall be a solvent corporation
organized and existing under the laws of the United States or any State
thereof (including the District of Columbia), and, if the Company is not
such successor corporation, such successor corporation (A) shall have
executed and delivered to each holder of any Notes its assumption of the
due and punctual performance and observance of each covenant and condition
of this Agreement and the Notes and (B) shall have caused to be delivered
to each holder of any Notes an opinion of nationally recognized independent
counsel, or other independent counsel reasonably satisfactory to the
Required Holders, to the effect that all agreements or instruments
effecting such assumption are enforceable in accordance with their terms
and comply with the terms hereof; and
(ii) immediately after giving effect to such transaction, no
Default or Event of Default shall have occurred and be continuing.
10.3. DISPOSAL OF OWNERSHIP OF A SUBSIDIARY.
The Company will not, and will not permit any of its Subsidiaries to,
sell or otherwise dispose of any shares of Subsidiary Stock, nor will the
Company permit any such Subsidiary to issue, sell or otherwise dispose of any
shares of its own Subsidiary Stock, provided that the foregoing restrictions do
not apply to:
(a) the issue of directors' qualifying shares by any such Subsidiary;
(b) the sale of Subsidiary Stock to the Company or a Wholly-Owned
Subsidiary;
(c) the sale or disposition of Subsidiary Stock by the Company if (i)
such Transfer satisfies the requirements of Section 10.4 and (ii) immediately
after giving effect to such transaction, no Default or Event of Default shall
have occurred and be continuing; or
(d) the sale to a member-patron of the Company of Subsidiary Stock of
a Subsidiary whose assets were acquired by such Subsidiary with the intent and
purpose of transferring to a member-patron such assets or the Subsidiary Stock
of such Subsidiary, the
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Company gives each holder of a Note a notice of such intent and purpose within
30 days after such acquisition, and such Subsidiary Stock is so transferred
within 18 months after the acquisition by such Subsidiary of such assets.
10.4. SALE OF ASSETS, ETC.
The Company will not, and will not permit any of its Subsidiaries to,
make any Transfer except
(a) as permitted under Section 10.2 and 10.3;
(b) a Transfer to the Company or a Wholly-Owned Subsidiary so long as
immediately before and immediately after the consummation of any such Transfer
and after giving effect thereto, no Default or Event of Default exists;
(c) any Transfer made in the ordinary course of business and
involving only property that is either (i) inventory held for sale or (ii)
equipment, fixtures, supplies or materials no longer required in the operation
of the business of the Company or any of its Subsidiaries or that is obsolete;
(d) any Transfer made in the ordinary course of business of short
term high quality investments of the Company or any Subsidiary that are
generally considered to be "cash equivalents";
(e) any transfer of an investment made by GCC or an Insurance
Subsidiary in the ordinary course of business;
(f) any Transfer of property that was acquired by the Company or any
Subsidiary subsequent to the Closing Date if such property is leased to the
Company or such Subsidiary within 180 days after such Transfer;
(g) the Transfer to a member-patron of the Company of the assets of a
Subsidiary whose assets were acquired by such Subsidiary with the intent and
purpose of transferring to a member-patron such assets or the Subsidiary Stock
of such Subsidiary, the Company gives each holder of a Note a notice of such
intent and purpose within 30 days after such acquisition] and such assets are so
transferred within 18 months after the acquisition by such Subsidiary of such
assets;
(h) any Transfer if
(i) in the good faith opinion of the Company, the Transfer is in
exchange for consideration having a Fair Market Value at least equal to
that of the property exchanged and is in the best interest of the Company
or such Subsidiary;
(ii) before and immediately after the consummation of any such
Transfer and immediately after giving effect thereto, no Default or Event
of Default would exist; and
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(iii) the book value of the assets that are the subject of such
Transfer plus the book value of all other assets subject to such a Transfer
during the 12-month period preceding such Transfer are less than 10% of
Consolidated Assets as of the date of the most recent financial statements
due pursuant to Section 7.1(b); and
(i) any Transfer to the extent that, within 180 days after such
Transfer, the Person making such Transfer acquires productive assets and/or
enters into contracts for the construction of productive assets, diligently
pursues completion of such construction and completes such construction within
two years after such Transfer and the aggregate acquisition and construction
cost of such productive assets is equal to or greater than the Net Proceeds
Amount from such Transfer.
10.5. LIENS.
The Company will not, and will not permit any of its Subsidiaries to,
directly or indirectly create, incur, assume or permit to exist (upon the
happening of a contingency or otherwise) any Lien on or with respect to any
property or asset (including, without limitation, any document or instrument in
respect of goods or accounts receivable) of the Company or any such Subsidiary,
whether now owned or held or hereafter acquired, or any income or profits
therefrom, or assign or otherwise convey any right to receive income or profits,
except:
(a) Liens existing on the date of this Agreement and securing the
Indebtedness of the Company and its Subsidiaries referred to in Schedule 10.5;
(b) Liens for taxes, assessments or other governmental charges which
are not yet due and payable or the payment of which is not at the time required
by Section 9.4; provided, however, that this clause (b) shall not be deemed to
permit any Liens that may be imposed pursuant to Section 4068 of ERISA or
Section 412(n) of the Code;
(c) leases or subleases granted to others, easements, rights-of-way,
restrictions and other similar charges or encumbrances, in each case incidental
to, and not interfering with, the ordinary conduct of the business of the
Company or any of its Subsidiaries, provided that such Liens do not, in the
aggregate, materially detract from the value of such property;
(d) Liens arising in connection with workers' compensation,
unemployment insurance, appeal and release bonds, and other similar Liens
incidental to the conduct of its business or the ownership, lease or use of its
property and assets in the ordinary course of business for sums not yet due and
payable, including, without limitation, materialmen's and mechanics Liens, which
were not incurred in connection with Indebtedness and which do not, in the
aggregate, materially detract from the value of such property or assets or
materially impair the use thereof in the operation of the business of the
Company and its Subsidiaries;
(e) any attachment or judgment Lien, unless the judgment it secures
shall not, within 60 days after the entry thereof, have been discharged or
execution thereof stayed pending appeal, or shall not have been discharged
within 60 days after the expiration of any such stay;
(f) Liens on property or assets of the Company or any of its Wholly-
Owned Subsidiaries securing Indebtedness owing to the Company or to another
Subsidiary;
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(g) any Lien created to secure all or any part of the purchase price,
or to secure Indebtedness incurred or assumed to pay all or any part of the
purchase price or cost of construction, of tangible property (or any improvement
thereon) acquired or constructed by the Company or a Subsidiary after the date
of this Agreement, provided that
(i) such Lien shall extend solely to the item or items of such
property so acquired or constructed and, if required by the terms of the
instrument originally creating such Lien, other property which is an
improvement to or is acquired for specific use in connection with such
acquired or constructed property or which is real property being improved
by such acquired or constructed property,
(ii) the principal amount of the Indebtedness secured by any such
Lien shall at no time exceed an amount equal to the lesser of (A) the cost
to the Company or such Subsidiary of the property so acquired or
constructed and (B) the Fair Market Value (as determined in good faith by
the Board of Directors of the Company) of such property at the time of such
acquisition or construction, and
(iii) such Lien shall be created contemporaneously with, or
within 180 days after, the acquisition or construction of such property;
(h) any Lien existing on property of a Person immediately prior to
its being consolidated with or merged into the Company or a Subsidiary or its
becoming a Subsidiary, or any Lien existing on any property acquired by the
Company or any Subsidiary at the time such property is so acquired (whether or
not the Indebtedness secured thereby shall have been assumed), provided that (i)
no such Lien shall have been created or assumed in contemplation of such
consolidation or merger or such Person's becoming a Subsidiary or such
acquisition of property, and (ii) each such Lien shall extend solely to the item
or items of property so acquired and, if required by the terms of the instrument
originally creating such Lien, other property which is an improvement to or is
acquired for specific use in connection with such acquired property;
(i) Liens on any assets of GCC or any of the Insurance Subsidiaries;
and
(j) any Lien renewing, extending or refunding any Lien permitted by
paragraphs (a), (f), (g) or (h) of this Section 10.5, provided that (i) the
principal amount of Indebtedness secured by such Lien immediately prior to such
extension, renewal or refunding is not increased or the maturity thereof
reduced, (ii) such Lien is not extended to any other property, and (iii)
immediately after such extension, renewal or refunding no Default or Event of
Default would exist.
10.6. FINANCIAL COVENANTS.
(a) Funded Indebtedness. The Company will not, and will not permit
-------------------
any Subsidiary to, directly or indirectly, create, incur, assume, guarantee, or
otherwise become directly or indirectly liable with respect to, any Funded
Indebtedness, other than Funded Indebtedness represented by Patronage Dividend
Certificates, unless on the date the Company or such Subsidiary becomes liable
with respect to any such Indebtedness and immediately after giving effect
thereto and the concurrent retirement of any other Indebtedness,
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(i) no Default or Event of Default exists, and
(ii) such Funded Indebtedness constitutes Permitted Funded
Indebtedness.
In addition, the Company will not permit Consolidated Funded Indebtedness at any
time to exceed 60% of the sum of Consolidated Funded Indebtedness and
Consolidated Tangible Net Worth. For the purposes of this Section 10.6(a), any
Person becoming a Subsidiary after the date hereof shall be deemed, at the time
it becomes a Subsidiary, to have incurred all of its then outstanding
Indebtedness, and any Person extending, renewing or refunding any Indebtedness
shall be deemed to have incurred such Indebtedness at the time of such
extension, renewal or refunding.
(b) Current Indebtedness. The Company will not, and will not permit
--------------------
any Subsidiary to, directly or indirectly, create, incur, assume, guarantee, or
otherwise become directly or indirectly liable with respect to, any Current
Indebtedness other than (i) the Operating Line of Credit, (ii) a revolving
credit facility or other working capital credit facility extended to GCC and
(iii) other Current Indebtedness if the aggregate principal amount of the
Current Indebtedness under this clause (iii) would not exceed $20,000,000.
(c) Consolidated Tangible Net Worth. The Company will not permit
-------------------------------
Consolidated Tangible Net Worth at any time to be less than the sum of (i)
$80,000,000 plus (ii) an amount (but only if a positive number) equal to 50% of
Consolidated Net Income for each fiscal year completed after the Closing Date
minus (iii) the aggregate amount paid by the Company since the Closing Date in
redeeming Redeemable Class B Shares pursuant to Section 10.6(f)(iv).
(d) Minimum Working Capital. Consolidated Current Assets will, at
-----------------------
all times, exceed Consolidated Current Liabilities by at least $50,000,000.
(e) Fixed Charge Coverage. The Company will not permit the ratio
---------------------
of (i) Consolidated Income Available for Fixed Charges to (ii) Fixed Charges to
be less than 1.80 to 1.00 for any consecutive four fiscal quarters.
(f) Restricted Payments. The Company will not, and will not permit
-------------------
any of its Subsidiaries to, declare or make, or incur any liability to declare
or make, any Restricted Payments other than (i) Permitted Member Payments, (ii)
Required Permitted Redemptions, (iii) Distributions made by a Subsidiary of the
Company to the Company or to another Subsidiary of the Company and (iv) any
redemption of Redeemable Class B Shares for an amount equal to or less than the
Discounted Value of such Redeemable Class B Shares. The Company will not, and
will not permit any of its Subsidiaries to, declare or make, or incur any
liability to declare or make, any Restricted Payment, excluding distributions
made by a Subsidiary of the Company to the Company or to another Subsidiary of
the Company, but otherwise including, without limitation, any Permitted Member
Payment, Required Permitted Redemptions and redemptions of Redeemable Class B
Shares, if (i) a Default or Event of Default has occurred and is continuing or
(ii) the making of such Restricted Payment would result in the occurrence of a
Default or Event of Default. Except for Required Permitted Redemptions, the
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Company will not redeem any Class B Shares without the prior written consent of
the Required Holders, which consent will not be unreasonably withheld or
delayed.
(g) Limitations on Affiliate Loans. The Company will not, and will
------------------------------
not permit any Subsidiary to, make any loan to, or any payment on any
Indebtedness for money borrowed from, any officer, employee, partner, Subsidiary
or Affiliate if (i) a Default or Event of Default has occurred and is continuing
or (ii) such loan or payment would result in the occurrence of a Default or
Event of Default.
(h) Guaranties. The Company will not, and will not permit any of its
----------
Subsidiaries to, Guaranty any lease of equipment or real property by a member-
patron or associate-patron if the aggregate annual scheduled rent under all such
leases (excluding "percentage" rent or other contingent rent and payments made
by the lessee for property taxes, insurance, utilities, common area maintenance
charges and the like) would exceed $30,000,000 in the next calendar year.
(i) Revolving Lines of Credit. The Company will not permit
-------------------------
revolving credit facilities or other working capital credit facilities extended
to the Company or its Subsidiaries other than GCC, including, without
limitation, the Operating Line of Credit, at any time to have a maximum
borrowing limit in the aggregate greater than $120,000,000.
(j) Restricted Investments. The Company will not, and will not
----------------------
permit any of its Subsidiaries to, make any Investments in GCC or the Insurance
Subsidiaries other than (i) Investments existing on the Closing Date, (ii)
Investments in GCC to the extent necessary to comply with Section 8 of the
Operating Agreement, provided, however, that the Company assigns to the
Noteholders a note evidencing and such Investment, which assignment shall secure
the Notes on a pari passu basis with any Indebtedness outstanding under the
Rabobank Revolving Credit Agreement pursuant to an intercreditor agreement in
form and substance satisfactory to the Required Noteholders in their sole
discretion, (iii) Investments in the Insurance Subsidiaries required by
insurance law statutes and regulations and (iv) Investments in the Insurance
Subsidiaries in compliance with the Company's policy with respect to the capital
of the Insurance Subsidiaries as such policy is in place on the Closing Date.
Notwithstanding the foregoing,
10.7. MAINTENANCE OF BUSINESS.
The Company will not, and will not permit any Subsidiary to, engage in
any business other than the manufacture, processing and wholesale and retail
distribution and sale of grocery and other food and non-food goods and the
provision of financial, insurance and other services to its customers.
10.8. TAX CONSOLIDATION.
The Company will not, and will not permit any Subsidiary to, file or
consent to the filing of any consolidated tax return with any other Person other
than the Company and its Subsidiaries or be a party to or bound by or obligated
under any tax sharing or similar agreement with any Person other than the
Company and its Subsidiaries.
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11. EVENTS OF DEFAULT.
An "EVENT OF DEFAULT" shall exist if any of the following conditions
or events shall occur and be continuing:
(a) the Company defaults in the payment of any principal or Make-
Whole Amount, if any, on any Note when the same becomes due and payable, whether
at maturity or at a date fixed for prepayment or by declaration or otherwise; or
(b) the Company defaults in the payment of any interest on any Note
for more than 5 Business Days after the same becomes due and payable; or (c) the
Company defaults in the performance of or compliance with any term contained in
Section 7.1(e), 9.7 or 10; or
(d) the Company defaults in the performance of or compliance with any
term contained herein (other than those referred to in paragraphs (a), (b) and
(c) of this Section 11) and such default is not remedied within 30 days after
the earlier of (i) a Responsible Officer obtaining actual knowledge of such
default and (ii) the Company receiving written notice of such default from any
holder of a Note (any such written notice to be identified as a "notice of
default" and to refer specifically to this paragraph (d) of Section 11), or
within 90 days after such earlier date if such default cannot reasonably be
remedied within such 30-day period and the Company is proceeding diligently to
remedy such default; or
(e) any representation or warranty made in writing by or on behalf of
the Company or by any officer of the Company in this Agreement or in any writing
furnished in connection with the transactions contemplated hereby proves to have
been false or incorrect in any material respect on the date as of which made; or
(f) (i) the Company or any Subsidiary is in default (as principal or
as guarantor or other surety) in the payment of any principal of or premium or
make-whole amount or interest on any Indebtedness that is outstanding in an
aggregate principal amount of at least $5,000,000 beyond any period of grace
provided with respect thereto; or (ii) the Company or any Subsidiary is in
default in the performance of or compliance with any term of any evidence of any
Indebtedness in an aggregate outstanding principal amount of at least $5,000,000
or of any mortgage, indenture or other agreement relating thereto or any other
condition exists, and as a consequence of such default or condition such
Indebtedness has become, or has been declared (or one or more Persons are
entitled to declare such Indebtedness to be), due and payable before its stated
maturity or before its regularly scheduled dates of payment; or (iii) as a
consequence of the occurrence or continuation of any event or condition (other
than the passage of time or the right of the holder of Indebtedness to convert
such Indebtedness into equity interests), (x) the Company or any Subsidiary has
become obligated to purchase or repay Indebtedness before its regular maturity
or before its regularly scheduled dates of payment in an aggregate outstanding
principal amount of at least $5,000,000, or (y) one or more Persons have the
right to require the Company or any Subsidiary so to purchase or repay such
Indebtedness; or
(g) the Company or any Subsidiary (i) is generally not paying, or
admits in writing its inability to pay, its debts as they become due; (ii)
files, or consents by answer or
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otherwise to the filing against it of, a petition for relief or reorganization
or arrangement or any other petition in bankruptcy, for liquidation or to take
advantage of any bankruptcy, insolvency, reorganization, moratorium or other
similar law of any jurisdiction; (iii) makes an assignment for the benefit of
its creditors; (iv) consents to the appointment of a custodian, receiver,
trustee or other officer with similar powers with respect to it or with respect
to any substantial part of its property; (v) is adjudicated as insolvent or to
be liquidated; or (vi) takes corporate action for the purpose of any of the
foregoing; or
(h) a court or governmental authority of competent jurisdiction
enters an order appointing, without consent by the Company or any of its
Subsidiaries, a custodian, receiver, trustee or other officer with similar
powers with respect to it or with respect to any substantial part of its
property, or constituting an order for relief or approving a petition for relief
or reorganization or any other petition in bankruptcy or for liquidation or to
take advantage of any bankruptcy or insolvency law of any jurisdiction, or
ordering the dissolution, winding-up or liquidation of the Company or any of its
Subsidiaries, or any such petition shall be filed against the Company or any of
its Subsidiaries and such petition shall not be dismissed within 60 days; or
(i) a final judgment or judgments for the payment of money
aggregating in excess of $2,500,000 are rendered against one or more of the
Company and its Subsidiaries and are not, within 60 days after entry thereof,
bonded, discharged or stayed pending appeal, or are not discharged within 60
days after the expiration of such stay; or
(j) if (i) any Plan shall fail to satisfy the minimum funding
standards of ERISA or the Code for any plan year or part thereof or a waiver of
such standards or extension of any amortization period is sought or granted
under section 412 of the Code, (ii) a notice of intent to terminate any Plan
shall have been or is reasonably expected to be filed with the PBGC or the PBGC
shall have instituted proceedings under ERISA section 4042 to terminate or
appoint a trustee to administer any Plan or the PBGC shall have notified the
Company or any ERISA Affiliate that a Plan may become a subject of any such
proceedings, (iii) the aggregate "amount of unfunded benefit liabilities"
(within the meaning of section 4001(a)(18) of ERISA) under all Plans, determined
in accordance with Title IV of ERISA, shall exceed $2,500,000, (iv) the Company
or any ERISA Affiliate shall have incurred or is reasonably expected to incur
any liability pursuant to Title I or IV of ERISA or the penalty or excise tax
provisions of the Code relating to employee benefit plans, (v) the Company or
any ERISA Affiliate withdraws from any Multiemployer Plan, (vi) the Company or
any Subsidiary establishes or amends any employee welfare benefit plan that
provides postemployment welfare benefits in a manner that would increase the
liability of the Company or any Subsidiary thereunder; or (vii) the Company or
any ERISA Affiliate shall incur or be likely to incur a liability to or on
account of a Pension Plan under Section 4062, 4063, 4064 or 4201 of ERISA; and
any such event or events described in clauses (i) through (vi) above, either
individually or together with any other such event or events, could reasonably
be expected to have a Material Adverse Effect.
(As used in Section 11(j), the terms "employee benefit plan" and "employee
welfare benefit plan" shall have the respective meanings assigned to such terms
in Section 3 of ERISA.)
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12. REMEDIES ON DEFAULT, ETC.
12.1. ACCELERATION.
(a) If an Event of Default with respect to the Company described in
paragraph (g) or (h) of Section 11 (other than an Event of Default described in
clause (i) of paragraph (g) or described in clause (vi) of paragraph (g) by
virtue of the fact that such clause encompasses clause (i) of paragraph (g)) has
occurred, all the Notes then outstanding shall automatically become immediately
due and payable.
(b) If any other Event of Default has occurred and is continuing, the
Required Holders may at any time at its or their option, by notice or notices to
the Company, declare all the Notes then outstanding to be immediately due and
payable.
(c) If any Event of Default described in paragraph (a) or (b) of
Section 11 has occurred and is continuing, any holder or holders of Notes at the
time outstanding affected by such Event of Default may at any time, at its or
their option, by notice or notices to the Company, declare all the Notes held by
it or them to be immediately due and payable.
Upon any Notes becoming due and payable under this Section 12.1,
whether automatically or by declaration, such Notes will forthwith mature and
the entire unpaid principal amount of such Notes, plus (A) all accrued and
unpaid interest thereon and (B) the Make-Whole Amount determined in respect of
such principal amount (to the full extent permitted by applicable law), shall
all be immediately due and payable, in each and every case without presentment,
demand, protest or further notice, all of which are hereby waived. The Company
acknowledges, and the parties hereto agree, that each holder of a Note has the
right to maintain its investment in the Notes free from repayment by the Company
(except as herein specifically provided for) and that the provision for payment
of a Make-Whole Amount by the Company in the event that the Notes are prepaid or
are accelerated as a result of an Event of Default, is intended to provide
compensation for the deprivation of such right under such circumstances.
12.2. OTHER REMEDIES.
If any Default or Event of Default has occurred and is continuing, and
irrespective of whether any Notes have become or have been declared immediately
due and payable under Section 12.1, the holder of any Note at the time
outstanding may proceed to protect and enforce the rights of such holder by an
action at law, suit in equity or other appropriate proceeding, whether for the
specific performance of any agreement contained herein or in any Note, or for an
injunction against a violation of any of the terms hereof or thereof, or in aid
of the exercise of any power granted hereby or thereby or by law or otherwise.
12.3. RESCISSION.
At any time after any Notes have been declared due and payable
pursuant to clause (b) or (c) of Section 12.1, the holders of not less than 67%
in principal amount of the Notes then outstanding, by written notice to the
Company, may rescind and annul any such declaration and its consequences if (a)
the Company has paid all overdue interest on the Notes, all principal of and
Make-Whole Amount, if any, on any Notes that are due and payable and are
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unpaid other than by reason of such declaration, and all interest on such
overdue principal and Make-Whole Amount, if any, and (to the extent permitted by
applicable law) any overdue interest in respect of the Notes, at the Default
Rate, (b) all Events of Default and Defaults, other than nonpayment of amounts
that have become due solely by reason of such declaration, have been cured or
have been waived pursuant to Section 17, and (c) no judgment or decree has been
entered for the payment of any monies due pursuant hereto or to the Notes. No
rescission and annulment under this Section 12.3 will extend to or affect any
subsequent Event of Default or Default or impair any right consequent thereon.
12.4. NO WAIVERS OR ELECTION OF REMEDIES, EXPENSES, ETC.
No course of dealing and no delay on the part of any holder of any
Note in exercising any right, power or remedy shall operate as a waiver thereof
or otherwise prejudice such holder's rights, powers or remedies. No right,
power or remedy conferred by this Agreement or by any Note upon any holder
thereof shall be exclusive of any other right, power or remedy referred to
herein or therein or now or hereafter available at law, in equity, by statute or
otherwise. Without limiting the obligations of the Company under Section 15,
the Company will pay to the holder of each Note on demand such further amount as
shall be sufficient to cover all costs and expenses of such holder incurred in
any enforcement or collection under this Section 12, including, without
limitation, reasonable attorneys' fees, expenses and disbursements.
13. REGISTRATION; EXCHANGE; SUBSTITUTION OF NOTES.
13.1. REGISTRATION OF NOTES.
The Company shall keep at its principal executive office a register
for the registration and registration of transfers of Notes. The name and
address of each holder of one or more Notes, each transfer thereof and the name
and address of each transferee of one or more Notes shall be registered in such
register. Prior to due presentment for registration of transfer, the Person in
whose name any Note shall be registered shall be deemed and treated as the owner
and holder thereof for all purposes hereof, and the Company shall not be
affected by any notice or knowledge to the contrary. The Company shall give to
any holder of a Note that is an Institutional Investor promptly upon request
therefor, a complete and correct copy of the names and addresses of all
registered holders of Notes.
13.2. TRANSFER AND EXCHANGE OF NOTES.
Upon surrender of any Note at the principal executive office of the
Company for registration of transfer or exchange (and in the case of a surrender
for registration of transfer, duly endorsed or accompanied by a written
instrument of transfer duly executed by the registered holder of such Note or
its attorney duly authorized in writing and accompanied by the address for
notices of each transferee of such Note or part thereof), the Company shall
execute and deliver, at the Company's expense (except as provided below), one or
more new Notes (as requested by the holder thereof) in exchange therefor, in an
aggregate principal amount equal to the unpaid principal amount of the
surrendered Note. Each such new Note shall be payable to such Person as such
holder may request and shall be substantially in the form of Exhibit 1. Each
such new Note shall be dated and bear interest from the date to which interest
shall have been paid on the
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surrendered Note or dated the date of the surrendered Note if no interest shall
have been paid thereon. The Company may require payment of a sum sufficient to
cover any stamp tax or governmental charge imposed in respect of any such
transfer of Notes. Notes shall not be transferred in denominations of less than
$500,000, provided that if necessary to enable the registration of transfer by a
holder of its entire holding of Notes, one Note may be in a denomination of less
than $500,000. Any transferee, by its acceptance of a Note registered in its
name (or the name of its nominee), shall be deemed to have made the
representation set forth in Section 6.2.
13.3. REPLACEMENT OF NOTES.
Upon receipt by the Company of evidence reasonably satisfactory to it
of the ownership of and the loss, theft, destruction or mutilation of any Note
(which evidence shall be, in the case of an Institutional Investor, notice from
such Institutional Investor of such ownership and such loss, theft, destruction
or mutilation), and
(a) in the case of loss, theft or destruction, of indemnity
reasonably satisfactory to it (provided that if the holder of such Note is, or
is a nominee for, an original Purchaser or another holder of a Note with a
minimum net worth of at least $50,000,000, such Person's own unsecured agreement
of indemnity shall be deemed to be satisfactory), or
(b) in the case of mutilation, upon surrender and cancellation
thereof,
the Company at its own expense shall execute and deliver, in lieu thereof, a new
Note, dated and bearing interest from the date to which interest shall have been
paid on such lost, stolen, destroyed or mutilated Note or dated the date of such
lost, stolen, destroyed or mutilated Note if no interest shall have been paid
thereon.
14. PAYMENTS ON NOTES.
14.1. PLACE OF PAYMENT.
Subject to Section 14.2, payments of principal, Make-Whole Amount, if
any, and interest becoming due and payable on the Notes shall be made in Los
Angeles, California, at the principal office of the Company in such
jurisdiction. The Company may at any time, by notice to each holder of a Note,
change the place of payment of the Notes so long as such place of payment shall
be either the principal office of the Company in the United States or the
principal office of a bank or trust company in the United States.
14.2. HOME OFFICE PAYMENT.
So long as you or your nominee shall be the holder of any Note, and
notwithstanding anything contained in Section 14.1 or in such Note to the
contrary, the Company will pay all sums becoming due on such Note for principal,
Make-Whole Amount, if any, and interest by no later than 12:00 noon Champagne,
Illinois time on the date specified for payment by the method and at the address
specified for such purpose below your name in Schedule A, or by such other
method or at such other address as you shall have from time to time specified to
the Company in writing for such purpose, without the presentation or surrender
of such Note or
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the making of any notation thereon, except that upon written request of the
Company made concurrently with or reasonably promptly after payment or
prepayment in full of any Note, you shall surrender such Note for cancellation,
reasonably promptly after any such request, to the Company at its principal
executive office or at the place of payment most recently designated by the
Company pursuant to Section 14.1. Prior to any sale or other disposition of any
Note held by you or your nominee you will, at your election, either endorse
thereon the amount of principal paid thereon and the last date to which interest
has been paid thereon or surrender such Note to the Company in exchange for a
new Note or Notes pursuant to Section 13.2. The Company will afford the benefits
of this Section 14.2 to any Institutional Investor that is the direct or
indirect transferee of any Note purchased by you under this Agreement and that
has made the same agreement relating to such Note as you have made in this
Section 14.2.
14.3. SET OFF
In addition to any other rights any holder of the Notes may have under
law or in equity, if any amount shall at any time be due and owing by the
Company to any holder under this Agreement or the Notes, each holder of the
Notes is authorized at any time or from time to time, without notice (any such
notice being hereby expressly waived), to set off and to appropriate and to
apply any and all deposits (general or special, including but not limited to
indebtedness evidenced by certificates of deposit, whether matured or unmatured)
and any other indebtedness of such holder owing to the Company and any other
property of the Company held by such holder to or for the credit or the account
of the Company against and on account of the obligations and liabilities of the
Company to any holder under this Agreement and the Notes.
14.4. SHARING OF PAYMENTS
If, other than as expressly provided elsewhere herein, any holder of
the Notes shall obtain on account of the Notes held by it any payment (whether
voluntary, involuntary, under any agreement or instrument executed pursuant to
this Agreement or any guaranty or security for the Notes, through the exercise
of any right of set off or otherwise) in excess of its ratable share, such
holder shall immediately (a) notify the other holders of the Notes of such fact,
and (b) purchase from the other holders of the Notes such participations in the
Notes made by them as shall be necessary to cause such purchasing holder to
share the excess payment pro rata with each of them; provided, however, that if
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all or any portion of such excess payment is thereafter recovered from such
purchasing holder, such purchase shall to that extent be rescinded and each
other holder of the Notes shall repay to such purchasing holder the purchase
price paid therefor, together with an amount equal to such paying holder's
ratable share (according to the proportion of (i) the amount of such paying
holder's required repayment to (ii) the total amount so recovered from the
purchasing holder) of any interest or other amount paid or payable by the
purchasing holder in respect of the total amount so recovered. The Company
agrees that any holder of the Notes so purchasing a participation from another
holder of the Notes may, to the fullest extent permitted by applicable law,
exercise all its rights of payment (including any right of set off) with respect
to such participation as fully as if such holder were the direct creditor of the
Company in the amount of such participation.
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15. EXPENSES; INDEMNITY.
15.1. TRANSACTION EXPENSES.
Whether or not the transactions contemplated hereby are consummated,
the Company will pay all costs and expenses (including reasonable attorneys'
fees of a special counsel and, if reasonably required, local or other counsel)
incurred by each Purchaser or holder of a Note in connection with such
transactions and in connection with any amendments, waivers or consents under or
in respect of this Agreement or the Notes (whether or not such amendment, waiver
or consent becomes effective), including, without limitation: (a) the costs and
expenses incurred in enforcing or defending (or determining whether or how to
enforce or defend) any rights under this Agreement or the Notes or in responding
to any subpoena or other legal process or informal investigative demand issued
in connection with this Agreement or the Notes, or by reason of being a holder
of any Note, and (b) the costs and expenses, including financial advisors' fees,
incurred in connection with the insolvency or bankruptcy of the Company or any
Subsidiary or in connection with any work-out or restructuring of the
transactions contemplated hereby and by the Notes. The Company will pay, and
will save you and each other holder of a Note harmless from, all claims in
respect of any fees, costs or expenses if any, of brokers and finders (other
than those retained by you).
15.2. INDEMNITY FOR FUNDS AVAILABILITY AT CLOSING.
In connection with the Closing under this Agreement, the Company is
requesting that you make available for funding an amount equal to the aggregate
purchase price of the Notes to be purchased by you. If, for any reason (other
than your intentional misconduct or gross negligence including, without
limitation, the breach of your obligation under Section 2 to purchase Notes),
the Closing does not occur as scheduled under Section 3, the Company hereby
agrees to protect, indemnify and hold you harmless from and against any and all
losses, liabilities, obligations, expenses (including, with limitation,
reasonable attorneys' fees and expenses) imposed upon or incurred by or asserted
against you in any way resulting from, caused by or arising out of the failure
of the Closing to occur as scheduled under Section 3, including, without
limitation, any and all losses resulting from the inability to reinvest any
amounts reserved, set aside or otherwise to be made available at the scheduled
Closing at a rate of interest equal to or greater than the rate of interest on
the Notes. The obligations of the Company under this Section 15.2 shall survive
the payment or prepayment of the Notes and the termination of this Agreement.
15.3. SURVIVAL.
The obligations of the Company under this Section 15 will survive the
payment or transfer of any Note, the enforcement, amendment or waiver of any
provision of this Agreement or the Notes, and the termination of this Agreement.
16. SURVIVAL OF REPRESENTATIONS; ENTIRE AGREEMENT.
All representations and warranties contained herein shall survive the
execution and delivery of this Agreement and the Notes, the purchase or transfer
by you of any Note or portion thereof or interest therein and the payment of any
Note, and may be relied upon by any
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subsequent holder of a Note, regardless of any investigation made at any time by
or on behalf of you or any other holder of a Note. All statements contained in
any certificate or other instrument delivered by or on behalf of the Company
pursuant to this Agreement shall be deemed representations and warranties of the
Company under this Agreement. Subject to the preceding sentence, this Agreement
and the Notes embody the entire agreement and understanding between you and the
Company and supersede all prior agreements and understandings relating to the
subject matter hereof.
17. AMENDMENT AND WAIVER.
17.1. REQUIREMENTS.
This Agreement and the Notes may be amended, and the observance of any
term hereof or of the Notes may be waived (either retroactively or
prospectively), with (and only with) the written consent of the Company and the
Required Holders, except that (a) no amendment or waiver of any of the
provisions of Section 1, 2, 3, 4, 5, 6 or 21 hereof, or any defined term (as it
is used therein), will be effective as to you unless consented to by you in
writing, and (b) no such amendment or waiver may, without the written consent of
the holder of each Note at the time outstanding affected thereby, (i) subject to
the provisions of Section 12 relating to acceleration or rescission, change the
amount or time of any prepayment or payment of principal of, or reduce the rate
or change the time of payment or method of computation of interest or of the
Make-Whole Amount on, the Notes, (ii) change the percentage of the principal
amount of the Notes the holders of which are required to consent to any such
amendment or waiver, or (iii) amend any of Sections 8, 11(a), 11(b), 12, 14.3,
14.4, 17 or 20.
17.2. SOLICITATION OF HOLDERS OF NOTES.
(a) Solicitation. The Company will provide each holder of the Notes
------------
(irrespective of the amount of Notes then owned by it) with sufficient
information, sufficiently far in advance of the date a decision is required, to
enable such holder to make an informed and considered decision with respect to
any proposed amendment, waiver or consent in respect of any of the provisions
hereof or of the Notes. The Company will deliver executed or true and correct
copies of each amendment, waiver or consent effected pursuant to the provisions
of this Section 17 to each holder of outstanding Notes promptly following the
date on which it is executed and delivered by, or receives the consent or
approval of, the requisite holders of Notes.
(b) Payment. The Company will not directly or indirectly pay or
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cause to be paid any remuneration, whether by way of supplemental or additional
interest, fee or otherwise, or grant any security, to any holder of Notes as
consideration for or as an inducement to the entering into by any holder of
Notes or any waiver or amendment of any of the terms and provisions hereof
unless such remuneration is concurrently paid, or security is concurrently
granted, on the same terms, ratably to each holder of Notes then outstanding
even if such holder did not consent to such waiver or amendment.
17.3. BINDING EFFECT, ETC.
Any amendment or waiver consented to as provided in this Section 17
applies equally to all holders of Notes and is binding upon them and upon each
future holder of any Note
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and upon the Company without regard to whether such Note has been marked to
indicate such amendment or waiver. No such amendment or waiver will extend to or
affect any obligation, covenant, agreement, Default or Event of Default not
expressly amended or waived or impair any right consequent thereon. No course of
dealing between the Company and the holder of any Note nor any delay in
exercising any rights hereunder or under any Note shall operate as a waiver of
any rights of any holder of such Note. As used herein, the term "this Agreement"
and references thereto shall mean this Agreement as it may from time to time be
amended or supplemented.
17.4. NOTES HELD BY COMPANY.
Solely for the purpose of determining whether the holders of the
requisite percentage of the aggregate principal amount of Notes then outstanding
approved or consented to any amendment, waiver or consent to be given under this
Agreement or the Notes, or have directed the taking of any action provided
herein or in the Notes to be taken upon the direction of the holders of a
specified percentage of the aggregate principal amount of Notes then
outstanding, Notes directly or indirectly owned by the Company or any of its
Affiliates shall be deemed not to be outstanding.
18. NOTICES.
All notices and communications provided for hereunder shall be in
writing and sent (a) by telecopy if the sender on the same day sends a
confirming copy of such notice by a recognized overnight delivery service
(charges prepaid), or (b) by registered or certified mail with return receipt
requested (postage prepaid), or (c) by a recognized overnight delivery service
(with charges prepaid). Any such notice must be sent:
(i) if to you or your nominee, to you or it at the address specified
for such communications in Schedule A, or at such other address as you or
it shall have specified to the Company in writing,
(ii) if to any other holder of any Note, to such holder at such
address as such other holder shall have specified to the Company in
writing, or
(iii) if to the Company, to the Company at its address set forth at
the beginning hereof to the attention of the Chief Financial Officer, or at
such other address as the Company shall have specified to the holder of
each Note in writing.
Notices under this Section 18 will be deemed given only when actually received,
or if delivery is refused, will be deemed to have been given when such delivery
is refused. Each holder of a Note will also send a copy of notices and
communications to the Company to the attention of the Secretary of the
Corporation, but failure to do so will not affect the effectiveness of any
notice sent as provided in clause (iii) above.
19. REPRODUCTION OF DOCUMENTS.
This Agreement and all documents relating thereto, including, without
limitation, (a) consents, waivers and modifications that may hereafter be
executed, (b) documents received
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by you at the Closing (except the Notes themselves), and (c) financial
statements, certificates and other information previously or hereafter furnished
to you, may be reproduced by you by any photographic, photostatic, microfilm,
microcard, miniature photographic or other similar process and you may destroy
any original document so reproduced. The Company agrees and stipulates that, to
the extent permitted by applicable law, any such reproduction shall be
admissible in evidence as the original itself in any judicial or administrative
proceeding (whether or not the original is in existence and whether or not such
reproduction was made by you in the regular course of business) and any
enlargement, facsimile or further reproduction of such reproduction shall
likewise be admissible in evidence. This Section 19 shall not prohibit the
Company or any other holder of Notes from contesting any such reproduction to
the same extent that it could contest the original, or from introducing evidence
to demonstrate the inaccuracy of any such reproduction.
20. CONFIDENTIAL INFORMATION.
For the purposes of this Section 20, "CONFIDENTIAL INFORMATION" means
information delivered to you by or on behalf of the Company or any Subsidiary in
connection with the transactions contemplated by or otherwise pursuant to this
Agreement that is proprietary in nature and that was clearly marked or labeled
or otherwise adequately identified when received by you as being confidential
information of the Company or such Subsidiary, provided that such term does not
include information that (a) was publicly known or otherwise known to you prior
to the time of such disclosure, (b) subsequently becomes publicly known through
no act or omission by you or any person acting on your behalf, (c) otherwise
becomes known to you other than through disclosure by the Company or any
Subsidiary or (d) constitutes financial statements delivered to you under
Section 7.1 that are otherwise publicly available. You will maintain the
confidentiality of such Confidential Information in accordance with procedures
adopted by you in good faith to protect confidential information of third
parties delivered to you, provided that you may deliver or disclose Confidential
Information to (i) your directors, officers, employees, agents, attorneys and
affiliates (to the extent such disclosure reasonably relates to the
administration of the investment represented by your Notes), (ii) your financial
advisors and other professional advisors who agree to hold confidential the
Confidential Information substantially in accordance with the terms of this
Section 20, (iii) any other holder of any Note, (iv) any Institutional Investor
to which you sell or offer to sell such Note or any part thereof or any
participation therein (if such Person has agreed in writing prior to its receipt
of such Confidential Information to be bound by the provisions of this Section
20), (v) any Person from which you offer to purchase any security of the Company
(if such Person has agreed in writing prior to its receipt of such Confidential
Information to be bound by the provisions of this Section 20), (vi) any federal
or state regulatory authority having jurisdiction over you, (vii) the National
Association of Insurance Commissioners or any similar organization, or any
nationally recognized rating agency that requires access to information about
your investment portfolio or (viii) any other Person to which such delivery or
disclosure may be necessary or appropriate (A) to effect compliance with any
law, rule, regulation or order applicable to you, (B) in response to any
subpoena or other legal process, (C) in connection with any litigation to which
you are a party or (D) if an Event of Default has occurred and is continuing, to
the extent you may reasonably determine such delivery and disclosure to be
necessary or appropriate in the enforcement or for the protection of the rights
and remedies under your Notes and this Agreement. Each holder of a Note, by its
acceptance of a Note, will be deemed to have agreed to
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be bound by and to be entitled to the benefits of this Section 20 as though it
were a party to this Agreement. On reasonable request by the Company in
connection with the delivery to any holder of a Note of information required to
be delivered to such holder under this Agreement or requested by such holder
(other than a holder that is a party to this Agreement or its nominee), such
holder will enter into an agreement with the Company embodying the provisions of
this Section 20.
21. SUBSTITUTION OF PURCHASER.
You shall have the right to substitute any one of your Affiliates as
the purchaser of the Notes that you have agreed to purchase hereunder, by
written notice to the Company, which notice shall be signed by both you and such
Affiliate, shall contain such Affiliate's agreement to be bound by this
Agreement and shall contain a confirmation by such Affiliate of the accuracy
with respect to it of the representations set forth in Section 6. Upon receipt
of such notice, wherever the word "you" is used in this Agreement (other than in
this Section 21), such word shall be deemed to refer to such Affiliate in lieu
of you. In the event that such Affiliate is so substituted as a purchaser
hereunder and such Affiliate thereafter transfers to you all of the Notes then
held by such Affiliate, upon receipt by the Company of notice of such transfer,
wherever the word "you" is used in this Agreement (other than in this Section
21), such word shall no longer be deemed to refer to such Affiliate, but shall
refer to you, and you shall have all the rights of an original holder of the
Notes under this Agreement.
22. MISCELLANEOUS.
22.1. SUCCESSORS AND ASSIGNS.
All covenants and other agreements contained in this Agreement by or
on behalf of any of the parties hereto bind and inure to the benefit of their
respective successors and assigns (including, without limitation, any subsequent
holder of a Note) whether so expressed or not.
22.2. PAYMENTS DUE ON NON-BUSINESS DAYS.
Anything in this Agreement or the Notes to the contrary
notwithstanding, any payment of principal of or Make-Whole Amount or interest on
any Note that is due on a date other than a Business Day shall be made on the
next succeeding Business Day without including the additional days elapsed in
the computation of the interest payable on such next succeeding Business Day.
22.3. NO PARTNERSHIP.
Neither the execution or delivery of this Agreement or any of the
other agreements or instruments executed and delivered or contemplated to be
executed and delivered in order to consummate the transactions contemplated
hereby, nor the performance of this Agreement or any of such other agreements or
instruments, shall constitute you or any subsequent holder of a Note as a
partner or a joint venturer in or of the Company or any Subsidiary, or shall
constitute or evidence the agreement of any of such Persons to undertake or
assume any liabilities or share in any losses of the Company or any Subsidiary.
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22.4. SEVERABILITY.
Any provision of this Agreement that 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, and any such prohibition or unenforceability in any
jurisdiction shall (to the full extent permitted by applicable law) not
invalidate or render unenforceable such provision in any other jurisdiction.
22.5. CONSTRUCTION.
Each covenant contained herein shall be construed (absent express
provision to the contrary) as being independent of each other covenant contained
herein, so that compliance with any one covenant shall not (absent such an
express contrary provision) be deemed to excuse compliance with any other
covenant. Where any provision herein refers to action to be taken by any
Person, or which such Person is prohibited from taking, such provision shall be
applicable whether such action is taken directly or indirectly by such Person.
22.6. COUNTERPARTS.
This Agreement may be executed in any number of counterparts, each of
which shall be an original but all of which together shall constitute one
instrument. Each counterpart may consist of a number of copies hereof, each
signed by less than all, but together signed by all, of the parties hereto.
22.7. GOVERNING LAW.
THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER
SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH,
THE INTERNAL LAWS OF THE STATE OF NEW YORK (INCLUDING WITHOUT LIMITATION SECTION
5-1401 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK), WITHOUT REGARD
TO CONFLICTS OF LAWS PRINCIPLES.
22.8. CONSENT TO JURISDICTION AND SERVICE OF PROCESS
ALL JUDICIAL PROCEEDINGS BROUGHT AGAINST ANY PARTY HERETO ARISING OUT
OF OR RELATING TO THIS AGREEMENT OR THE NOTES, OR ANY OBLIGATIONS HEREUNDER OR
THEREUNDER, MAY BE BROUGHT IN ANY STATE OR FEDERAL COURT OF COMPETENT
JURISDICTION IN THE STATE, COUNTY AND CITY OF NEW YORK. BY EXECUTING AND
DELIVERING THIS AGREEMENT, EACH OF THE PARTIES HERETO, FOR ITSELF AND IN
CONNECTION WITH ITS PROPERTIES, IRREVOCABLY
(a) ACCEPTS GENERALLY AND UNCONDITIONALLY THE NONEXCLUSIVE
JURISDICTION AND VENUE OF SUCH COURTS;
(b) WAIVES ANY DEFENSE OF FORUM NON CONVENIENS;
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(c) AGREES THAT SERVICE OF ALL PROCESS IN ANY SUCH PROCEEDING IN ANY
SUCH COURT MAY BE MADE BY REGISTERED OR CERTIFIED MAIL, RETURN RECEIPT
REQUESTED, TO SUCH PARTY AT ITS ADDRESS PROVIDED IN ACCORDANCE WITH SECTION 18;
(d) AGREES THAT SERVICE AS PROVIDED IN CLAUSE (c) ABOVE IS SUFFICIENT
TO CONFER PERSONAL JURISDICTION OVER SUCH PARTY IN ANY SUCH PROCEEDING IN ANY
SUCH COURT, AND OTHERWISE CONSTITUTES EFFECTIVE AND BINDING SERVICE IN EVERY
RESPECT;
(e) AGREES THAT ANY PARTY HERETO RETAINS THE RIGHT TO SERVE PROCESS
IN ANY OTHER MANNER PERMITTED BY LAW OR TO BRING PROCEEDINGS AGAINST ANOTHER
PARTY IN THE COURTS OF ANY OTHER JURISDICTION; AND
(f) AGREES THAT THE PROVISIONS OF THIS SECTION 22.8 RELATING TO
JURISDICTION AND VENUE SHALL BE BINDING AND ENFORCEABLE TO THE FULLEST EXTENT
PERMISSIBLE UNDER NEW YORK GENERAL OBLIGATIONS LAW SECTION 5-1401 OR OTHERWISE.
22.9. WAIVER OF TRIAL BY JURY.
EACH PARTY HERETO AND, BY ITS ACCEPTANCE OF THE BENEFITS HEREOF, EACH
HOLDER OF THE NOTES, HEREBY AGREES TO WAIVE ITS RESPECTIVE RIGHTS TO A JURY
TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS
AGREEMENT OR THE NOTES. The scope of this waiver is intended to be all
encompassing of any and all disputes that may be filed in any court and that
relate to the subject matter of this transaction, including without limitation
contract claims, tort claims, breach of duty claims and all other common law and
statutory claims. Each of the parties hereto (a) acknowledges that this waiver
is a material inducement for such party to enter into a business relationship,
that such party has already relied on this waiver in entering into this
Agreement or accepting the benefits thereof, as the case may be, and that each
will continue to rely on this waiver in their related future dealings and (b)
further warrants and represents that each has reviewed this waiver with its
legal counsel, and that each knowingly and voluntarily waives its jury trial
rights following consultation with legal counsel. THIS WAIVER IS IRREVOCABLE,
MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING (OTHER THAN BY A
MUTUAL WRITTEN WAIVER SPECIFICALLY REFERRING TO THIS SECTION 22.9 AND EXECUTED
BY THE PARTIES HERETO), AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT
AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT. In the
event of litigation, this Agreement may be filed as a written consent to a trial
by the court.
40
<PAGE>
If you are in agreement with the foregoing, please sign the form of
agreement on the accompanying counterpart of this Agreement and return it to the
Company, whereupon the foregoing shall become a binding agreement between you
and the Company.
Very truly yours,
CERTIFIED GROCERS OF CALIFORNIA, LTD.
By:
-----------------------------
David A. Woodward
Treasurer
[Signatures of Purchaser follow on separate pages.]
<PAGE>
The foregoing Note Purchase Agreement is hereby accepted.
JOHN HANCOCK MUTUAL LIFE INSURANCE COMPANY
By:
--------------------------
Name:
Title:
<PAGE>
The foregoing Note Purchase Agreement is hereby accepted.
JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY
By:
---------------------------
Name:
Title:
<PAGE>
The foregoing Note Purchase Agreement is hereby accepted.
MELLON BANK, N.A., AS TRUSTEE FOR
LONG-TERM INVESTMENT TRUST
By:
---------------------------
Name:
Title:
<PAGE>
The foregoing Note Purchase Agreement is hereby accepted.
MELLON BANK, N.A., AS TRUSTEE FOR
BELL ATLANTIC MASTER TRUST
By:
---------------------------
Name:
Title:
<PAGE>
The foregoing Note Purchase Agreement is hereby accepted.
COMMONWEALTH OF PENNSYLVANIA
STATE EMPLOYES' RETIREMENT SYSTEM
By: JOHN HANCOCK MUTUAL LIFE
INSURANCE COMPANY
By:
---------------------------
Its: Investment Advisor
<PAGE>
GLOSSARY TO NOTE PURCHASE AGREEMENT
-----------------------------------
The terms defined in this Glossary include the plural as well as the
singular and the singular as well as the plural. Except as otherwise indicated,
all the agreements or instruments herein defined mean such agreements or
instruments as the same may from time to time be supplemented or amended or the
terms thereof waived or modified to the extent permitted by, and in accordance
with, the terms thereof and of this Agreement. References in a document to
statutes, sections or regulations are to be construed as including all statutory
or regulatory provisions consolidating, amending, replacing, succeeding or
supplementing the statute, section or regulation referred to; the words
including, "includes" and "include" are deemed to be followed by the words
"without limitation" or "but not limited to" or words of similar import;
references in a document to articles, sections (or subdivisions of sections),
exhibits, annexes or schedules are to those of such document unless otherwise
indicated; and references to a Person includes such Person's successors and
permitted assigns.
"AFFILIATE" means, at any time, and with respect to any Person, (a)
any other Person that at such time directly or indirectly through one or more
intermediaries Controls, or is Controlled by, or is under common Control with,
such first Person, (b) any Person beneficially owning or holding, directly or
indirectly, 15% or more of any class of Voting Stock of the Company or any
Subsidiary and (c) any corporation of which the Company and its Subsidiaries
beneficially own or hold, in the aggregate, directly or indirectly, 30% or more
of any class of voting or equity interests. As used in this definition,
"Control" means the possession, directly or indirectly, of the power to direct
or cause the direction of the management and policies of a Person, whether
through the ownership of voting securities, by contract or otherwise. A member-
patron or associate-patron of the Company shall not be deemed to be an Affiliate
of the Company solely because a Person that is an Affiliate of such member-
patron or associate-patron is a director of the Company. Unless the context
otherwise clearly requires, any reference to an "Affiliate" is a reference to an
Affiliate of the Company.
"BUSINESS DAY" means (a) for the purposes of Section 8.6 only, any day
other than a Saturday, a Sunday or a day on which commercial banks in New York
City are required or authorized to be closed, and (b) for the purposes of any
other provision of this Agreement, any day other than a Saturday, a Sunday or a
day on which commercial banks in Los Angeles, California, or New York, New York,
are required or authorized to be closed.
"CAPITAL LEASE" means, at any time, a lease with respect to which the
lessee is required concurrently to recognize the acquisition of an asset and the
incurrence of a liability in accordance with GAAP.
"CAPITAL LEASE OBLIGATION" means, with respect to any Person and a
Capital Lease, the amount of the obligation of such Person as the lessee under
such Capital Lease which would, in accordance with GAAP, appear as a liability
on a balance sheet of such Person.
"CLOSING" is defined in Section 3.
"CLOSING DATE" means the date of the Closing.
Glossary - 1
<PAGE>
"CODE" means the Internal Revenue Code of 1986, as amended from time
to time, and the rules and regulations promulgated thereunder from time to time.
"COMPANY" means Certified Grocers of California, Ltd., a California
corporation.
"CONFIDENTIAL INFORMATION" is defined in Section 20.
"CONSOLIDATED ASSETS" means, at any time, the total assets of the
Company and its Subsidiaries which would be shown as assets on a consolidated
balance sheet of the Company and its Subsidiaries as of such time prepared in
accordance with GAAP, after eliminating all amounts properly attributable to
minority interests, if any, in the stock and surplus of Subsidiaries.
"CONSOLIDATED CURRENT ASSETS" means, at any time, the total assets of
the Company and its Subsidiaries that would be shown as current assets on a
balance sheet of the Company and its Subsidiaries prepared in accordance with
GAAP at such time.
"CONSOLIDATED CURRENT LIABILITIES" means, at any time, the total
liabilities of the Company and its Subsidiaries, other than the liabilities
under the Operating Line of Credit, that would be shown as current liabilities
on a balance sheet of the Company and its Subsidiaries prepared in accordance
with GAAP at such time.
"CONSOLIDATED FUNDED INDEBTEDNESS" means, as of any date of
determination, the total of all Funded Indebtedness of the Company and its
Subsidiaries outstanding on such date, after eliminating all offsetting debits
and credits between the Company and its Subsidiaries and all other items
required to be eliminated in the course of the preparation of consolidated
financial statements of the Company and its Subsidiaries in accordance with GAAP
"CONSOLIDATED INCOME AVAILABLE FOR FIXED CHARGES" means, in respect of
any period, the sum of Consolidated Net Income for such period plus all amounts
(a) deducted in the computation thereof on account of (i) all depreciation and
amortization allowances and other non-cash expenses, (ii) Interest Charges,
(iii) to the extent not treated as an extraordinary item, any prepayment
premiums or penalties associated with the prepayment of Indebtedness
contemplated by this Agreement and (iv) taxes imposed on or measured by income
or excess profits and (b) of Permitted Member Payments made during such period.
"CONSOLIDATED NET INCOME" means, with reference to any period, the net
income (or loss) of the Company and its Subsidiaries for such period (taken as a
cumulative whole), as determined in accordance with GAAP, after eliminating all
offsetting debits and credits between the Company and its Subsidiaries and all
other items required to be eliminated in the course of the preparation of
consolidated financial statements of the Company and its Subsidiaries in
accordance with GAAP, provided that there shall in any event be excluded net
income or gain during such period from (i) any extraordinary gains or losses and
(ii) any discontinued operations or the disposition thereof.
Glossary - 2
<PAGE>
"CONSOLIDATED TANGIBLE NET WORTH" means, at any time,
(a) the gross book amount (prior to any deduction for depreciation or
other reserves) of all assets of the Company and its Subsidiaries which
would be shown as assets on a consolidated balance sheet of the Company and
its Subsidiaries as of such time prepared in accordance with GAAP, after
eliminating all amounts properly attributable to minority interests, if
any, in the stock and surplus of Subsidiaries, minus
(b) the total liabilities of the Company and its Subsidiaries which
would be shown as liabilities on a consolidated balance sheet of the
Company and its Subsidiaries as of such time prepared in accordance with
GAAP, minus
(c) accumulated depreciation and amortization and other reserves,
minus
(d) the net book amount of all assets (other than deferred taxes and
prepaid taxes and other prepaid expenses) of the Company and its
Subsidiaries which would be shown as deferred assets on a consolidated
balance sheet of the Company and its Subsidiaries as of such time prepared
in accordance with GAAP, minus
(e) the net book amount of all assets of the Company and its
Subsidiaries (after deducting any reserves applicable thereto) which would
be shown as intangible assets on a consolidated balance sheet of the
Company and its Subsidiaries as of such time prepared in accordance with
GAAP, plus
(f) the aggregate book amount of Patrons' Required Deposits, plus
(g) the aggregate book value of the principal amount of all Patronage
Dividend Certificates that are first payable after the final maturity date
of the Notes.
"Current Indebtedness" mean, with respect to any Person, all
Indebtedness of such Person which by its terms or by the terms of any instrument
or agreement relating thereto matures on demand or within one year from the date
of the creation thereof and is not directly or indirectly renewable or
extendible at the option of the obligor in respect thereof to a date one year or
more from such date, provided that (a) Indebtedness outstanding under a
revolving credit facility or other working capital facility which obligates the
lender or lenders to extend credit over a period of one year or more and (b)
Current Maturities of Funded Indebtedness shall constitute Funded Indebtedness
and not Current Indebtedness, even though such Indebtedness by its terms matures
on demand or within one year from such date.
"CURRENT MATURITIES OF FUNDED INDEBTEDNESS" means, at any time and
with respect to any item of Funded Indebtedness, the portion of such Funded
Indebtedness outstanding at such time which by the terms of such Funded
Indebtedness or the terms of any instrument or agreement relating thereto is due
on demand or within one year from such time (whether by sinking fund, other
required prepayment or final payment at maturity) and is not directly or
indirectly renewable, extendible or refundable at the option of the obligor
under an agreement or firm commitment in effect at such time to a date one year
or more from such time.
Glossary - 3
<PAGE>
"DEFAULT" means an event or condition the occurrence or existence of
which would, with the lapse of time or the giving of notice or both, become an
Event of Default.
"DEFAULT RATE" means that rate of interest that is the greater of (a)
9.22% and (b) 2% over the "prime rate" of interest as published in the Wall
Street Journal.
"DISCOUNTED VALUE" of any Redeemable Class B Shares means, as of any
date of determination, an amount equal to 80% of the aggregate present value on
such date of all payments that are included in the Redemption Schedule of such
Redeemable Class B Shares, using an annual discount rate equal to the annual
interest rate then applicable for one-month LIBOR-based borrowings under the
Operating Line of Credit. "REDEMPTION SCHEDULE" of Redeemable Class B Shares
means the schedule of payments that the Company reasonably estimates it would be
expected to make, under its redemption policy for Class B Shares as in effect on
the Closing Date, in order to redeem completely such Class B Shares, assuming
(i) such redemptions were made on the last day of each fiscal year of the
Company and (ii) no more Class B Shares were issued after such date.
"DISTRIBUTION" means, in respect of any corporation, association or
other business entity:
(a) dividends or other distributions or payments on capital stock
or other equity interest of such corporation, association or other business
entity (except distributions in such stock or other equity interest); and
(b) the redemption or acquisition of such stock or other equity
interests or of warrants, rights or other options to purchase such stock or
other equity interests (except when solely in exchange for such stock or
other equity interests) unless made, contemporaneously, from the net
proceeds of a sale of such stock or other equity interests.
"ENVIRONMENTAL LAWS" means any and all Federal, state, local, and
foreign statutes, laws, regulations, ordinances, rules, judgments, orders,
decrees, permits, concessions, grants, franchises, licenses, agreements or
governmental restrictions relating to pollution and the protection of the
environment or the release of any materials into the environment, including but
not limited to those related to hazardous substances or wastes, air emissions
and discharges to waste or public systems.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time. Reference to a specific Section of the ERISA shall
include such section, any regulations promulgated thereunder and any comparable
provision of any future legislation amending, supplementing or superseding such
section.
"ERISA AFFILIATE" means any Person that is under "common control" with
the Company or any Subsidiary (within the meaning of Section 414(b) or (c) of
the Code or Section 4001(b) of ERISA).
"ERISA TERMINATION EVENT" means (a) a "reportable event" (within the
meaning of Section 4043 of ERISA) with respect to a Pension Plan (other than a
"reportable
Glossary - 4
<PAGE>
event" as to which the PBGC has by regulation waived the 30-day notice
requirement under Section 4043 of ERISA); provided, however, that a failure
-------- -------
to meet the minimum funding standards of Section 412 of the Code shall be an
ERISA Termination Event regardless of the issuance of any waivers under Section
412(d) of the Code; (b) the withdrawal of the Company, any Subsidiary or any
ERISA Affiliate from a Pension Plan during a plan year in which it was a
"substantial employer" (within the meaning of Section 4001(a)(2) of ERISA); (c)
the complete or partial withdrawal of the Company, any Subsidiary or any ERISA
Affiliate from a Multiemployer Plan under Section 4201 or 4204 or ERISA; (d) the
receipt by the Company, any Subsidiary or any ERISA Affiliate of notice from a
Multiemployer Plan that is in reorganization or insolvent under Section 4241 or
4245 of ERISA or that it intends to terminate or has terminated under Section
4041A of ERISA; (e) the providing of a notice of intent to terminate a Pension
Plan pursuant to Section 4041(a)(2) of ERISA or the treatment of a Pension Plan
amendment as a termination under Section 4041 of ERISA; (f) the institution of
proceedings by the PBGC to terminate a Pension Plan or the appointment of a
trustee to administer any Pension Plan under Section 4042 of ERISA; (g) the
receipt by the Company, any Subsidiary or any ERISA Affiliate of a notice from
any Multiemployer Plan that any action described in clause (f) has been taken
with respect to that Multiemployer Plan; or (h) any other event or condition
which might constitute grounds under Section 4042 of ERISA for the termination
of, or the appointment of a trustee to administer, any Pension Plan.
"EVENT OF DEFAULT" is defined in Section 11.
"FAIR MARKET VALUE" means, at any time and with respect to any
property, the sale value of such property that would be realized in an arm's-
length sale at such time between an informed and willing buyer and an informed
and willing seller (neither being under a compulsion to buy or sell).
"FIXED CHARGES" means, with respect to any period, the sum of the
following for such period (a) Interest Charges and (b) payments of principal of
Funded Indebtedness (including any required payments of principal under a
revolving credit facility but otherwise excluding payments of principal under a
revolving credit facility and the revolving portion of any term loan facility
permitted by this Agreement and other than prepayment premiums or penalties
associated with the prepayment of Indebtedness contemplated by this Agreement).
"FUNDED INDEBTEDNESS" means, with respect to any Person, all
Indebtedness of such Person which by its terms or by the terms of any instrument
or agreement relating thereto matures, or which is otherwise payable or unpaid,
one year or more from, or is directly or indirectly renewable or extendible at
the option of the obligor in respect thereof to a date one year or more
(including, without limitation, an option of such obligor under a revolving
credit or similar agreement obligating the lender or lenders to extend credit
over a period of one year or more) from, the date of the creation thereof,
provided that Funded Indebtedness, as at any date of determination,
(a) shall include (i) Current Maturities of Funded Indebtedness and
(ii) all liabilities in respect of Patronage Dividend Certificates; and
Glossary - 5
<PAGE>
(b) shall exclude (i) all liabilities in respect to an Operating Line
of Credit extended to the Company, (ii) all liabilities in respect to any
revolving credit facility, revolving portion of any term loan facility or
other working capital credit facility extended to GCC and (iii) any
Guaranty by GCC of Funded Indebtedness of any Person that is not an
Affiliate of the Company.
"GAAP" means generally accepted accounting principles as in effect
from time to time in the United States of America.
"GCC" means Grocers Capital Company, a California corporation and a
wholly owned Subsidiary of the Company, and all Subsidiaries thereof.
"GOVERNMENTAL AUTHORITY" means (a) the government of (i) the United
States of America or any State or other political subdivision thereof, or (ii)
any jurisdiction in which the Company or any Subsidiary conducts all or any part
of its business, or which asserts jurisdiction over any properties of the
Company or any Subsidiary, or (b) any entity exercising executive, legislative,
judicial, regulatory or administrative functions of, or pertaining to, any such
government.
"GUARANTY" means, with respect to any Person, any obligation (except
the endorsement in the ordinary course of business of negotiable instruments for
deposit or collection) of such Person guaranteeing or in effect guaranteeing
(whether by reason of being a general partner of a partnership or otherwise) any
indebtedness, dividend or other obligation of any other Person in any manner,
whether directly or indirectly, including (without limitation) obligations
incurred through an agreement, contingent or otherwise, by such Person:
(a) to purchase such indebtedness or obligation or any property
constituting security therefor;
(b) to advance or supply funds (i) for the purchase or payment of such
indebtedness or obligation, or (ii) to maintain any working capital or
other balance sheet condition or any income statement condition of any
other Person or otherwise to advance or make available funds for the
purchase or payment of such indebtedness or obligation;
(c) to lease properties or to purchase properties or services
primarily for the purpose of assuring the owner of such indebtedness or
obligation of the ability of any other Person to make payment of the
indebtedness or obligation; or
(d) otherwise to assure the owner of such indebtedness or obligation
against loss in respect thereof;
provided, however, that any leasing by the Company , as lessee, of real or
- -------- -------
personal property that the Company in turn subleases to a member-patron or
associate-patron shall not be a Guaranty for purposes of this Agreement. In any
computation of the indebtedness or other liabilities of the obligor under any
Guaranty, the indebtedness or other obligations that are the subject of such
Guaranty shall be assumed to be direct obligations of such obligor.
Glossary - 6
<PAGE>
"HAZARDOUS MATERIAL" means any and all pollutants, toxic or hazardous
wastes or any other substances that might pose a hazard to health or safety, the
removal of which may be required or the generation, manufacture, refining,
production, processing, treatment, storage, handling, transportation, transfer,
use, disposal, release, discharge, spillage, seepage, or filtration of which is
or shall be restricted, prohibited or penalized by any applicable law
(including, without limitation, asbestos, urea formaldehyde foam insulation and
polycholorinated biphenyls).
"HOLDER" means, with respect to any Note, the Person in whose name
such Note is registered in the register maintained by the Company pursuant to
Section 13.1.
"INDEBTEDNESS" with respect to any Person means, at any time, without
duplication,
(a) its liabilities for borrowed money and its redemption obligations
in respect of mandatorily redeemable Preferred Stock;
(b) all liabilities for borrowed money secured by any Lien with
respect to any property owned by such Person (whether or not it has assumed
or otherwise become liable for such liabilities);
(c) all liabilities for the deferred purchase price of property
acquired by such Person (excluding accounts payable arising in the ordinary
course of business but including, without limitation, all liabilities
created or arising under any conditional sale or other title retention
agreement with respect to any such property);
(d) all liabilities appearing on its balance sheet in accordance with
GAAP in respect of Capital Leases;
(e) any Guaranty of such Person with respect to liabilities of a type
described in any of clauses (a) through (d) hereof.
provided, however, that Guaranties of leases by the Company permitted by Section
- -------- -------
10.6(h) shall not be deemed Indebtedness for purposes of this Agreement.
Indebtedness of any Person shall include all obligations of such Person of the
character described in clauses (a) through (e) to the extent such Person remains
legally liable in respect thereof notwithstanding that any such obligation is
deemed to be extinguished under GAAP.
"INSTITUTIONAL INVESTOR" means (a) any original purchaser of a Note,
(b) any holder of a Note holding more than 5% of the aggregate principal amount
of the Notes then outstanding, and (c) any bank, trust company, savings and loan
association or other financial institution, any pension plan, any investment
company, any insurance company, any broker or dealer, or any other similar
financial institution or entity, regardless of legal form.
"INSURANCE SUBSIDIARIES" means (a) Grocers and Merchants Insurance
Services, a California corporation, (b) Springfield Insurance Company, a
California corporation, Springfield Insurance Limited, a Bermuda corporation,
and (c) all Subsidiaries of the foregoing.
Glossary - 7
<PAGE>
"INTEREST CHARGES" means, with respect to any period, the sum (without
duplication) of the following (in each case, eliminating all offsetting debits
and credits between the Company and its Subsidiaries and all other items
required to be eliminated in the course of the preparation of consolidated
financial statements of the Company and its Subsidiaries in accordance with
GAAP): (a) all interest in respect of Indebtedness of the Company and its
Subsidiaries (including imputed interest on Capital Lease Obligations ) deducted
in determining Consolidated Net Income for such period, together with all
interest capitalized during such period and not deducted in determining
Consolidated Net Income for such period, and (b) all debt discount, premium and
expense amortized or required to be amortized in the determination of
Consolidated Net Income for such period.
"INVESTMENT" means any investment, made in cash or by delivery of
property, by the Company or any of its Subsidiaries in any Person, whether by
acquisition of stock, indebtedness or other obligation or Security, or by loan,
Guaranty, advance, capital contribution or otherwise.
"LIEN" means, with respect to any Person, any mortgage, lien, pledge,
charge, security interest or other encumbrance, or any interest or title of any
vendor, lessor, lender or other secured party to or of such Person under any
conditional sale or other title retention agreement or Capital Lease, upon or
with respect to any property or asset of such Person (including in the case of
stock, stockholder agreements, voting trust agreements and all similar
arrangements).
"MAKE-WHOLE AMOUNT" is defined in Section 8.6.
"MATERIAL" means material in relation to the business, operations,
affairs, financial condition, assets, properties, or prospects of the Company
and its Subsidiaries taken as a whole.
"MATERIAL ADVERSE EFFECT" means a material adverse effect on (a) the
business, operations, affairs, financial condition, assets or properties of the
Company and its Subsidiaries taken as a whole, or (b) the ability of the Company
to perform its obligations under this Agreement and the Notes, or (c) the
validity or enforceability of this Agreement or the Notes.
"MATURITY DATE" means the tenth (10th) anniversary of the first day of
the calendar month immediately following the Closing Date.
"MULTI-EMPLOYER PLAN" means any Plan that is a "multi-employer plan"
(as such term is defined in section 4001(a)(3) of ERISA).
"NET PROCEEDS AMOUNT" means, with respect to any Transfer by any
Person, an amount equal to the difference of (a) the aggregate amount of the
consideration (valued at the Fair Market Value of such consideration at the time
of the consummation of such Transfer) received by such Person in respect of such
Transfer, minus (b) all ordinary and reasonable out-of-pocket costs and expenses
actually incurred by such Person in connection with such Transfer.
"NOTES" is defined in Section 1.
Glossary - 8
<PAGE>
"OFFICER'S CERTIFICATE" means a certificate of a Senior Financial
Officer or of any other officer of the Company whose responsibilities extend to
the subject matter of such certificate.
"OPERATING AGREEMENT" means the Second Amended and Restated Operating
Agreement dated as of April 22, 1994, between GCC, the Company and Grocers
Equipment Company, a California corporation and a wholly-owned subsidiary of the
Company.
"OPERATING LINE OF CREDIT" means any Indebtedness outstanding under
(a) the Rabobank Revolving Credit Agreement, (b) any revolving credit facility
or other working capital credit facility in substitution for such Revolving
Credit Agreement that is approved in advance by the Required Holders, such
approval not to be unreasonably withheld, and (c) subject to Section 10.6(i),
any amendment, extension or refinancing thereof.
"PATRONAGE DIVIDEND CERTIFICATES" means "Patronage Dividend
Certificates" as defined in Article 1, Section 5.A of the Company's Bylaws as in
effect on the Closing Date.
"PATRONAGE DIVIDEND DEPOSIT ACCOUNTS" means "Patronage Dividend
Deposit Accounts" as defined in Article 1, Section 5.A of the Company's Bylaws
as in effect on the Closing Date that are not evidenced by Patronage Dividend
Certificates.
"PATRONS' REQUIRED DEPOSITS" means the cash deposits required by the
Company of its patrons that are contractually subordinated and subject to the
prior payment in full of the Notes pursuant to agreements substantially
identical to the "Member-Patron Subordination Agreements" used by the Company on
the date hereof, a copy of which has been delivered to the Purchasers.
"PBGC" means the Pension Benefit Guaranty Corporation referred to and
defined in ERISA or any successor thereto.
"PERMITTED FUNDED INDEBTEDNESS" means (a) the Operating Line of Credit
extended to the Company, (b) a revolving credit facility or other working
capital credit facility extended to GCC, (c) the Guaranty by GCC of the
Indebtedness of any of its lessees or borrowers, (d) Indebtedness evidenced by
Patronage Dividend Certificates that are first payable after the final maturity
date of the Notes and (e) Indebtedness that is secured by a Lien permitted by
Section 10.5(g).
"PENSION PLAN" means any Plan that is an "employee pension benefit
plan" (within the meaning of Section 3(2) of ERISA).
"PERMITTED MEMBER PAYMENTS" means distributions of patronage dividends
to the Company's member-patrons and associate-patrons as contemplated by Article
VII of the Company's Bylaws as in effect on the Closing Date.
"PERSON" means an individual, partnership, corporation, limited
liability company, association, trust, unincorporated organization, or a
government or agency or political subdivision thereof.
Glossary - 9
<PAGE>
"PLAN" means any "employee benefit plan" (within the meaning of
Section 3(3) of ERISA) that the Company or any ERISA Affiliate maintains,
contributes to or is obligated to contribute to for the benefit of employees or
former employees of the Company, any Subsidiary or any ERISA Affiliate.
"PREFERRED STOCK" means any class of capital stock of a corporation
that is preferred over any other class of capital stock of such corporation as
to the payment of dividends or the payment of any amount upon liquidation or
dissolution of such corporation.
"PROPERTY" or "PROPERTIES" means, unless otherwise specifically
limited, real or personal property of any kind, tangible or intangible, choate
or inchoate.
"PURCHASER" means each named in Schedule A to this Agreement.
"RABOBANK REVOLVING CREDIT AGREEMENT means that certain Revolving
Credit Agreement, dated as of April 13, 1998, among the Company, Cooperatieve
Centrale Raiffeisen-Boerenleenbank B.A., "Rabobank Nederland", New York Branch,
as Agent, and the Lenders party thereto.
"REDEEMABLE CLASS B SHARES" means, at any time, outstanding Class B
Shares of the Company that are redeemable by the Company pursuant to its Bylaws
as in effect on the Closing Date. "CLASS B SHARES" means the Class B shares of
the Company as provided for in the Articles of Incorporation and the Bylaws of
the Company as in effect on the Closing Date.
"REQUIRED HOLDERS" means, at any time, the holders of at least 51% in
principal amount of the Notes at the time outstanding (exclusive of Notes then
owned by the Company or any of its Affiliates).
"REQUIRED PERMITTED REDEMPTIONS" means all purchases by the Company of
one or more shares of its Class A Shares from its terminated member-patrons and
its Class B Shares, in each case (a) as provided for in, and subject to the
limitations set forth in, the Company's Bylaws as in effect on the Closing Date,
(b) so long as such purchase is permitted under the California Corporations Code
and (c) no Default or Event of Default has occurred and is continuing.
"RESPONSIBLE OFFICER" means any Senior Financial Officer and any other
officer of the Company with responsibility for the administration of the
relevant portion of this agreement.
"RESTRICTED PAYMENT" means
(a) any Distribution in respect of the Company or any Subsidiary of
the Company (other than on account of capital stock or other equity
interests of a Subsidiary of the Company owned legally and beneficially by
the Company or another Subsidiary of the Company), including, without
limitation, any Distribution resulting in the acquisition by the Company of
Securities which would constitute treasury stock, and
Glossary - 10
<PAGE>
(b) any payment, repayment, redemption, retirement, repurchase or
other acquisition, direct or indirect, by the Company or any Subsidiary of,
on account of, or in respect of, the principal of any Subordinated Debt (or
any installment thereof) prior to the regularly scheduled maturity date
thereof (as in effect on the date such Subordinated Debt was originally
incurred).
For purposes of this Agreement, the amount of any Restricted Payment made in
property shall be the greater of (i) the Fair Market Value of such property (as
determined in good faith by the Board of Directors (or equivalent governing
body) of the Person making such Restricted Payment) and (ii) the net book value
thereof on the books of such Person, in each case determined as of the date on
which such Restricted Payment is made.
"SECURITIES ACT" means the Securities Act of 1933, as amended from
time to time.
"SECURITY" has the meaning set forth in section 2(1) of the Securities
Act.
"SENIOR FINANCIAL OFFICER" means the chief financial officer,
principal accounting officer, treasurer or controller of the Company.
"SUBORDINATED DEBT" means any Indebtedness that is in any manner
subordinated in right of payment or security in any respect to Indebtedness
evidenced by the Notes, including, without limitation, Indebtedness represented
by Patronage Dividend Certificates and Patronage Dividend Deposit Accounts.
"SUBSIDIARY" means, as to any Person, any corporation, association or
other business entity in which such Person or one or more of its Subsidiaries or
such Person and one or more of its Subsidiaries owns sufficient equity or voting
interests to enable it or them (as a group) ordinarily, in the absence of
contingencies, to elect a majority of the directors (or Persons performing
similar functions) of such entity, and any partnership or joint venture if more
than a 50% interest in the profits or capital thereof is owned by such Person or
one or more of its Subsidiaries or such Person and one or more of its
Subsidiaries (unless such partnership can and does ordinarily take major
business actions without the prior approval of such Person or one or more of its
Subsidiaries). Unless the context otherwise clearly requires, any reference to
a "Subsidiary" is a reference to a Subsidiary of the Company.
"SUBSIDIARY GUARANTY" when used in the singular and "SUBSIDIARY
GUARANTIES" when used in the plural means any and all guaranties executed by
each of the Subsidiary Guarantors in favor of the Noteholders, substantially in
the form of Exhibit 2, and any all amendments thereto.
"SUBSIDIARY GUARANTORS" means all of the Subsidiaries of the Company
other than (a) GCC, (b) the Insurance Subsidiaries and (c) any other Subsidiary
with total assets of less than $30,000.
"SUBSIDIARY STOCK" means the Voting Stock (or any options or warrants
to purchase Voting Stock or other Securities exchangeable for or convertible
into Voting Stock) of any Subsidiary.
Glossary - 11
<PAGE>
"TRANSFER" means, with respect to any Person, any transaction in which
such Person sells, conveys, transfers or leases (as lessor) any of its property,
including, without limitation, Subsidiary Stock.
"VOTING STOCK" means, with respect to a corporation the stock of such
corporation the holders of which are ordinarily, in the absence of
contingencies, entitled to elect members of the Board of Directors (or other
governing body) of such corporation.
"WHOLLY-OWNED SUBSIDIARY" means, at any time, any Subsidiary one
hundred percent (100%) of all of the equity interests (except directors'
qualifying shares) and voting interests of which are owned by any one or more of
the Company and the Company's other Wholly-Owned Subsidiaries at such time.
Glossary - 12
<PAGE>
EXHIBIT 1
[FORM OF SENIOR NOTE]
CERTIFIED GROCERS
OF CALIFORNIA, LTD.
7.22% SENIOR NOTE DUE 2008
No. [_____] April 13, 1998
$[_______] PPN 15706#AH8
FOR VALUE RECEIVED, the undersigned, CERTIFIED GROCERS OF CALIFORNIA,
LTD., (herein called the "Company"), a corporation organized and existing under
the laws of the State of California, hereby promises to pay to
[_________________], or registered assigns, the principal sum of
[____________________] Dollars on May 1, 2008, with interest (computed on the
basis of a 360-day year of twelve 30-day months) (a) on the unpaid balance
thereof at the rate of 7.22% per annum from the date hereof, payable, on the 1st
day of each calendar month commencing with the 1st day of the calendar month
next succeeding the date hereof, until the principal hereof shall have become
due and payable, and (b) to the extent permitted by law on any overdue payment
(including any overdue prepayment) of principal, any overdue payment of interest
and any overdue payment of any Make-Whole Amount (as defined in the Note
Purchase Agreement referred to below), payable as aforesaid (or, at the option
of the registered holder hereof, on demand), at a rate per annum from time to
time equal to the greater of (i) 9.22% or (ii) 2% over the "prime rate" of
interest as published in the Wall Street Journal.
On May 1, 2000 and on the first of each month thereafter to and
including the month immediately preceding May 1, 2008, the Company will pay
principal of and accrued interest on the Notes in the aggregate amount of
$_____________ without payment of the Make-Whole Amount or any premium.
Notwithstanding anything to the contrary contained herein or in any Note,
however, the final payment due under each Note (whether at maturity, by
acceleration or otherwise) shall be in an amount sufficient to pay in full all
outstanding principal thereon together with all accrued interest and premium due
hereon.
Payments of principal of, interest on and any Make-Whole Amount with
respect to this Note are to be made in lawful money of the United States of
America at the principal office of the Company in Los Angeles, California, or at
such other place as the Company shall have designated by written notice to the
holder of this Note as provided in the Note Purchase Agreement referred to
below.
This Note is one of a series of Senior Notes (herein called the
"Notes") issued pursuant to the Note Purchase Agreement, dated as of March 15,
1998 (as from time to time amended, the "Note Purchase Agreement"), between the
Company and the respective Purchasers named therein and is entitled to the
benefits thereof. Each holder of this Note will be deemed, by its acceptance
hereof, (i) to have agreed to the confidentiality provisions set forth in
Section 20
1
<PAGE>
of the Note Purchase Agreement and (ii) to have made the representation set
forth in Section 6.2 of the Note Purchase Agreement.
This Note is a registered Note and, as provided in the Note Purchase
Agreement, upon surrender of this Note for registration of transfer, duly
endorsed, or accompanied by a written instrument of transfer duly executed, by
the registered holder hereof or such holder's attorney duly authorized in
writing, a new Note for a like principal amount will be issued to, and
registered in the name of, the transferee. Prior to due presentment for
registration of transfer, the Company may treat the person in whose name this
Note is registered as the owner hereof for the purpose of receiving payment and
for all other purposes, and the Company will not be affected by any notice to
the contrary.
This Note is subject to pre-payment, in whole or from time to time in
part, at the times and on the terms specified in the Note Purchase Agreement,
but not otherwise.
If an Event of Default, as defined in the Note Purchase Agreement,
occurs and is continuing, the principal of this Note may be declared or
otherwise become due and payable in the manner, at the price (including any
applicable Make-Whole Amount) and with the effect provided in the Note Purchase
Agreement.
This agreement and the rights and obligations of the parties hereunder
shall be governed by, and shall be construed and enforced in accordance with,
the internal laws of the State Of New York (including without limitation section
5-1401 of the general obligations law of the State of New York), without regard
to conflicts of laws principles.
CERTIFIED GROCERS OF CALIFORNIA, LTD.
By
--------------------------------------
Treasurer
2
<PAGE>
REVOLVING CREDIT AGREEMENT
DATED AS OF APRIL 10, 1998
BY AND AMONG
CERTIFIED GROCERS OF CALIFORNIA, LTD.
THE LENDERS NAMED HEREIN
AND
COOPERATIEVE CENTRALE RAIFFEISEN-BOERENLEENBANK
B.A., "RABOBANK NEDERLAND", NEW YORK BRANCH,
AS AGENT
Exhibit 4.17
<PAGE>
REVOLVING CREDIT AGREEMENT
THIS REVOLVING CREDIT AGREEMENT is entered into as of April 10, 1998, by
and among CERTIFIED GROCERS OF CALIFORNIA, LTD., a California corporation
operating primarily on a cooperative basis (the "Borrower"), the Lenders (as
defined below), COOPERATIEVE CENTRALE RAIFFEISEN-BOERENLEENBANK B.A., "RABOBANK
NEDERLAND", NEW YORK BRANCH, not in its individual capacity, but solely in its
capacity as the Agent.
RECITALS
The Borrower desires to obtain from the Lenders a revolving credit facility in
the aggregate principal amount of up to One Hundred Million Dollars
($100,000,000) outstanding at any time, for the limited purposes as more
particularly described below; and
The Lenders have agreed to make such credit available to the Borrower, but only
upon the terms and subject to the conditions hereinafter set forth and in
reliance on the representations and warranties set forth herein.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing recitals and the mutual
covenants hereinafter set forth, and intending to be legally bound, the parties
hereto agree as follows:
SECTION 1. DEFINITIONS.
1.1 DEFINED TERMS. As used herein, the following terms have the following
meanings:
"Adjusted LIBOR" means, for each Interest Period in respect of LIBOR Loans
comprising part of the same Borrowing, an interest rate per annum (rounded
upward to the nearest 1/16th of one percent (0.0625%)) determined pursuant to
the following formula:
LIBOR
Adjusted LIBOR = ------------------------------------
1.00 - Eurodollar Reserve Percentage
The Adjusted LIBOR shall be adjusted automatically as of the effective date of
any change in the Eurodollar Reserve Percentage.
"Adjusted Tangible Net Worth" means, as measured at any date of
determination, on a consolidated basis, an amount equal to the sum of (a) the
aggregate value of the shareholders' equity of the Borrower and its
Subsidiaries, plus (b) the aggregate value of Patron Required Deposits then on
deposit, plus (c) the aggregate book value of the principal amount of all
Patronage Dividend Certificates that are first payable after the Maturity Date,
minus (d) the aggregate value of all intangible assets of the Borrower and its
Subsidiaries.
1
<PAGE>
"Adjustment Date" means the second Business Day following receipt by the
Agent of each delivery of the financial statements required to be delivered by
the Borrower pursuant to SECTIONS 6.1(a) or (b) and the corresponding Compliance
Certificate required by SECTION 6.1(d).
"Affiliate" means, with respect to any Person, each other Person which,
directly or indirectly, controls, is controlled by or is under common control
with such Person (excluding any trustee under, or any committee with
responsibility for administering, any Pension Plan or Employee Benefit Plan). A
Person shall be deemed to be "controlled by" another Person if such other Person
possesses, directly or indirectly, power (i) to vote fifteen percent (15.0%) or
more of the securities (on a fully diluted basis) having ordinary voting power
for the election of directors, managing general partners or managing members or
(ii) to direct or cause the direction of the management and policies of such
Person whether by contract or otherwise. A member-patron or associate-patron of
the Borrower shall not be deemed to be an Affiliate of the Borrower solely
because a person that is an Affiliate of such member-patron or associate-patron
is director of the Borrower.
"Agent" means Rabobank, not when acting in its individual capacity, but
solely when acting in its capacity as the administrative agent under this
Agreement or any of the other Loan Documents, and any successor administrative
agent.
"Agent's Payment Office" means the address for payments set forth on the
signature page hereto in relation to the Agent or such other address as the
Agent may from time to time specify in accordance with SECTION 12.6.
"Agent-Related Persons" means the Agent and any successor agent, appointed
to the terms hereof, together with their respective Affiliates, and the
officers, directors, employees and attorneys-in-fact of such Persons.
"Aggregate Commitments" means the combined Commitments of the Lenders in
the aggregate principal amount of One Hundred Million Dollars ($100,000,000), as
such may be reduced from time to time pursuant to this Agreement.
"Agreement" means this Revolving Credit Agreement, including all
amendments, modifications and supplements hereto and all appendices, exhibits
and schedules to any of the foregoing, and shall refer to the Agreement as the
same may be in effect from time to time.
"Applicable Commitment Fee Percentage" means the percentage rate per annum
used to calculate from time to time the commitment fees payable pursuant to
SECTION 2.9(b) of this Agreement, in accordance with the table below:
2
<PAGE>
<TABLE>
<CAPTION>
====================================================================================
COMMITMENT FEE FOR
LEVERAGE RATIO REVOLVING LOANS
- ------------------------------------------------------------------------------------
<S> <C>
Greater than 3.00:1.00 0.25%
- ------------------------------------------------------------------------------------
Greater than 2.75:1.00, but less than or equal to 3.00:1.00 0.225%
Greater than 2.50:1.00, but less than or equal to 2.75:1.00 0.20%
Greater than 2.25:1.00, but less than or equal to 2.50:1.00 0.175%
Greater than 2.00:1.00, but less than or equal to 2.25:1.00 0.15%
- ------------------------------------------------------------------------------------
Less than or equal to 2.00:1.00 0.125%
====================================================================================
</TABLE>
From the Closing Date to the second Adjustment Date, the Applicable Margin shall
be 0.225%.
Upon each Adjustment Date (after the initial Adjustment Date), the Applicable
Commitment Fee Percentage shall be determined in accordance with the above
table, based on the Leverage Ratio as of the date of the financial statements
and the corresponding Compliance Certificate delivered to the Agent with respect
to such Adjustment Date. If the above table indicates that an adjustment to the
existing Applicable Commitment Fee Percentage is required, the effective date
for such adjustment shall be the respective Adjustment Date (which adjustments
shall remain effective until the next Adjustment Date after which the Borrower
delivers to the Agent quarterly or annual financial statements and a
corresponding Compliance Certificate evidencing that the Applicable Commitment
Fee Percentage, in accordance with the above table, is to be further adjusted).
Notwithstanding the foregoing, in no event shall the Borrower be entitled to a
decrease in the Applicable Commitment Fee Percentage if an Event of Default has
occurred and is continuing.
"Applicable Margin" means the percentage determined on the Funding Date for
such LIBOR Loan or the issuing date for such Letter of Credit, in accordance
with the table below:
<TABLE>
<CAPTION>
===================================================================================
LEVERAGE RATIO APPLICABLE MARGIN
- -----------------------------------------------------------------------------------
<S> <C>
Greater than 3.0:1.00 0.90%
- -----------------------------------------------------------------------------------
Greater than 2.75:1.00, but less than or equal to 3.00:1.00 0.825%
- -----------------------------------------------------------------------------------
Greater than 2.50:1.00, but less than or equal to 2.75:1.00 0.685%
- -----------------------------------------------------------------------------------
Greater than 2.25:1.00, but less than or equal to 2.50:1.00 0.575%
- -----------------------------------------------------------------------------------
Greater than 2.00:1.00, but less than or equal to 2.25:1.00 0.475%
- -----------------------------------------------------------------------------------
Less than or equal to 2.00:1.00 0.375%
===================================================================================
</TABLE>
From the Closing Date to the second Adjustment Date, the Applicable Margin shall
be 0.825%.
Upon each Adjustment Date (after the initial Adjustment Date), the Applicable
Margin for all LIBOR Loans and Letters of Credit shall be determined in
accordance with the above table, based on the Leverage Ratio as of the date of
the financial statements and the corresponding Compliance Certificate delivered
to the Agent with respect to such Adjustment Date. If the above table indicates
that an adjustment to the existing Applicable Margin for all LIBOR Loans and
Letters of Credit is required, the effective date for such adjustment shall be
the respective Adjustment Date (which adjustments shall remain effective until
the next Adjustment Date after which the Borrower delivers to the Agent
quarterly or annual financial statements and a corresponding Compliance
Certificate evidencing that the Applicable Margin for all LIBOR Loans and
Letters of Credit, in accordance
3
<PAGE>
with the above table, is to be further adjusted). Notwithstanding the foregoing,
in no event shall the Borrower be entitled to a decrease in the Applicable
Margin applicable to LIBOR Loans or Letters of Credit if an Event of Default has
occurred and is continuing.
"Asset Sale" means the sale by the Borrower or any of its Subsidiaries, or
by any successor in interest (including a debtor in possession or trustee under
the Bankruptcy Code) to any Person other than the Borrower or any of its wholly-
owned Subsidiaries of (i) the outstanding Stock or similar equity interests (in
the case of Persons other than corporations) of any Subsidiary of the Borrower,
(ii) all or substantially all of the assets of any division or line of business
of the Borrower or any of its Subsidiaries, or (iii) any other assets
(including, without limitation, any assets that do not constitute substantially
all of the assets of any division or line of business of the Borrower or any of
its Subsidiaries); provided that the term "Asset Sale" shall not include (y) any
sale of capital assets of the Borrower or any of its Subsidiaries to the extent
such sale constitutes the sale of obsolete, obsolescent or worn out capital
assets, or capital assets that the Borrower reasonably determines are no longer
required in the operation of the business of the Borrower and its Subsidiaries,
and (z) the sale in the ordinary course of business of personal property held
for resale or lease in the ordinary course of business of the Borrower or any of
its Subsidiaries or liquidation sales of any discontinued, discounted or
obsolete inventory, conducted in the ordinary course of business by the Borrower
or any of its Subsidiaries.
"Assignee" has the meaning set forth in SECTION 11.2(a) of this Agreement.
"Assignment and Acceptance" has the meaning specified in SECTION 11.2(a) of
this Agreement.
"Attorney Costs" means, in respect of any matter and at the election of the
Person incurring such fees and disbursements, (i) the reasonable fees and
disbursements of any law firm or other external counsel and (ii) the reasonably
allocated cost of internal legal services and all disbursements of internal
counsel.
"Bankruptcy Code" means the Bankruptcy Code of 1978, as amended, as
codified under Title 11 of the United States Code, and the Bankruptcy Rules
promulgated thereunder, as the same may be in effect from time to time.
"Base Rate" means for any day, the higher of (i) the per annum rate of
interest announced by Rabobank in New York City from time to time as its base
rate, each change in such fluctuating interest rate to take effect
simultaneously with the corresponding change in such base rate, but in no event
in excess of the maximum interest rate permitted by applicable law and (ii) one-
half percent (0.50%) per annum above Rabobank's Federal Funds Rate for overnight
funds. Each change in the Base Rate shall result in a corresponding change in
the interest rate charged on any Base Rate Loan. Rabobank's base rate is a rate
set by Rabobank based upon various factors, including Rabobank's costs and
desired return, general economic conditions and other factors, and is neither
directly tied to an external rate of interest or index nor necessarily the
lowest or best rate of interest actually charged by Rabobank at any given time
to any customer or particular class of customers for any particular credit
extension. Rabobank may make commercial or other loans at rates of interest at,
4
<PAGE>
above or below its base rate.
"Base Rate Loans" means any and all of the Loans bearing interest at the
Base Rate.
"Base Rate Revolving Loan" means a Loan funded pursuant to SECTION 2.1.1(e)
of this Agreement bearing interest at the Base Rate.
"Board of Directors" means the board of directors of the Borrower or any
committee of the board of directors of the Borrower authorized with respect to
any particular matter to exercise the power of the board of directors of the
Borrower.
"Borrowing" means a borrowing under this Agreement consisting of Loans made
to the Borrower on the same day by the Lenders pursuant to SECTION 2.
"Borrowing Notice" means a notice given by the Borrower to the Agent in
accordance with SECTION 2.5, substantially in the form of EXHIBIT C.
"Business Day" means any day which is not a Saturday, Sunday or a legal
holiday under the laws of the States of New York or California or is not a day
on which banking institutions located in the States of New York or California
are authorized or required by law or other governmental action to close; except
that if any determination of a "Business Day" shall relate to a LIBOR Loan, the
term "Business Day" shall in addition exclude any day which is not a Eurodollar
Banking Day.
"Capital Expenditures" means all payments made for any fixed assets or
improvements or for replacements, substitutions or additions thereto, that have
a useful life of more than one (1) year and which are required to be capitalized
under GAAP, including such expenditures financed with Capital Lease Obligations.
"Capital Lease" means, as to any Person, any lease of any Property by such
Person as lessee that is, or should be in accordance with Financing Accounting
Standards Board Statement No. 13, classified and accounted for as a "capital
lease" on the balance sheet of such Person prepared in accordance with GAAP.
"Capital Lease Obligation" means, with respect to any Capital Lease, the
amount of the obligation of the lessee thereunder that, in accordance with GAAP,
would appear on a balance sheet of such lessee in respect of such Capital Lease
or otherwise be disclosed in a note to such balance sheet.
"Cash Equivalents" means any of the following instruments: certificates of
deposit, bankers acceptance or eurodollar certificates issued by major United
States commercial banks or their international banking facilities or major
foreign banks with assets of not less than $100,000,000, prime commercial paper,
corporate notes, bonds and preferred stock listed on a national securities
exchange, municipal bonds rated A or better by Moody's or S&P, direct
obligations of the United States of America or its agencies, and obligations
guaranteed by the United States of America.
"Change of Control" means the occurrence after the date of this Agreement
of: (i) any
5
<PAGE>
Person, or two or more Persons acting in concert, acquiring
beneficial ownership (within the meaning of Rule 13d-3 of the Securities and
Exchange Commission under the Securities Exchange Act of 1934, as amended),
directly or indirectly, of securities of the Borrower (or other securities
convertible into such securities) representing greater than twenty percent
(20.0%) of the combined voting power of all securities of the Borrower entitled
to vote in the election of directors; or (ii) any Person, or two or more Persons
acting in concert, acquiring by contract or otherwise, or entering into a
contract or arrangement which, upon consummation, will result in its or their
acquisition of, or control over, securities of the Borrower (or other securities
convertible into such securities) representing greater than twenty percent
(20.0%) of the combined voting power of all securities of the Borrower entitled
to vote in the election of directors.
"Charges" means all federal, state, county, city, municipal, local, foreign
or other governmental taxes, levies, assessments, charges or claims, in each
case then due and payable by the Borrower or any of its Subsidiaries, upon or
relating to (a) the Loans hereunder, (b) any of their employees, payroll, income
or gross receipts, (c) any of their ownership or use of any of their respective
assets, or (d) any other aspect of their respective businesses.
"Closing" means the time at which each of the conditions precedent set
forth in SECTION 4 to the making of the first Loan hereunder shall have been
duly and completely satisfied by the Borrower or waived by all Lenders in their
sole and absolute discretion.
"Closing Date" means the date on which the Closing occurs.
"Code" means the Internal Revenue Code of 1986, as amended, the Treasury
Regulations adopted thereunder and the Treasury Regulations proposed thereunder,
as the same may be in effect from time to time.
"Commitment" means, as to each Lender, the amount set forth on SCHEDULE 1.0
next to such Lender's name, as such may be amended from time to time in
accordance with this Agreement.
"Compliance Certificate" means a certificate signed by a Responsible
Person, substantially in the form set forth in EXHIBIT D, with such changes
therein as the Agent from time to time reasonably may request for the purpose of
having such certificate disclose the matters certified therein and the method of
computation thereof.
"Confidential Booklet" has the meaning set forth in SECTION 5.5 below.
"Contingent Obligation" means, as applied to any Person, any direct or
indirect liability, contingent or otherwise, of that Person with respect to any
indebtedness, lease, dividend, letter of credit or other obligation of another
Person, including, without limitation, any such obligation directly or
indirectly guaranteed, endorsed (other than for collection or deposit in the
ordinary course of business), co-made or discounted or sold with recourse by
that Person, or in respect of which that Person is otherwise directly or
indirectly liable, including, without limitation, any such obligation for which
that Person is in effect liable through any agreement (contingent or otherwise)
to purchase, repurchase or otherwise acquire such obligation or any security
therefor, or to provide funds for the
6
<PAGE>
payment or discharge of such obligation (whether in the form of loans, advances,
capital stock purchases, capital contributions or otherwise), or to maintain the
solvency of the obligor of such obligation, or to make payment for any products,
materials or supplies or for any transportation, services or lease regardless of
the non-delivery or non-furnishing thereof, in any such case if the purpose or
intent of such agreement is to provide assurance that such obligation will be
paid or discharged, or that any agreements relating thereto will be complied
with, or that the holders of such obligation will be protected (in whole or in
part) against loss in respect thereof. The leasing by the Borrower, as lessee,
of real or personal property that the Borrower in turn subleases to a member-
patron of the Borrower shall not be a Contingent Obligation for purposes of this
Agreement. The amount of any Contingent Obligation of any Person shall be deemed
to be an amount equal to the maximum amount of such Person's liability with
respect to the stated or determinable amount of the primary obligation for which
such Contingent Obligation is incurred or, if not stated or determinable, the
maximum reasonably anticipated liability in respect thereof (assuming such
Person is required to perform thereunder).
"Contracts" has the meaning set forth in SECTION 5.7 of this Agreement.
"Conversion/Continuation Notice" means a notice given by the Borrower to
the Agent in accordance with SECTION 2.6, substantially in the form of EXHIBIT
E, with appropriate insertions.
"Designated Deposit Account" means demand deposit account no. 0700424464
maintained by the Borrower in the State of California with Union Bank of
California or such other financial institution as the Borrower from time to time
shall designate by written notice to the Agent.
"Discounted Value" of any Class B Shares means, as of any date of
determination, an amount equal to eighty percent (80.0%) of the aggregate
present value on such date of all payments that are included in the Redemption
Schedule of such Class B Shares, using an annual discount rate equal to the
annual interest rate then applicable for one-month LIBOR Loans under this
Agreement.
"Dollars" and "$" means the lawful money of the United States of America.
"Due Inquiry" means any and all inquiry, investigation and analysis which a
prudent Person would undertake and complete with diligence with the intent of
coming to as complete an understanding as reasonably possible of facts or
circumstances, and shall include, but shall not be limited to, a review of
relevant records in such Person's possession and inquiry of appropriate
employees, officers and directors.
"EBITDAP" means, as measured at any date of determination, for any period,
an amount equal to the sum of (a) net income (before extraordinary non-cash
items and non-cash items in respect of discontinued operations), plus (b)
Interest Expense, plus (c) provisions for income taxes, plus (d) depreciation,
plus (e) amortization of intangible assets, plus (f) other non-cash expenses,
plus (g) Patronage Dividends, plus (h) prepayment premiums actually paid in
connection with the repayment and termination of the Existing Debt, each as
measured for such period.
"Eligible Assignee" means (a) a commercial bank organized under the laws of
the United
7
<PAGE>
States, or any State thereof, and having combined capital and surplus of
$100,000,000; (b) a commercial bank organized under the laws of any other
country which is a member of the Organization for Economic Cooperation and
Development ("OECD"), or a political subdivision of any such country, and having
a combined capital and surplus of $100,000,000; provided, however, that such
bank is acting through a branch or agency located in the country in which it is
organized or another country which is also a member of the OECD or the Cayman
Islands; (c) the central bank of any country which is a member of the OECD; (d)
a finance company or other financial institution or fund (whether a corporation,
partnership, trust or other entity) that is engaged in making, purchasing or
otherwise investing in commercial loans in the ordinary course of its business
and having a combined capital and surplus of $100,000,000; (e) an insurance
company organized under the laws of the United States, or any state thereof, and
having a combined capital and surplus of $100,000,000; (f) any Lender party to
this Agreement; (g) any Affiliate of a Lender, and (h) any other Person approved
by the Agent and the Borrower, such approval not to be unreasonably withheld;
provided, however, that an Affiliate of the Borrower shall not qualify as an
Eligible Assignee.
"Employee Benefit Plan" means any Pension Plan and any employee welfare
benefit plan, as defined in Section 3(1) of ERISA, that is maintained for the
employees of the Borrower or any ERISA Affiliate of the Borrower.
"Environmental Laws" has the meaning set forth in SECTION 5.19 below.
"Environmental Complaint" has the meaning set forth in SECTION 5.19 below.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, as the same may be in effect from time to time, and any successor
statute, and the regulations promulgated and rulings issued thereunder.
"ERISA Affiliate" means, as applied to any Person, any trade or business
(whether or not incorporated) which is a member of a group of which that Person
is a member and which is under common control within the meaning of the
regulations promulgated under Section 414 of the Code.
"Eurodollar Banking Day" means any day on which dealings in dollar deposits
are conducted by and among banks in the London Interbank Market.
"Eurodollar Reserve Percentage" means the reserve percentage, if any,
(expressed as a decimal, rounded upward to the nearest 1/100th of one percent
(0.01%)) in effect on the date LIBOR for such Interest Period is determined
(whether or not applicable to any Lender) under regulations issued from time to
time by the Federal Reserve Board for determining the maximum reserve
requirement (including any emergency, supplemental or other marginal reserve
requirement) with respect to Eurocurrency funding (currently referred to as
"Eurocurrency liabilities") having a term comparable to such Interest Period.
"Event of Default" means the occurrence of any of the events set forth in
SECTION 9.1.
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"Existing Debt" has the meaning set forth in SECTION 4.1(m).
"Federal Funds Rate" means, for any period, the rate at which Rabobank, as
a state licensed branch of a foreign bank, in its sole discretion, can acquire
federal funds in the New York City interbank federal funds market or other
funding sources available to Rabobank, through brokers of recognized standing,
for a period and in an amount comparable to the period and amount requested by
the Borrower.
"Federal Reserve Board" means the Board of Governors of the Federal Reserve
System and any successor thereto.
"Fee Letter" means the side letter dated the date of this Agreement, from
the Borrower in favor of Rabobank, whereby the Borrower agrees to pay to
Rabobank the fees contemplated therein.
"Fiscal Quarter" means each fiscal quarter of the Borrower ending on or
about the last day of each November, February, May and August.
"Fiscal Year" means each fiscal year of the Borrower ending on the Saturday
nearest August 31 of each calendar year.
"Fixed Charge Coverage Ratio" means, as measured at any date of
determination on a rolling four (4) Fiscal Quarter basis, on a consolidated
basis for the Borrower and its Subsidiaries, the ratio of (a) EBITDAP to (b) the
sum of Interest Expense, plus current maturities of Total Funded Debt (excluding
current payments on Loans outstanding hereunder).
"Funding Date" means with respect to any proposed Borrowing hereunder, the
date funds are advanced to the Borrower for any Loan.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other Persons as may be approved by the significant segment of the accounting
profession, which are applicable to the circumstances as of the date of
determination.
"Governmental Authority" means (a) any federal, state, county, municipal or
foreign government, or political subdivision thereof, (b) any governmental or
quasi-governmental agency, authority, board, bureau, commission, department,
instrumentality or public body, (c) any court or administrative tribunal or (d)
with respect to any Person, any arbitration tribunal or other non-governmental
authority to whose jurisdiction that Person has consented.
"Grocers Capital Company" means Grocers Capital Company, a California
corporation, and its Subsidiaries.
"Guarantor" in the singular and "Guarantors" in the plural shall mean all
Subsidiaries of the Borrower other than (a) Grocers Capital Company, (b) the
Insurance Subsidiaries and (c) any other Subsidiaries with total assets of not
greater than $30,000.
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"Guaranty" when used in the singular and "Guaranties" when used in the
plural means any and all guaranties dated as of even date herewith, executed by
each of the Guarantors in favor of the Agent and the Lenders, substantially in
the form of EXHIBIT B, and any and all amendments thereto.
"Hazardous Materials" means, without limitation, any flammable explosives,
radioactive materials, hazardous materials, hazardous wastes, hazardous or toxic
substances or related materials defined in the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended (42 U.S.C. Section
9601, et seq.), the Hazardous Materials Transportation Act, as amended (49
U.S.C. Section 1801, et seq.), the Resource Conservation and Recovery Act, as
amended (42 U.S.C. Section 6901, et seq.) and in the regulations adopted and
publications promulgated pursuant thereto, or any other federal, state or local
governmental law, ordinance, rule or regulation.
"Indebtedness" means, as to any Person, without duplication, (a) all
indebtedness of such Person for borrowed money, including, without limitation in
the case of the Borrower, all of such indebtedness outstanding under this
Agreement and any of the other Loan Documents, (b) all Capital Lease Obligations
of such Person, (c) to the extent of the outstanding indebtedness thereunder,
any obligation of such Person that is evidenced by a promissory note or other
instrument representing an extension of credit to such Person, whether or not
for borrowed money, (d) any obligation of such Person for the deferred purchase
price of Property or services (other than trade or other accounts payable in the
ordinary course of business in accordance with customary industry terms), (e)
any obligation of such Person of the nature described in clauses (a), (b), (c)
or (d), above, that is secured by a Lien on assets of such Person and which is
non-recourse to the credit of such Person, but only to the extent of the fair
market value of the assets so subject to the Lien, (f) obligations of such
Person arising under acceptance facilities or under facilities for the discount
of accounts receivable of such Person, (g) any obligation of such Person to
reimburse the issuer of any letter of credit issued for the account of such
Person upon which a draw has been made, (h) all obligations of such Person to a
counterparty under any Rate Contract, (i) all Contingent Obligations of such
Person, and (j) all Off Balance Sheet Liabilities; provided that Patron Required
Deposits and any other deposits made by patrons of the Borrower in the ordinary
course of business shall not constitute Indebtedness.
"Indenture" has the meaning set forth in SECTION 5.21 hereof.
"Insolvency Proceeding" means (a) any case, action or proceeding before any
court or other Governmental Authority relating to bankruptcy, reorganization,
insolvency, liquidation, receivership, dissolution, winding-up or relief of
debtors, or (b) any general assignment for the benefit of creditors,
composition, marshalling of assets for creditors or other, similar arrangement
in respect of its creditors generally or any substantial portion of its
creditors, in each of case (a) and (b) undertaken under federal, state or
foreign law, including the Bankruptcy Code.
"Insurance Subsidiaries" means (a) Grocers & Merchants Insurance Services,
a California corporation, (b) Springfield Insurance Company, a California
corporation, (c) Springfield Insurance Co. Limited, a Bermuda corporation, and
(d) any of their Subsidiaries.
"Interest Differential" means, with respect to any prepayment of a LIBOR
Loan on a day
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other than an Interest Payment Date on which such LIBOR Loan matures, the
difference between (a) the per annum interest rate payable with respect to such
LIBOR Loan as of the date of the prepayment and (b) the Adjusted LIBOR on, or as
near as practicable to, the date of the prepayment for a LIBOR Loan commencing
on such date and ending on the last day of the applicable Interest Period. The
determination of the Interest Differential by the Agent shall constitute a
rebuttable presumption of the accuracy thereof.
"Interest Expense" has the meaning customarily given such term in
accordance with GAAP.
"Interest Payment Date" means, (a) with respect to any LIBOR Loan, the last
day of each Interest Period applicable to such Loan, and (b) with respect to
Base Rate Loans, the last Business Day of each calendar month and each date a
Base Rate Loan is converted into a LIBOR Loan; provided, however, that if any
Interest Period for a LIBOR Loan exceeds three (3) months, interest shall also
be paid on the date which falls three (3) months after the beginning of such
Interest Period.
"Interest Period" means, as to any LIBOR Loan, the period commencing on the
date of such LIBOR Loan and ending on the numerically corresponding day (or, if
there is no numerically corresponding day, on the last day) in the calendar
month that is one (1), two (2), three (3) or six (6) months thereafter, in each
case as the Borrower may elect; provided, however, that (x) no Interest Period
with respect to a LIBOR Loan shall end later than the Maturity Date, (y) if an
Interest Period would end on a day that is not a Business Day, such Interest
Period shall be extended to the next succeeding Business Day, and (z) interest
shall accrue from and including the first Business Day of an Interest Period to,
but excluding, the last Business Day of such Interest Period.
"Interest Rate Determination Date" means the second Business Day prior to
the first day of the related Interest Period for a LIBOR Loan.
"Investment" means, when used in connection with any Person, any investment
by or of that Person, whether by means of purchase or other acquisition of Stock
or other securities of any other Person or by means of loan or advance (other
than advances to employees for moving or travel expenses, drawing accounts and
similar expenditures in the ordinary course of business), capital contribution,
guaranty or other debt or equity participation or interest, or otherwise, in any
other Person, including any partnership and joint venture interests of such
Person in any other Person.
"Investment Company Act" means the Investment Company Act of 1940, as
amended (15 U.S.C. (S) 80a-1 et seq.), as the same may be in effect from time to
time, or any successor statute thereto.
"IRS" means the Internal Revenue Service and any successor thereto.
"Issuing Bank" means Rabobank or such other Lender as shall replace
Rabobank, with the consent of Requisite Lenders, as the Lender designated to
issue Letters of Credit for the account of the Borrower pursuant to the terms
and conditions of this Agreement.
"John Hancock Debt" means the unsecured Indebtedness of the Borrower in the
principal
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amount not to exceed $80,000,000, evidenced by the Note Purchase Agreement dated
as of March 15, 1998, between the Borrower, John Hancock Mutual Life Insurance
Company and certain other Persons.
"Lenders" means the financial institutions which have executed signature
pages to this Agreement and such other Assignee financial institutions as shall
hereafter execute and deliver an Assignment and Acceptance with respect to all
or any portion of the Commitments and the Loans advanced and maintained pursuant
to the Commitments, in each case pursuant to and in accordance with SECTION
11.2.
"Lending Office" means, with respect to any Lender, the office or offices
of such Lender specified as its "Domestic Lending Office" opposite its name on
the applicable signature page hereto, or such other office or offices of such
Lender as it may from time to time specify in accordance with SECTION 12.6 of
this Agreement.
"Letter of Credit" has the meaning set forth in SECTION 2.1.1(g).
"Letter of Credit Application" means an application given by the Borrower
to the Issuing Bank in the Issuing Bank's standard form, with appropriate
insertions.
"Letter of Credit Commitment" means an amount equal to Ten Million Dollars
($10,000,000), which amount is a sublimit of, and not in addition to, the
Aggregate Commitments of the Lenders, as such may be reduced from time to time
pursuant to this Agreement.
"Letter of Credit Undrawn Amount" means the stated but undrawn amount of
any issued and outstanding Letters of Credit.
"Leverage Ratio" means, as measured at any date of determination on a
rolling four (4) Fiscal Quarter basis, calculated on a consolidated basis for
the Borrower and its Subsidiaries, the ratio of (a) Total Debt to (b) EBITDAP.
"LIBOR" means, with respect to any LIBOR Loan, the London Inter-Bank
Offered Rate (determined solely by the Agent) at which United States Dollar
deposits are offered to Rabobank by prime banks in London, England at or about
11:00 a.m., London time, on the Interest Rate Determination Date with respect to
such LIBOR Loan in an aggregate amount approximately equal to the amount of such
LIBOR Loan and for a period of time comparable to the number of days in the
applicable Interest Period. The determination of LIBOR by the Agent shall be
conclusive in the absence of manifest error.
"LIBOR Loan" means any and all of the Loans funded pursuant to SECTION
2.1.1(e) of this Agreement bearing interest at a rate determined on the basis of
Adjusted LIBOR.
"Lien" means any mortgage, deed of trust, pledge, hypothecation, assignment
for security, security interest, encumbrance, levy, lien or charge of any kind,
whether voluntarily incurred or arising by operation of law or otherwise,
affecting any Property, including any agreement to grant or right to acquire any
of the foregoing, any conditional sale or other title retention agreement, any
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lease in the nature of a security interest, and the filing of or agreement to
file or deliver any financing statement (other than a precautionary financing
statement with respect to a lease that is not in the nature of a security
interest) under the UCC or comparable law of any jurisdiction.
"Loan" in the singular and "Loans" when used in the plural means any and
all of the loans advanced to the Borrower under the Revolving Credit Facility.
"Loan Documents" means this Agreement, the Notes, the Guaranties, all
Letters of Credit, any Letter of Credit Applications, any Rate Contract between
the Borrower and any Lender, and any and all other agreements, guaranties,
documents and instruments heretofore, now or hereafter executed by, on behalf of
or for the benefit of the Borrower or any of its Subsidiaries and delivered to
the Agent or the Lenders pursuant to or in connection with this Agreement, the
Loans or the transactions contemplated hereby, together with all amendments,
modifications, supplements and renewals thereto or thereof.
"Material Adverse Change" means a change in the assets, condition
(financial or otherwise), or business prospects or operations of the Borrower or
any of its Subsidiaries which has, either individually or in the aggregate, a
Material Adverse Effect.
"Material Adverse Effect" means any set of circumstances or events which
(a) has or could reasonably be expected to have any material adverse effect upon
the validity or enforceability of the Borrower's obligation to repay the Loans
or make any other payment required under any Loan Document, (b) is or could
reasonably be expected to be material and adverse to the condition (financial or
otherwise) or business operations of the Borrower and its Subsidiaries, taken as
a whole, or to the ability of the Borrower and its Subsidiaries, taken a whole,
to repay the Loans or make any other payment required under the Loan Documents,
(c) materially impairs or could reasonably be expected to materially impair the
ability of the Borrower and its Subsidiaries, taken as a whole, to perform their
material Obligations, or (d) materially impairs or could reasonably be expected
to materially impair the ability of the Agent or any Lender to enforce any of
its legal remedies pursuant to the Loan Documents.
"Maturity Date" means April 10, 2003, or, if such date is not a Business
Day, the next preceding Business Day.
"Multiemployer Plan" shall mean a "multiemployer plan" as defined in
Section 4001(a)(3) of ERISA, and to which the Borrower or any ERISA Affiliate of
the Borrower is making, or is obligated to make, contributions or has made, or
been obligated to make, contributions within the preceding five (5) years.
"Note" when used in the singular and "Notes" when used in the plural means
any and all of the Revolving Notes.
"Obligations" means all loans, advances, debts, liabilities and obligations
for monetary amounts owing by the Borrower to the Lenders or the Agent, whether
due or to become due, matured or unmatured, liquidated or unliquidated,
contingent or non-contingent, and all covenants
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and duties regarding such amounts, of any kind or nature, present or future,
whether or not evidenced by any note, agreement or other instrument, arising
under any of the Loan Documents. This term includes, without limitation, all
principal, interest (including interest that accrues after the commencement
against the Borrower or any of its Subsidiaries of a proceeding under the
Bankruptcy Code), fees, including, without limitation, any and all arrangement
fees, closing fees, prepayment fees, commitment fees, advisory fees, agent fees
and any and all other fees, expenses, costs or other sums (including Attorney
Costs) chargeable to the Borrower under any of the Loan Documents.
"Off Balance Sheet Liabilities" means, with respect to the Borrower and its
Subsidiaries, (i) any repurchase obligation or other liability of the Borrower
or any of its Subsidiaries with respect to accounts or notes receivable
permitted to be sold by the Borrower or such Subsidiary pursuant to this
Agreement, (ii) any repurchase obligation or other liability of the Borrower or
any of its Subsidiaries with respect to Property leased by such Person pursuant
to an operating lease, and (iii) obligations arising with respect to any other
transaction which is the functional equivalent of, or takes the place of
borrowing but which does not constitute, a liability on the financial statements
of the Borrower; provided, however, that Off Balance Sheet Liabilities shall not
include (a) operating leases which require no payments or a nominal payment by
or due from such Person at the scheduled termination of such operating lease or
pursuant to a required purchase by such Person of the leased property or (b)
"trac" leases of trucks, tractors, trailers or other over-the-road equipment.
"Overadvance" has the meaning set forth in SECTION 2.1.1(d) and SECTION
2.1.3(a).
"Patronage Dividend Certificates" means "patronage dividend certificates"
as defined in Article I, Section 5A of the Bylaws of the Borrower as in effect
on the Closing Date.
"Patronage Dividends" means patronage dividends actually made by the
Borrower to its patrons pursuant to Article VII of the Bylaws of the Borrower as
in effect on the Closing Date.
"Patron Required Deposits" means subordinated deposits required to be made
by patrons of the Borrower.
"PBGC" means the Pension Benefit Guaranty Corporation and any successor
thereto.
"Pension Plan" means any employee pension benefit plan, as defined in
Section 3(2) of ERISA, that is maintained for the employees of the Borrower or
any ERISA Affiliate of the Borrower, other than a Multiemployer Plan.
"Permitted Liens" has the meaning set forth in SECTION 7.1.
"Permitted Right of Others" means a right of others consisting of (a) an
interest (other than a legal or equitable co-ownership interest in any material
Property, an option or right to acquire a legal or equitable co-ownership
interest in any material Property and any interest of a ground lessor under a
ground lease) that does not materially impair the value or use of any material
Property for the purposes for which it is or may reasonably be expected to be
held, (b) an option or right to
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acquire a Lien that would be a Permitted Lien, and (c) the reversionary interest
of a lessor under a lease of Property.
"Person" means any individual, sole proprietorship, partnership, joint
venture, limited liability company, trust, unincorporated organization,
association, corporation, institution, public benefit corporation, firm, joint
stock company, estate, entity or Governmental Authority.
"Potential Event of Default" means a condition or event which, after notice
or lapse of time or both, would constitute an Event of Default.
"Property" means any interest in any kind of property or asset, whether
real, personal or mixed, whether tangible or intangible.
"Pro Rata Share" means, for any Lender, the proportion such Lender's
Commitment has to the Aggregate Commitments.
"Public Utility Holding Company Act" means the Public Utility Holding
Company Act of 1935, as amended (15 U.S.C. (S) 79 et seq.) as the same shall be
in effect from time to time, and any successor statute thereto.
"Rabobank" means Cooperatieve Centrale Raiffeisen-Boerenleenbank B.A.,
"Rabobank Nederland", New York Branch.
"Rate Contract" means any interest rate or currency cap or swap, or other
agreement or arrangement designed to provide protection against fluctuations in
interest or currency exchange rates.
"Redemption Schedule" of Class B Shares means the schedule of payments that
the Borrower reasonably estimates it would be expected to make, under its
redemption policy for Class B Shares as in effect on the Closing Date, in order
to redeem completely such Class B Shares, assuming (i) such redemptions were
made on the last day of each Fiscal Year of the Borrower and (ii) no more Class
B Shares were issued after such date.
"Regulation D" means Regulation D adopted by the Federal Reserve Board (12
C.F.R. Part 204) and any other regulation in substance substituted therefor.
"Regulations G, T, U and X" means, collectively, Regulations G, T, U and X
adopted by the Federal Reserve Board (12 C.F.R. Parts 207, 220, 221 and 224,
respectively) and any other regulation in substance substituted therefor.
"Requirement of Law" means, as to any Person, any law (statutory or
common), treaty, rule, regulation, guideline or determination of an arbitrator
or of a Governmental Authority, in each case applicable to or binding upon the
Person or any of its Property or to which the Person or any of its Property is
subject.
"Requisite Lenders" means any combination of Lenders whose combined Pro
Rata Share
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(and voting interest with respect thereto) of all amounts outstanding under this
Agreement, or, in the event there are no amounts outstanding, the Aggregate
Commitments, is greater than fifty-one percent (51.0%) of all such amounts
outstanding or the Aggregate Commitments, as the case may be.
"Responsible Person" means, as to the Borrower, any of the chief executive
officer, president, chief financial officer, treasurer, corporate controller or
any other officer of the Borrower appointed by resolution of the Board of
Directors of the Borrower and acceptable to Requisite Lenders, in each case
having authority to request Loans hereunder.
"Revolving Credit Availability" has the meaning set forth in SECTION 2.1.1.
"Revolving Credit Facility" means the One Hundred Million Dollar
($100,000,000) revolving credit facility described in SECTION 2.1.1 to be
provided by the Lenders to the Borrower according to each Lender's Pro Rata
Share.
"Revolving Loan" means a Loan advanced to the Borrower under the Revolving
Credit Facility pursuant to SECTION 2.1.1 by the Lenders based on their
Commitments according to their respective Pro Rata Shares percentages, which
Revolving Loan may be in the form of either a Base Rate Revolving Loan or a
LIBOR Loan.
"Revolving Note" when used in the singular and "Revolving Notes" when used
in the plural means any and all promissory notes dated the date of issuance,
executed by the Borrower, and payable to the order of each Lender in the stated
principal amount of such Lender's Commitment, substantially in the form of
EXHIBIT A-1, and any and all replacements, extensions, substitutions and
renewals thereof or therefor.
"Rights of Others" means, as to any Property in which a Person has an
interest, (a) any legal or equitable right, title or other interest (other than
a Lien) held by any other Person in or with respect to that Property, and (b)
any option or right held by any other Person to acquire any such right, title or
other interest in or with respect to that Property.
"SEC" means the Securities and Exchange Commission and any successor
thereto.
"Solvent" has the meaning set forth in SECTION 5.8.
"Stock" means all shares, options, warrants, interests, participation or
other equivalents (regardless of how designated) of or in a corporation or
equivalent entity, whether voting or nonvoting, including, without limitation,
common stock, preferred stock, or any other "equity security" (as such term is
defined in Rule 3a11-1 of the General Rules and Regulations promulgated by the
Securities and Exchange Commission under the Securities Exchange Act of 1934, as
amended).
"Subsidiary" means, with respect to any Person, any corporation,
association, partnership, limited liability company, joint venture or other
business entity of which more than fifty percent (50.0%) of the voting stock or
other voting equity interests (in the case of Persons other than
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corporations) is owned or controlled directly or indirectly by such Person, or a
combination thereof.
"Termination Event" means (a) a "reportable event" described in Section
4043 of ERISA and the regulations issued thereunder (other than a reportable
event not subject to the provision for 30-day notice to the PBGC under such
regulations), or (b) the withdrawal of the Borrower or any of its ERISA
Affiliates from a Pension Plan during a plan year in which it was a "substantial
employer" as defined in Section 4001(a)(2) of ERISA, or (c) the filing of a
notice of intent to terminate a Pension Plan or the treatment of a Pension Plan
amendment as a termination under Section 4041 of ERISA, or (d) the institution
of proceedings to terminate a Pension Plan by the PBGC, or (e) any other event
or condition which might constitute grounds under Section 4042 of ERISA for the
termination of, or the appointment of a trustee to administer, any Pension Plan.
"Total Debt" means, as measured as any date of determination, the sum of
(a) Total Funded Debt plus (b) the unpaid amount of all Patronage Dividend
Certificates that mature on or before the Maturity Date.
"Total Funded Debt" means, as measured at any date of determination, on a
consolidated basis, the total amount of all Indebtedness of (a) the Borrower and
each of its Subsidiaries (other than Grocers Capital Company) or (b) of any
other Person for and as to which the Borrower or any of its Subsidiaries (other
than Grocers Capital Company) is contingently liable, including in each case,
without limitation with respect to the Borrower, any such Subsidiary (other than
Grocers Capital Company) or any such other Person, all Capital Lease
Obligations, the undrawn face amount of all letters of credit (including the
Letters of Credit), all subordinated debt and the aggregate principal amounts of
all Loans outstanding hereunder; provided, however, that Total Funded Debt (i)
shall include the scheduled lease payments for the year following such date on
Contingent Obligations permitted under SECTION 7.3(g) (excluding "percentage
rent" or other contingent rent and payments to be made by the lessee for
property taxes, insurance, utilities, common area maintenance charges and the
like), and (ii) shall not include the value of Patronage Dividend Certificates.
"UCC" means the Uniform Commercial Code as the same may, from time to time,
be in effect in the State of New York.
"Working Capital" means the excess of (a) the consolidated current assets
of the Borrower and its Subsidiaries over (b) the consolidated current
liabilities (other than those under this Agreement) of the Borrower and its
Subsidiaries.
"Year 2000 Issues" has the meaning set forth in SECTION 5.20.
"Year 2000 Plan" has the meaning set forth in SECTION 5.20.
1.2 ACCOUNTING TERMS. Any accounting term used in this Agreement shall
have, unless otherwise specifically provided herein, the meaning customarily
given such term in accordance with GAAP, and all financial data required to be
submitted by this Agreement shall be prepared and computed, unless otherwise
specifically provided herein, in accordance with GAAP. That certain
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terms or computations are explicitly modified by the phrase "in accordance with
GAAP" shall in no way be construed to limit the foregoing. In the event that
GAAP changes during the term of this Agreement such that the covenants contained
in SECTION 8 would then be calculated in a different manner or with different
components, (a) the parties hereto agree to amend this Agreement in such
respects as are necessary to conform those covenants as criteria for evaluating
the Borrower's financial condition to substantially the same criteria as were
effective prior to such change in GAAP and (b) the Borrower shall be deemed to
be in compliance with the covenants contained in the aforesaid subsections
during the sixty (60) day period following any such change in GAAP if and to the
extent that the Borrower would have been in compliance therewith under GAAP as
in effect immediately prior to such change.
1.3 OTHER TERMS. All other undefined terms contained in this Agreement
shall, unless the context indicates otherwise, have the meanings provided for by
the UCC to the extent the same are used or defined therein. The words "herein,"
"hereof" and "hereunder" and other words of similar import refer to this
Agreement as a whole, including the exhibits and schedules hereto, all of which
are by this reference incorporated into this Agreement, as the same may from
time to time be amended, modified or supplemented, and not to any particular
section, subsection or clause contained in this Agreement. The term "including"
shall not be limiting or exclusive, unless specifically indicated to the
contrary. The term "or" is disjunctive; the term "and" is conjunctive. The term
"shall" is mandatory; the term "may" is permissive. Wherever from the context
it appears appropriate, each term stated in either the singular or plural shall
include the singular and plural, and pronouns stated in the masculine, feminine
or neuter gender shall include the masculine, feminine and neuter.
1.4 PERFORMANCE; TIME. Whenever any performance obligation hereunder
(other than a payment obligation) shall be stated to be due or required to be
satisfied on a day other than a Business Day, such performance shall be made or
satisfied on the next succeeding Business Day unless otherwise indicated. In
the computation of periods of time from a specified date to a later specified
date, the word "from" means "from and including"; the words "to" and "until"
each mean "to but excluding", and the word "through" means "to and including."
If any provision of this Agreement refers to any action taken or to be taken by
any Person, or which such Person is prohibited from taking, such provision shall
be interpreted to encompass any and all means, direct or indirect, of taking, or
not taking, such action.
1.5 LAWS. References to any statute or regulation are to be construed as
including all statutory and regulatory provisions consolidating, amending,
replacing, supplementing or interpreting the statute or regulation.
1.6 ROUNDING. Any financial ratios required to be maintained by the
Borrower pursuant to this Agreement shall be calculated by dividing the
appropriate component by the other component, carrying the result to one place
more than the number of places by which such ratio is expressed in this
Agreement and rounding the result up or down to the nearest number (with a
round-up if there is no nearest number) to the number of places by which such
ratio is expressed in this Agreement.
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1.7 SCHEDULES AND EXHIBITS. Any reference to a "Section," "Subsection,"
"Exhibit" or "Schedule" shall refer to the relevant Section or Subsection of or
Exhibit or Schedule to this Agreement, unless specifically indicated to the
contrary.
SECTION 2. THE CREDIT - AMOUNT AND TERMS.
2.1 AMOUNTS AND TERMS OF COMMITMENTS.
2.1.1 REVOLVING CREDIT FACILITY. Upon the terms, subject to the
conditions and in reliance upon the representations and warranties of the
Borrower set forth in this Agreement, and subject further to SECTION 2.1.2(d),
each of the Lenders hereby severally agrees to make Revolving Loans of
immediately available funds to the Borrower, on a revolving basis, from the
Closing until the Business Day immediately preceding the Maturity Date, in an
aggregate principal amount outstanding not to exceed at any time the lesser of
(a) an amount equal to such Lender's Commitment and (b) an amount equal to such
Lender's Pro Rata Share of (i) the Aggregate Commitments of all the Lenders less
(ii) the Letter of Credit Undrawn Amount (the "Revolving Credit Availability").
(a) LIMITATION ON EACH LENDER'S OBLIGATION. With respect to any
Borrowing of Revolving Loans requested by the Borrower pursuant to a complying
Borrowing Notice delivered to the Agent pursuant to SECTION 2.5 of this
Agreement, each Lender's obligation to advance funds in the form of Loans to the
Borrower shall be limited to an amount equal to such Lender's Pro Rata Share of
such Borrowing (obtained by multiplying the Borrowing amount by such Lender's
Pro Rata Share).
(b) FUNDING OF LOANS TO AGENT. Following the Agent's receipt of a
complying Borrowing Notice and the Agent's determination that the conditions
precedent to a requested Borrowing set forth in SECTION 4 of this Agreement have
been duly satisfied, the Agent shall promptly notify each Lender having a
Commitment of (i) the amount of the requested Borrowing and such Lender's Pro
Rata Share thereof and (ii) the requested Funding Date, which (1) if a LIBOR
Loan is requested, shall be no earlier than the third Business Day following the
date on which the Agent receives the Borrower Notice and, (2) if a Base Rate
Loan is requested, shall be the same Business Day. Not later than 12:00 noon,
San Francisco, California time, on the requested Funding Date, each Lender
having a Commitment shall advance its Loan to the Agent at the Agent's Payment
Office in immediately available funds. No Lender shall have any liability to
the Borrower for the failure of such Lender to advance funds for any Loan, nor
shall the Borrower shall have any right to enforce any obligation of a Lender to
fund any Loan, unless and until each condition precedent to the applicable
Borrowing has been duly satisfied or has been waived in writing by Requisite
Lenders. The Agent's determination that the conditions precedent to any
Borrowing have been duly satisfied shall be conclusive and binding on all
Lenders for purposes of determining when Lenders shall be obligated to advance
funds to the Agent.
(c) DISBURSEMENT OF LOANS TO BORROWER. On the requested Funding Date,
the Agent shall disburse in immediately available funds to the Designated
Deposit Account an amount equal to the Loans advanced by the Lenders to the
Agent's Payment Office with respect
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to such Borrowing.
(d) OVERADVANCES. If at any time and for any reason (i) the aggregate
principal amount of the Revolving Loans then outstanding, plus the Letter of
Credit Undrawn Amount shall exceed the Revolving Credit Availability or (ii) the
Letter of Credit Undrawn Amount shall exceed the Letter of Credit Commitment
(the amount of such excess, if any, in each case being an "Overadvance"), the
Borrower shall immediately repay the full amount of such Overadvance, together
with all interest accrued thereon; provided, that in the case of an Overadvance
relating to the Letter of Credit Commitment, such amount shall be held as cash
collateral for undrawn Letters of Credit, and shall immediately be returned to
the Borrower if Letters of Credit in an amount sufficient to eliminate such
Overadvance expire undrawn.
(e) GENERAL PROVISIONS RELATING TO REVOLVING LOANS. Each Revolving
Loan made by a Lender hereunder shall, at the Borrower's option in accordance
with the terms of this Agreement, be either in the form of a Base Rate Loan (a
"Base Rate Revolving Loan") or a LIBOR Loan; provided, however, that in no event
shall the Borrower maintains at any time LIBOR Loans having more than seven (7)
different Interest Periods. The Borrower shall repay the principal amount of
the Revolving Loans in the amounts and in the manner set forth in SECTION 2.3 of
this Agreement and pay interest accrued on the Revolving Loans at the rates and
in the manner set forth in SECTION 2.4 of this Agreement. Amounts borrowed by
the Borrower under the Aggregate Commitments may be repaid and, prior to the
Maturity Date and subject to the applicable terms and conditions precedent to
Borrowings hereunder, re-borrowed.
(f) PERMITTED USES OF REVOLVING LOAN PROCEEDS. The Borrower shall use
the Revolving Loan proceeds only for the purposes of funding working capital and
general corporate needs.
(g) LETTER OF CREDIT SUBLIMIT UNDER REVOLVING CREDIT FACILITY. Without
limiting the generality of the foregoing, each Lender severally agrees that a
Responsible Person of the Borrower may, by delivery of notice to the Agent in
accordance with SECTION 2.5, also request the Issuing Bank to issue one or more
standby or documentary letters of credit under the Letter of Credit Commitment
for the account of the Borrower, which letters of credit shall be in the
standard form of the Issuing Bank (each a "Letter of Credit"); in which event,
after satisfaction by the Borrower of all conditions precedent set forth in
SECTION 4.2, the Issuing Bank shall issue such Letters of Credit subject to and
in accordance with SECTION 2.1.2; provided, however, nothing contained in this
Agreement shall under any circumstance be deemed to require the Issuing Bank to
issue any Letter of Credit which, taking into account the issuance of such
Letter of Credit, would either (i) cause the Letter of Credit Undrawn Amount to
exceed the Letter of Credit Commitment or (ii) cause the aggregate principal
amount of the Revolving Loans then outstanding, plus the Letter of Credit
Undrawn Amount to exceed the Revolving Credit Availability.
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2.1.2 LETTER OF CREDIT SUBFACILITY.
(a) Subject to the terms and conditions of this Agreement and in
reliance upon the representations and warranties of the Borrower set forth
herein, at any time and from time to time from the Closing through the Business
Day immediately prior to the Maturity Date, after satisfaction of all conditions
precedent set forth in SECTION 4.2, the Issuing Bank shall issue for the account
of the Borrower Letters of Credit, provided that a request shall have been made
for each Letter of Credit by a Responsible Person of the Borrower delivering to
the Agent a Borrowing Notice, duly executed with appropriate insertions and as
otherwise required by SECTION 2.5, together with a duly executed Letter of
Credit Application, with appropriate insertions (which Borrowing Notice and
Letter of Credit Application shall have been received by the Issuing Bank prior
to 10:00 a.m., San Francisco, California time, three (3) Business Days prior to
the requested issuing date). No Letter of Credit shall have an expiration date
that is later than one hundred twenty (120) days after the Maturity Date or one
(1) year after the issuance of such Letter of Credit (or any renewal thereof),
whichever is earlier.
(b) Upon issuance of each Letter of Credit, each Lender shall be
deemed to have purchased a participation from the Issuing Bank equal to such
Lender's Pro Rata Share of the original stated amount of such Letter of Credit.
Nothing contained in this Agreement shall under any circumstance be deemed to
require any Lender to participate in the issuance of any Letter of Credit which,
taking into account such Lender's participation in such Letter of Credit, when
added to the aggregate of such Lender's participation in all other issued and
undrawn Letters of Credit, exceeds such Lender's Pro Rata Share of the Letter of
Credit Commitment.
(c) Unless otherwise expressly provided therein, each beneficiary
named by the Borrower with respect to a Letter of Credit issued hereunder shall
be permitted to make full or partial draws under such Letter of Credit. Upon
the making of any draw under a Letter of Credit by such beneficiary, the full
amount of such draw shall be immediately due and payable by the Borrower to the
Issuing Bank. The Issuing Bank shall immediately give written notification of
the amount of such draw to the Agent, each Lender and the Borrower and to the
extent that the Issuing Bank has not been immediately reimbursed by the Borrower
for any payment required to be made by the Issuing Bank under such Letter of
Credit (and all commissions incurred but unpaid in connection therewith), each
Lender shall, according to its Pro Rata Share of such Letter of Credit,
reimburse the Issuing Bank immediately upon written demand for the amount of
such payment (and such unpaid commissions). The obligation of each Lender to so
reimburse the Issuing Bank shall be absolute and unconditional and shall not be
affected by the occurrence of a Potential Event of Default or Event of Default
or any other occurrence or event. Any such reimbursement shall not relieve or
otherwise limit or impair the obligation of the Borrower to reimburse the
Lenders for the amount of any payment made by the Issuing Bank under any Letter
of Credit.
(d) Without limiting the generality of the preceding subsections of
this SECTION 2.1.2, in the event the Borrower shall fail to reimburse
immediately the Issuing Bank for any honor of a draw on any Letter of Credit as
confirmed by the Issuing Bank's written notice and demand for payment from each
Lender of its ratable participation amount pursuant to SECTION 2.1.2(c), each
Lender shall be deemed to have made, without further notice to the Borrower,
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a Base Rate Loan in the principal amount equal to such Lender's Pro Rata Share
of the amount drawn under such Letter of Credit (plus any unpaid commission);
and, for this purpose, the conditions precedent set forth in SECTION 4.2 shall
not apply. Any Base Rate Loan deemed to be advanced after the Maturity Date,
shall be immediately due and payable. The proceeds of such Base Rate Loans shall
be applied to reimburse the Issuing Bank for such payment required to be made by
the Issuing Bank under the Letter of Credit. In the event that any Base Rate
Loan shall be deemed to be made to the Borrower pursuant to this SECTION
2.1.2(d), such Base Rate Loan shall be deemed to have been made as of the date
of the honor of the draw under the respective Letter of Credit and interest
shall accrue thereon at the same rate as provided for other Base Rate Loans
under this Agreement. In the event that the Issuing Bank does not receive the
proceeds of any Base Rate Loans made pursuant to this subsection by 12:00 noon,
San Francisco, California time, on the date that the draw on the Letter of
Credit is honored, the Lender whose funds are delayed shall pay interest to the
Issuing Bank on the amount not received at the Federal Funds Rate from the date
of such honor until the date on which the Issuing Bank receives such proceeds by
12:00 noon.
(e) (i) The Issuing Bank may resign as Issuing Bank by giving
notice to the Agent, the Lenders and the Borrower, and such resignation shall be
effective thirty (30) days after the giving of such notice, and as to any Letter
of Credit outstanding upon the then current expiry date on such Letter of
Credit. If the Issuing Bank shall resign as the Issuing Bank under this
Agreement, Requisite Lenders shall appoint a successor Issuing Bank from among
the Lenders, with the consent of such successor.
(ii) If an Issuing Bank has resigned and no successor
Issuing Bank is appointed prior to thirty (30) days after such resignation, then
until an appointment of a successor Issuing Bank is made, in the event of a
request by the Borrower for the issuance of a Letter of Credit under this
SECTION 2.1.2, each Lender shall issue its own Letter of Credit in an amount
equal to such Lender's Pro Rata Share of the amount of such requested Letter of
Credit upon the terms and conditions set forth in SECTIONS 2.1.1 and 2.1.2, with
such changes as are appropriate to apply to an individual Lender issuing a
Letter of Credit without participation. In the event of an unreimbursed draw on
a Letter of Credit issued pursuant to the provisions of this SECTION
2.1.2(e)(ii), each Lender which has honored such a draw shall be deemed to have
made a Base Rate Loan to reimburse itself for the draw under such Letter of
Credit.
(iii) With respect to any Letter of Credit issued under
SECTION 2.1.2(e)(ii), the reference to "Issuing Bank" in SECTION 2.8(d) shall be
to each Lender issuing a Letter of Credit and all fees due (including the fee
payable to the Issuing Bank) under SECTION 2.8(b) shall be payable to the
Lenders according to their respective Pro Rata Shares of the Aggregate
Commitments.
(iv) Upon the acceptance of its appointment as a successor
Issuing Bank hereunder, such successor Issuing Bank shall succeed to all the
rights, powers and duties of the retiring Issuing Bank with respect to any
Letters of Credit issued subsequent to such acceptance, and the term "Issuing
Bank" shall mean such successor issuing bank with regard to such subsequently
issued Letters of Credit. Whether or not a successor Issuing Bank is appointed,
the retiring Issuing Bank shall retain all the rights, powers and duties of an
Issuing Bank with respect
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to any Letters of Credit previously issued by such retiring Issuing Bank, and
the term "Issuing Bank" shall mean such retiring Issuing Bank with respect to
such previously issued Letters of Credit.
(f) The obligation of the Borrower to reimburse the Lenders for
drawings made under the Letters of Credit shall be absolute, unconditional and
irrevocable, and shall be performed strictly in accordance with the terms of
this Agreement and such Letters of Credit, under all circumstances whatsoever,
including the following circumstances:
(i) Any lack of validity or enforceability of any Letter of Credit,
the obligation supported by such Letter of Credit or any other agreement or
instrument relating thereto (collectively, the "Related LC Documents");
(ii) Any amendment or waiver of or any consent to or departure from
all or any of the Related LC Documents;
(iii) The existence of any claim, set-off, defense or other rights
which the Borrower may have at any time against any beneficiary or any
transferee of any Letter of Credit (or any Persons or entities for whom any such
beneficiary or any such transferee may be acting), the Lenders, the Agent or any
other Person, whether in connection with the Loan Documents, the Related LC
Documents or any unrelated transaction;
(iv) Any breach of contract or other dispute between the Borrower
and any beneficiary or any transferee of any Letter of Credit (or any Persons or
entities for whom such beneficiary or any such transferee may be acting), the
Lenders, the Agent or any other Person;
(v) Any draft, statement or any other document presented under any
Letter of Credit proving to be forged, fraudulent, invalid or insufficient in
any respect or any statement therein being untrue or inaccurate in any respect
whatsoever; or
(vi) Any delay, extension of time, renewal, compromise or other
indulgence or modification granted or agreed to by the Issuing Bank, with or
without notice to or approval by the Borrower in respect of any of the
Borrower's Indebtedness under this Agreement.
(g) The Borrower assumes all risks of the acts or omissions of any
beneficiary and any transferee of each Letter of Credit; provided, however, this
assumption with respect to the Agent and the Lenders, including the Issuing
Bank, is not intended to, and shall not, preclude the Borrower's pursuing such
rights and remedies as it may have against any such beneficiary or transferee of
a Letter of Credit at law or under any other agreement. Neither the Agent nor
any Lender, including the Issuing Bank, nor any of their officers or directors
shall be liable or responsible for, without limitation: (1) the use which may be
made of any Letter of Credit or for any acts or omissions of any beneficiary and
any transferee of any Letter of Credit in connection therewith; or (2) the
validity, sufficiency or genuineness of documents, or of any endorsement(s)
thereon, even if such documents should in fact prove to be in any or all
respects invalid, insufficient, fraudulent or forged. In furtherance and not in
limitation of the foregoing, the Issuing Bank may accept documents that appear
on their face to be in order, without responsibility
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for further investigation, regardless of any notice or information to the
contrary.
(h) Subject to the laws, customs and practices of the trade in the
area where the beneficiary is located and to the extent not otherwise
inconsistent with the provisions of this SECTION 2.1.2, each Letter of Credit
will be subject to, and performance under each Letter of Credit by the Issuing
Bank, its correspondents, and the beneficiary will be governed by, UCC Article 5
and the "Uniform Customs and Practice for Documentary Credit (1993 Revision),
International Chamber of Commerce, Publication No. 500," or by any later Uniform
Customs and Practice fixed by later Congresses of the International Chamber of
Commerce as in effect on the date the Letter of Credit is issued; provided,
however, that to the extent any conflict exists between UCC Article 5 and such
Uniform Customs and Practices then in effect, UCC Article 5 shall control.
2.2 NOTES.
(a) REVOLVING NOTES. The Revolving Loans made by each Lender shall be
evidenced by separate Revolving Notes executed by the Borrower and made payable
to the order of such Lender in the stated principal amount equal to its
Commitment.
(b) NOTATIONS IN LENDERS' BOOKS AND RECORDS. Each Lender shall make
notations in its books and records regarding the date, amount and maturity of
each Loan made by it and the amount of each repayment or prepayment of principal
and payment of interest made by the Borrower with respect to such Loan. Each
Lender is irrevocably authorized by the Borrower to endorse its Note and each
Lender's record shall constitute a rebuttable presumption as to the matters set
forth therein; provided, however, that the failure of a Lender to make, or an
error in making, such a notation with respect to any Loan shall not limit or
otherwise affect the Obligations of the Borrower hereunder or under any such
Note to such Lender.
2.3 REPAYMENT OF THE LOANS. Subject to the terms of this Agreement
relating to the acceleration of maturities by the Lenders, the Borrower shall
repay the Lenders the entire outstanding principal amount of the Revolving Loans
and all other unpaid amounts outstanding under the Revolving Credit Facility on
the Maturity Date.
2.4 PAYMENT OF INTEREST ON THE LOANS.
(a) INTEREST RATES. Subject to SECTION 2.4(d) of this Agreement, each
Loan shall bear interest on the outstanding principal amount thereof from the
date when made, continued or converted until paid in full at a rate per annum
equal to the Base Rate with respect to Base Rate Loans, the Adjusted LIBOR plus
the Applicable Margin with respect to LIBOR Loans.
(b) INTEREST PAYMENT DATES. Interest on each Loan shall be paid in
arrears on each Interest Payment Date. Interest shall also be paid on the date
of any prepayment of any Loans pursuant to this Agreement for the portion of the
Loans so prepaid and upon payment (including prepayment) in full thereof.
(c) INTEREST UPON EVENTS OF DEFAULT. Upon the occurrence of an Event
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of Default and so long as such Event of Default shall continue, including after
acceleration (whether before or after entry of judgment), the Borrower shall, at
the option of Requisite Lenders, pay interest on the principal amount of each
Loan then outstanding at a rate per annum which is determined by adding two
percent (2.0%) to the interest rate otherwise applicable to such Loan.
(d) LIMITATIONS ON INTEREST RATES. Notwithstanding any provision in
this Agreement, the Notes or any of the other Loan Documents, the total
liability for payments in the nature of interest shall not exceed the applicable
limits imposed by any applicable federal or state interest rate laws. If any
payments in the nature of interest, additional interest and other charges made
hereunder or under any of the Loan Documents are held to be in excess of the
applicable limits imposed by any applicable federal or state law, the amount
held to be in excess shall be considered payment of principal under the Notes
and the indebtedness evidenced thereby shall be reduced by such amount in the
inverse order of maturity so that the total liability for payments in the nature
of interest, additional interest and other charges shall not exceed the
applicable limits imposed by any applicable federal or state interest rate laws.
2.5 PROCEDURE FOR THE BORROWING OF LOANS.
(a) Each Borrowing of Loans shall be made upon the Borrower's
irrevocable written notice delivered to the Agent in the form of a Borrowing
Notice, executed by a Responsible Person of the Borrower, with appropriate
insertions (which Borrowing Notice must be received by the Agent (i) prior to
10:00 a.m., San Francisco, California time, three (3) Business Days prior to
the requested Funding Date, in the case of LIBOR Loans, and (ii) prior to 10:00
a.m., San Francisco, California time on the requested Funding Date, in the case
of Base Rate Loans), specifying:
(i) the amount of the Borrowing, which shall be in a minimum amount
of One Million Dollars ($1,000,000) or any integral multiple of One Hundred
Thousand Dollars ($100,000) in excess thereof;
(ii) the requested Funding Date, which shall be a Business Day;
(iii) whether the Borrowing is to be comprised of LIBOR Loans or Base
Rate Loans; and
(iv) the duration of the Interest Period applicable to any such
LIBOR Loans included in such notice. If the Borrowing Notice shall fail to
specify the duration of the Interest Period for any Borrowing comprised of LIBOR
Loans, such Interest Period shall be deemed to be one (1) month.
(b) Upon receipt of the Borrowing Notice, the Agent will promptly
notify each Lender of the amount of such Lender's Pro Rata Share of the
requested Borrowing.
(c) Each Lender will make the amount of its Pro Rata Share of the
Borrowing available to the Agent for the account of the Borrower at the Agent's
Payment Office by
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1:00 p.m., San Francisco, California time, on the Funding Date requested by the
Borrower in funds immediately available to the Agent. The proceeds of all such
Loans will then be made available to the Borrower on the Funding Date by the
Agent by wire transfer to the Designated Deposit Account. No Borrowing of Loans
shall be deemed made to the Borrower, and no interest shall accrue on any such
Borrowing, until the related funds have been deposited in the Designated Deposit
Account.
(d) Unless all Lenders shall otherwise consent, during the existence
of a Potential Event of Default or Event of Default, the Borrower may not elect
to have a Loan made as a LIBOR Loan.
2.6 CONVERSION AND CONTINUATION ELECTIONS.
(a) The Borrower may upon irrevocable written notice from the
Borrower to the Agent:
(i) elect to convert on any Business Day, Base Rate Loans in an
amount equal to One Million Dollars ($1,000,000) or any integral multiple of One
Hundred Thousand Dollars ($100,000) in excess thereof, into LIBOR Loans; or
(ii) elect to convert on any Interest Payment Date any LIBOR Loans
maturing on such Interest Payment Date into Base Rate Loans; or
(iii) elect to continue on any Interest Payment Date any
LIBOR Loans maturing on such Interest Payment Date (or any part thereof in an
amount equal to One Million Dollars ($1,000,000) or any integral multiple of One
Hundred Thousand Dollars ($100,000) in excess thereof).
(b) The Borrower shall deliver a Conversion/Continuation Notice in
accordance with SECTION 12.6 of this Agreement to be received by the Agent (i)
prior to 10:00 a.m., San Francisco, California time, at least three (3) Business
Days in advance of the conversion date or continuation date, if any Loans are to
be converted into or continued as LIBOR Loans; and (ii) prior to 10:00 a.m., San
Francisco, California time on the conversion date, if any Loans are to be
converted into Base Rate Loans; specifying:
(i) the proposed Conversion Date or Continuation Date;
(ii) the aggregate amount of Loans to be converted or
continued;
(iii) the nature of the proposed conversion or continuation;
and
(iv) the duration of the requested Interest Period.
(c) If upon the expiration of any Interest Period applicable to any
LIBOR Loans, the Borrower shall have failed to have given due notice to the
Agent of the Borrower's selection of a new Interest Period to be applicable to
such LIBOR Loans, the Borrower shall be deemed to have elected to convert such
LIBOR Loans into Base Rate Loans.
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(d) Upon receipt of a Conversion/Continuation Notice, the Agent will
promptly notify each Lender thereof, or, if no timely notice is provided by the
Borrower, the Agent will promptly notify each Lender of the details of any
automatic conversion. All conversions and continuations shall be made according
to each Lender's applicable Pro Rata Share of the outstanding principal amounts
of the Loans with respect to which the notice was given.
(e) Unless all Lenders shall otherwise consent, during the existence
of a Potential Event of Default or an Event of Default, the Borrower may not
elect to have a Loan converted into or continued as a LIBOR Loan.
2.7 VOLUNTARY REDUCTION IN AGGREGATE COMMITMENTS. Subject to this SECTION
2.7 and SECTION 3.5, the Borrower may, at any time and from time to time, elect
to permanently reduce the Aggregate Commitments by delivering to the Agent
written notice thereof (a "Reduction Notice"). The Reduction Notice shall (a)
specify the date and amount of such reduction and (b) in the event such proposed
reduction in the Aggregate Commitments would, pursuant to this Agreement, give
rise to the requirement that the Borrower prepays any of the Loans in order to
comply with the Revolving Credit Availability, then such notice shall (i) state
whether such prepayment is to be applied to Base Rate Loans or LIBOR Loans, or
any combination thereof, and (ii) if such prepayment consists solely of Base
Rate Loans, the Reduction Notice shall be delivered to the Agent at least one
(1) Business Day prior to the effective date for such proposed reduction in the
Aggregate Commitments, or, if such prepayment (or any portion thereof) consists
of LIBOR Rate Loans, the Reduction Notice shall be delivered to the Agent at
least three (3) Business Days prior to the effective date for such proposed
reduction in the Aggregate Commitments. Such notice shall be irrevocable and
the Agent shall promptly notify each Lender thereof and of such Lender's Pro
Rata Share of such reduction in the Aggregate Commitments and, as applicable,
prepayment of Loans. Any prepayment of Loans required to be made by the Borrower
pursuant to a reduction in the Aggregate Commitments shall be due and payable on
the effective date for such reduction, together with accrued interest to such
date on the principal amount prepaid and any amounts required pursuant to
SECTION 3.5 of this Agreement, but otherwise without premium or penalty.
Notwithstanding anything to the contrary, any prepayments pursuant to this
SECTION 2.7 shall be applied first to any Base Rate Loans then outstanding and
then to LIBOR Loans with the shortest Interest Periods remaining.
2.8 FEES.
(a) COMMITMENT FEE FOR PROVIDING COMMITMENTS. In consideration of the
Lenders' agreement to commit to make the Revolving Loans available to the
Borrower as contemplated by this Agreement, the Borrower agrees to pay to the
Agent from time to time, on behalf of and for the ratable benefit of the Lenders
according to their respective Pro Rata Shares of the Aggregate Commitments, a
commitment fee in an amount equal to the Applicable Commitment Fee Percentage
for Revolving Loans multiplied by the average daily difference between the
Aggregate Commitments and (i) the sum of the aggregate outstanding principal
amount of Revolving Loans plus (ii) the Letter of Credit Undrawn Amount, due and
payable quarterly in arrears on the last Business Day of each March, June,
September and December, with the final such payment due and payable on the
Maturity Date.
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(b) LETTERS OF CREDIT FEES AND COMMISSIONS.
(i) The Borrower shall pay to the Issuing Bank for the account of
each Lender according to its Pro Rata Share a letter of credit participation fee
equal to the number of days between the date of such issuance through the expiry
date of such Letter of Credit, (1) multiplied by the face amount of such Letter
of Credit, (2) multiplied by the Applicable Margin, and (3) divided by 360. Such
participation fees will be payable by the Borrower to the Issuing Bank in
arrears on the last day of each Fiscal Quarter during which each Letter of
Credit is issued and undrawn and on the expiry date for each standby Letter of
Credit, and such amounts received by the Issuing Bank shall promptly be paid to
the Agent for distribution to the Lenders.
(ii) Issuance fees for sight documentary Letters of Credit, in
accordance with the then current standard schedule of such fees of the Issuing
Bank, will be paid by the Borrower upon issuance and the aggregate of such fees
received by the Issuing Bank during any Fiscal Quarter will be distributed by
the Issuing Bank to the Agent for distribution to the Lenders promptly upon the
Issuing Bank's receipt thereof.
(iii) The Borrower shall pay to the Issuing Bank, upon demand, all
standard charges of the Issuing Bank in connection with the issuance, extension,
renewal, modification, cancellation or negotiation of any Letter of Credit,
which amounts shall include, without limitation, the issuance fee set forth in
the Fee Letter. No fees or commissions paid in respect of any Letter of Credit
shall be refundable.
2.9 CALCULATION OF INTEREST AND FEES. Interest on all LIBOR Loans shall
be computed on the basis of a 360-day year and the actual number of days
elapsed. Interest on all Base Rate Loans shall be computed on the basis of a
365-day year and the actual number of days elapsed. All fees payable hereunder
shall be computed on the basis of a 360-day year and actual days elapsed. In
computing interest on any Loan, the date of the making of such Loan shall be
included and the date of payment shall be excluded; provided, however, that if
any Loan is repaid on the same day on which it is made, such day shall be
included in computing interest on such Loan. Each change in the interest rate
of the Base Rate Loans based on changes in the Base Rate and each change in the
interest rate of LIBOR Loans based on changes in the Eurodollar Reserve
Percentage shall be effective on the effective date of such change and to the
extent of such change. The Agent shall give the Borrower prompt notice of any
such change in the Base Rate or Eurodollar Reserve Percentage; provided,
however, that any failure by the Agent to provide the Borrower with notice
hereunder shall not affect the Lenders' right to make changes in the interest
rate of the Base Rate Loans based on changes in the Base Rate or changes in the
interest rate of LIBOR Loans based on changes in the Eurodollar Reserve
Percentage.
2.10 PAYMENTS. All repayments or prepayments of principal and all payments
of interest, fees, costs, expenses and other sums chargeable to the Borrower
under this Agreement, the Notes or any of the other Loan Documents shall be in
lawful money of the United States of America in immediately available funds and
delivered to the Agent, on behalf and for the benefit of the Lenders, not later
than 11:00 a.m., San Francisco, California time, on the date due at the Agent's
Payment Office.
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2.11 PAYMENT ON NON-BUSINESS DAYS. Whenever any payment to be made under
this Agreement, the Notes or any of the other Loan Documents shall be stated to
be due on a day which is not a Business Day, such payment shall be made on the
next succeeding Business Day and such extension of time shall in such case be
included in the computation of the payment of interest thereon.
2.12 APPLICATION OF PAYMENTS. Except as otherwise expressly provided in
this Agreement or in any other Loan Document, all payments, when received by the
Lenders or the Agent, on behalf of Lenders, shall be applied in the following
order: (a) then due and payable fees, costs and expenses of the Agent and the
Lenders; (b) then due and payable interest payments on Revolving Credit Loans;
and (c) then due and payable principal payments on Revolving Credit Loans. In
addition, each Lender is authorized to, and at its sole option may, for the
benefit of the Lenders and the Agent, make advances on behalf of the Borrower
for payment of any and all fees, expenses, charges, costs, principal and
interest incurred hereunder or under the other Loan Documents. To the extent
permitted by law, all amounts advanced by any Lender hereunder or under other
provisions of the Loan Documents shall accrue interest thereon at the Base Rate.
2.13 DISTRIBUTION OF PAYMENTS. The Agent shall immediately distribute to
each Lender, at such address as each Lender shall designate, such Lender's
interest in all repayments and prepayments of principal and all payments of
interest, loan fees, commitment fees and other fees, expenses and costs received
by the Agent on the same day and in the same type of funds as payment was
received. In the event the Agent does not distribute such payments on the same
day received, such payment shall accrue interest at the Federal Funds Rate,
which shall be payable by the Agent. The Agent shall indemnify and hold the
Borrower harmless from any claim for interest by any Lender under this SECTION
2.13.
2.14 AGENT'S RIGHT TO ASSUME FUNDS AVAILABLE FOR LOANS. Unless the Agent
shall have been notified by any Lender no later than the Business Day prior to
the respective Funding Date of any Loan that such Lender does not intend to make
available to the Agent immediately available funds equal to such Lender's Pro
Rata Share of the total principal amount of such Loan, the Agent may assume that
such Lender has advanced funds in the amount of such Loan to the Agent on the
applicable Funding Date and the Agent may, in reliance upon such assumption,
make available to the Borrower corresponding funds. The Agent agrees to give
prompt notice to the Borrower in the event it advances funds on behalf of a
Lender under this SECTION 2.14; provided, that failure to give such notice shall
in no way limit, restrict or otherwise affect the Borrower's obligations or the
Agent's or any Lender's rights or remedies under this Agreement and the other
Loan Documents. If the Agent has made funds available to the Borrower based on
such assumption and such Loan is not in fact made available to the Agent by such
Lender, the Agent shall be entitled to recover the corresponding amount of such
Loan on demand from such Lender. If such Lender does not promptly pay such
corresponding amount upon the Agent's demand, the Agent shall notify the
Borrower and the Borrower shall repay such Loan to the Agent. The Agent also
shall be entitled to recover from such Lender interest on such Loan in respect
of each day from the date such Loan was made by the Agent to the Borrower to the
date such corresponding amount is recovered by the Agent at the Federal Funds
Rate, and the Agent shall indemnify and hold harmless the Borrower
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from any claim for such interest.
2.15 AGENT'S RIGHT TO ASSUME PAYMENTS WILL BE MADE BY THE BORROWER. Unless
the Agent shall have been notified by the Borrower prior to the date on which
any payment to be made by the Borrower hereunder is due that the Borrower does
not intend to remit such payment, the Agent may, in its discretion, assume that
the Borrower has remitted such payment when so due and the Agent may, in its
discretion and in reliance upon such assumption, make available to each Lender
on such payment date an amount equal to such Lender's Pro Rata Share of such
assumed payment. If the Borrower has not in fact remitted such payment to the
Agent, each Lender shall forthwith on demand repay to the Agent the amount of
such assumed payment made available to such Lender, together with interest
thereon in respect of each date from and including the date such amount was made
available by the Agent to such Lender to the date such amount is repaid to the
Agent at the Federal Funds Rate.
SECTION 3. TAXES, YIELD PROTECTION AND ILLEGALITY.
3.1 TAXES.
(a) Subject to SECTION 3.1(h) of this Agreement, any and all payments
by the Borrower to the Lenders or the Agent under this Agreement shall be made
free and clear of, and without deduction or withholding for, any and all present
or future taxes, fees, duties, levies, imposts, non-income tax deductions, non-
income tax charges or non-income tax withholdings, whatsoever imposed by any
Governmental Authority, excluding, in the case of each Lender and the Agent,
such taxes as are imposed on or measured by the net income of any Lender or the
Agent by any jurisdiction under the laws of which such Lender or the Agent, as
the case may be, is organized or maintains a Lending Office or any political
subdivision thereof (all such non-excluded taxes, levies, imposts, deductions,
charges, withholdings and liabilities being hereinafter referred to as "Taxes").
(b) In addition, the Borrower shall pay any present or future stamp or
documentary taxes or any other excise or property taxes, charges or similar
levies which arise from any payment made hereunder or from the execution,
delivery or registration of, or otherwise with respect to, this Agreement or any
other Loan Documents (hereinafter referred to as "Other Taxes").
(c) Subject to SECTION 3.1(a) and 3.1(h) of this Agreement, if any
Taxes or Other Taxes are directly asserted or imposed against any Lender or the
Agent, the Borrower shall indemnify and hold harmless such Lender and the Agent
for the full amount of the Taxes or Other Taxes (including any Taxes or Other
Taxes asserted or imposed by any jurisdiction on amounts payable under this
SECTION 3.1) paid by such Lender or the Agent and any liability (including
penalties, interest, additions to tax and expenses) arising therefrom or with
respect thereto, whether or not such Taxes or Other Taxes were correctly or
legally asserted or imposed. Payment under this indemnification shall be made
within thirty (30) days from the date such Lender or the Agent makes written
demand therefor (provided that the Borrower shall have the right to contest in
good faith any such Taxes or Other Taxes through appropriate proceedings). Any
Lender in its discretion also may, but shall not be obligated to, pay such Taxes
or Other Taxes and the Borrower will promptly pay,
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within fifteen (15) days after written demand therefor by such Lender or the
Agent, such additional amounts (including any penalties, interest or expenses)
as is necessary in order that the net amount received by such Lender after the
payment of such Taxes or Other Taxes (including any Taxes on such additional
amount) shall equal the amount such Lender would have received had not such
Taxes or Other Taxes been asserted or imposed.
(d) If the Borrower shall be required by law to deduct or withhold any
Taxes or Other Taxes from or in respect of any sum payable hereunder to any
Lender or the Agent, then, subject to SECTION 3.1(h) of this Agreement:
(i) the sum payable shall be increased as necessary so that after
making all required deductions (including deductions applicable to additional
sums payable under this SECTION 3.1) such Lender or the Agent, as the case may
be, receives an amount equal to the sum it would have received had no such
deduction or withholding been made;
(ii) The Borrower shall make such deduction or withholding;
(iii) The Borrower shall pay the full amount deducted to the
relevant taxation authority or other authority in accordance with applicable
law; and
(iv) To the extent that the amount paid by the Borrower to the
relevant taxation or other authority results in an excess payment or credit to a
Lender or the Agent on account of such Taxes or Other Taxes, such Lender or the
Agent shall promptly refund such excess amount to the Borrower.
(e) Within thirty (30) days after the date of any payment by the
Borrower of Taxes or Other Taxes, the Borrower, upon the Agent's request, shall
furnish to the Agent the original or a certified copy of a receipt evidencing
payment thereof, or other evidence of payment satisfactory to the Agent.
(f) If the Borrower fails to pay any Taxes or Other Taxes when due to
the appropriate taxing authority or fails to furnish to the Agent the required
receipts or other required documentary evidence, the Borrower shall indemnify
the Agent and the Lenders for any incremental Taxes or Other Taxes, interest or
penalties that may become payable by the Agent and any such Lenders as a result
of any such failure.
(g) Each of the Agent and any Lender which is a foreign Person (i.e.,
a Person other than a United States Person for United States Federal income tax
purposes) agrees that:
(i) in the case of any Lender which is a "bank" within the meaning
of Section 881(c)(3)(a) of the Code,
(1) it shall, no later than the Closing Date (or, in the case of
a Lender which becomes a party hereto pursuant to SECTION 11.2 of this Agreement
after the Closing Date, the date upon which such Lender becomes a party hereto)
deliver to the Borrower
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through the Agent two (2) accurate and complete signed originals of IRS Form
4224 or any successor thereto ("Form 4224"), or two (2) accurate and complete
signed originals of IRS Form 1001 or any successor thereto ("Form 1001"), as
appropriate, in each case indicating that such Lender is on the date of delivery
thereof entitled to receive payments of principal, interest and fees under this
Agreement free from withholding of United States Federal income tax;
(2) if at any time the Agent or such Lender makes any changes
necessitating a new Form 4224 or Form 1001, it shall within thirty (30) days
after such change becomes effective deliver to the Borrower through the Agent in
replacement for, or in addition to, the forms previously delivered by it
hereunder, two (2) accurate and complete signed originals of Form 4224; or two
(2) accurate and complete signed originals of Form 1001, as appropriate, in each
case indicating that such Lender is on the date of delivery thereof entitled to
receive payments of principal, interest and fees under this Agreement free from
withholding of United States Federal income tax;
(ii) in the case of any Lender other than a Lender described in clause
(i) above,
(1) it shall, no later than the Closing Date (or, in the case of a
Lender which becomes a party hereto pursuant to SECTION 11.2 of this Agreement
after the Closing Date, the date upon which Lender becomes a party hereto)
deliver to the Borrower through the Agent two (2) accurate and complete signed
originals of a certificate substantially in the form of EXHIBIT E hereto (any
such certificate, a "Non-Bank Lender Tax Certificate") and two (2) accurate and
complete signed originals of IRS Form W-8 or any successor thereto ("Form W-8")
certifying to such Lender's legal entitlement (assuming compliance by the
Borrower with the terms of this Agreement) to an exemption whereby such Lender
is on the date of delivery thereof entitled to receive payments of principal,
interest and fees under this Agreement free from withholding of United States
Federal income tax;
(2) if at any time the Agent or such Lender makes any changes
necessitating a new Form W-8, it shall within thirty (30) days after such change
becomes effective deliver to the Borrower through the Agent in replacement for,
or in addition to, the forms previously delivered by it hereunder, two (2)
accurate and complete signed originals of Form W-8 certifying to such Lender's
legal entitlement (assuming compliance by the Borrower with the terms of this
Agreement) to an exemption whereby such Lender is on the date of delivery
thereof entitled to receive payments of principal, interest and fees under this
Agreement free from withholding of United States Federal income tax;
(iii) it shall, before or within thirty (30) days after the occurrence of
any event (including the passing of time but excluding any event mentioned in
(i) or (ii), above) requiring a change in or renewal of the most recent Form
4224, Form 1001 or Form W-8 previously delivered by such Lender, deliver to the
Borrower through the Agent two (2) accurate and complete original signed copies
of Form 4224, Form 1001 or Form W-8 in replacement for the forms previously
delivered by such Lender; and
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(iv) it shall, promptly upon any Lender's or the Agent's reasonable
request to that effect, deliver to such Lender or the Agent (as the case may be)
such other forms or similar documentation as may be required from time to time
by any applicable law, treaty, rule or regulation in order to establish such
Lender's tax status for withholding purposes.
(h) The Borrower will not be required to pay any additional amounts in
respect of United States Federal income tax pursuant to SECTION 3.1(d) of this
Agreement to the Agent or any Lender for the account of any Lending Office of
such Lender:
(i) if the obligation to pay such additional amounts would not have
arisen but for a failure by such Lender to comply with its obligations under
SECTION 3.1(g) of this Agreement in respect of such Lending Office; or
(ii) if such Lender shall have delivered to the Borrower a Form 4224,
Form 1001 or Form W-8 in respect of such Lending Office pursuant to SECTION
3.1(g) of this Agreement, and such Lender shall not at any time be entitled to
exemption from deduction or withholding of United States Federal income tax in
respect of payments by the Borrower hereunder for the account of such Lending
Office for any reason other than a change in United States law or regulations or
in the official interpretation of such law or regulations by any Governmental
Authority charged with the interpretation or administration thereof (whether or
not having the force of law) after the date of delivery of such form.
(i) If, at any time, the Borrower requests any Lender to deliver any
forms or other documentation in addition to those required pursuant to SECTION
3.1(g)(iv) of this Agreement, then the Borrower shall, on demand of such Lender
through the Agent, reimburse such Lender for any costs and expenses (including
Attorney Costs) reasonably incurred by such Lender in the preparation or
delivery of such forms or other documentation.
(j) If the Borrower is required to pay additional amounts to any Lender or
the Agent pursuant to SECTION 3.1(d) of this Agreement, then such Lender shall
use its reasonable best efforts (consistent with legal and regulatory
restrictions) to change the jurisdiction of its Lending Office so as to
eliminate any such additional payment by such Lender which may thereafter accrue
if such change in the judgment of such Lender is not otherwise disadvantageous
to such Lender.
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3.2 ILLEGALITY.
(a) If any Lender shall determine that the introduction of any
Requirement of Law, or any change in any Requirement of Law or in the
interpretation or administration thereof, has made it unlawful, or that any
central bank or other Governmental Authority has asserted that it is unlawful,
for any Lender or its Lending Office to make LIBOR Loans, then, on notice
thereof by such Lender to the Borrower through the Agent, the obligation of such
Lender to make LIBOR Loans shall be suspended until such Lender shall have
notified the Agent and the Borrower that the circumstances giving rise to such
determination no longer exists.
(b) If any Lender shall determine that it is unlawful to maintain any
LIBOR Loan, the Borrower shall prepay in full all LIBOR Loans of that Lender
then outstanding, together with interest accrued thereon, either on the last day
of the Interest Period thereof if such Lender may lawfully continue to maintain
such LIBOR Loans to such day, or immediately, if such Lender may not lawfully
continue to maintain such LIBOR Loans, together with any amounts required to be
paid in connection therewith pursuant to SECTION 3.5 of this Agreement.
(c) If the Borrower is required to prepay any LIBOR Loan immediately
as provided in SECTION 3.2(b) of this Agreement, then, on the date such
prepayment is required, unless such prepayment is actually made with funds from
another source, the Borrower shall be deemed to have borrowed from the affected
Lender the amount of such prepayment as a Base Rate Loan.
(d) Before giving any notice to the Agent pursuant to this SECTION
3.2, the affected Lender shall designate a different Lending Office with respect
to its LIBOR Loans if such designation will avoid the need for giving such
notice or making such demand and will not, in the judgment of such Lender, be
illegal or otherwise disadvantageous to such Lender.
3.3 INCREASED COSTS. If any Lender shall determine that, due to either
(a) the introduction of or any change (other than any change by way of
imposition of or increase in the Eurodollar Reserve Percentage included in the
calculation of Adjusted LIBOR) in or in the interpretation of any Requirement of
Law or (b) the compliance with any guideline or request from any central bank or
other Governmental Authority (whether or not having the force of law), there
shall be any increase in the cost to such Lender of agreeing to make or making,
funding or maintaining any LIBOR Loans, then the Borrower shall be liable for,
and shall from time to time, upon demand therefor by such Lender, pay to such
Lender such additional amounts as are sufficient to compensate such Lender for
such increased costs; provided that the Borrower shall not be obligated to pay
any such additional amounts attributable to periods prior to the date that is
ninety (90) days prior to the date of demand by a Lender, unless such increased
costs are attributable to an earlier period due to retroactive application of
such introduction, change or compliance, in which case the Borrower shall be
obligated to pay any such additional amounts from the retroactive application
date. Each Lender will promptly notify the Borrower and the Agent of any event
of which it has knowledge occurring after the date hereof, which will entitle
such Lender to compensation pursuant to this SECTION 3.3.
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3.4 INABILITY TO DETERMINE RATES. If the Agent shall have determined that
for any reason adequate and reasonable means do not exist for ascertaining the
LIBOR for any requested Interest Period with respect to a proposed LIBOR Loan or
that the LIBOR applicable for any requested Interest Period with respect to a
proposed LIBOR Loan does not adequately and fairly reflect the cost to the
Lenders of funding such Loan, the Agent will forthwith give notice of such
determination to the Borrower and each Lender. Thereafter, the obligation of
the Lenders to make or maintain LIBOR Loans, as the case may be, hereunder shall
be suspended until the Agent, upon the instruction of Requisite Lenders, revokes
such notice in writing. Upon receipt of such notice, the Borrower may revoke
any Borrowing Notice or Conversion/Continuation Notice then submitted by it. If
the Borrower does not revoke such notice, the Lenders shall make, convert or
continue the Loans, as proposed by the Borrower, in the amount specified in the
applicable notice submitted by the Borrower, but such Loans shall be made or
continued as or converted to Base Rate Loans instead of LIBOR Loans, as the case
may be.
3.5 PREPAYMENT OF LIBOR LOANS. In the event that the Borrower prepays or
is required to prepay any LIBOR Loan by acceleration or otherwise or fail to
draw down or convert to a LIBOR Loan after giving notice thereof, the Borrower
agrees to reimburse each Lender for its expenses and funding losses due to such
prepayment or failure to draw. The Borrower and the Lenders hereby agree that
such expenses and funding losses shall consist of the sum of the discounted
monthly differences for each month during the applicable or requested Interest
Period, calculated as follows for each such month:
(a) principal amount of such LIBOR Loan times (number of days between
the date of prepayment and the last day in the applicable Interest Period
divided by 360), times the applicable Interest Differential; plus
(b) all actual out-of-pocket expenses (other than those taken into
account in the calculation of the Interest Differential) incurred by the Lenders
and the Agent (excluding allocations of any expense internal to the Lenders and
the Agent) and reasonably attributable to such payment or prepayment; provided
that no prepayment fee shall be payable (and no credit or rebate shall be
required) if the product of the foregoing formula is not a positive number.
3.6 CAPITAL REQUIREMENTS. If any Lender shall determine that any change
after the date of this Agreement in any law, rule, regulation or guideline
adopted pursuant to or arising out of the July 1988 report of the Basle
Committee on Banking Regulations and Supervisory Practices entitled
"International Convergence of Capital Measurement and Capital Standards," or the
adoption after the date hereof of any other Requirement of Law regarding capital
adequacy, or any change after the date of this Agreement in any of the foregoing
or in the enforcement or interpretation or administration of any of the
foregoing by any Governmental Authority charged with the enforcement or
interpretation or administration thereof, or compliance by any Lender (or any
Lending Office of Lender) or compliance by such Lender's holding company with
any request or directive regarding capital adequacy (whether or not having the
force of law) of any such Governmental Authority, has the effect of reducing the
rate of return on such Lender's capital or on the capital of such Lender's
holding company, if any, as a consequence of the maintaining of any of its
Commitments or the making or maintaining of any Loan under this Agreement to a
level below that which such Lender
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or such Lender's holding company could have achieved but for such adoption,
change or compliance (taking into consideration such Lender's policies and the
policies of such Lender's holding company with respect to capital adequacy) by
an amount deemed to be material, then, upon written demand by such Lender, the
Borrower shall pay to such Lender, from time to time such additional amount or
amounts as will compensate such Lender or such Lender's holding company for any
such reduction suffered; provided that the Borrower shall not be obligated to
pay any such additional amounts attributable to periods prior to the date that
is ninety (90) days prior to the date of demand by a Lender, unless such reduced
rate of return is attributable to an earlier period due to retroactive
application of such adoption, change or compliance, in which case the Borrower
shall be obligated to pay any such additional amounts from the retroactive
application date. Without affecting its rights under this SECTION 3.6 or any
other provision of this Agreement, such Lender agrees that if there is any
increase in any cost to or reduction in any amount receivable by such Lender
with respect to which the Borrower would be obligated to compensate such Lender
pursuant to this SECTION 3.6, such Lender shall give the Borrower thirty (30)
days notice thereof and shall use reasonable efforts to select an alternative
Lending Office which would not result in any such increase in any cost to or
reduction in any amount receivable by such Lender; provided, however, that such
Lender shall not be obligated to select an alternative Lending Office if such
Lender determines that (a) as a result of such selection such Lender would be in
violation of any Requirement of Law, or would incur additional costs or
expenses, or (b) such selection would be inadvisable for regulatory reasons.
3.7 CERTIFICATES OF LENDERS. Any Lender claiming reimbursement or
compensation pursuant to this SECTION 3 shall deliver to the Borrower (with a
copy to the Agent) a certificate setting forth in reasonable detail the amount
payable and the basis therefor to such Lender hereunder, accompanied by any
statements, invoices, or demands in the case of jurisdictions or Governmental
Authorities asserting or imposing a Tax, Other Tax or other amounts owed, with
any confidential information, including amounts, redacted. Such certificate
shall constitute a rebuttable presumption as to the matters set forth therein.
3.8 REMOVAL OF A LENDER. In the event that any Lender (a) gives notice
under SECTION 3.2(a) or 3.2(b) of its inability to make or maintain LIBOR Loans
as a result of any condition described in such Sections which is not generally
applicable to all Lenders, and such inability continues for thirty (30) Business
Days or more, or (b) demands payment under SECTION 3.3 or 3.6 of any material
amount, then the Borrower may, within forty-five (45) days of such notice or
demand, remove such Lender as a party to this Agreement by either:
(a) requiring such Lender to execute and deliver an Assignment and
Acceptance, with respect to its entire Commitment to a willing Eligible Assignee
designated by the Borrower and acceptable to the Agent, in which event all
provisions of SECTION 11.2(a) and (b) shall apply (except that the Borrower
shall pay the processing fee required pursuant to SECTION 11.2(a)); or
(b) reducing the Aggregate Commitments pursuant to, and in accordance
with, SECTION 2.7 by an amount equal to such Lender's Commitment, whereupon the
Commitment of such Lender shall be irrevocably terminated in whole (which shall
include the termination in whole of the obligation of such Lender to make Loans
to the Borrower).
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Such Lender shall consummate such Assignment and Acceptance, or the Borrower
shall make such reduction in the Aggregate Commitments, in accordance with such
terms within a reasonable time from the date the Borrower shall have designated
an Eligible Assignee or given notice of the reduction of the Aggregate
Commitments, and whereupon such Lender shall no longer be a party hereto or have
any obligations or rights hereunder (except rights which, pursuant to the
provisions of this Agreement, survive the termination of this Agreement and the
repayment of the Notes), and, if applicable, the Eligible Assignee shall succeed
to such obligations and rights pursuant to SECTION 11.2.
SECTION 4. CONDITIONS PRECEDENT TO LOANS.
4.1 FIRST LOAN. The obligation of each Lender to make the first Loan
hereunder is subject to the satisfaction of the following conditions precedent:
(a) CORPORATE DOCUMENTS. The Lenders shall have received, in form and
substance satisfactory to the Lenders and their respective counsel, a
certificate of the secretary of the Borrower and each Guarantor dated as of the
Closing Date and certifying that the following items are attached thereto, are
true, complete and accurate and that the Lenders may conclusively rely on such
certificate unless and until such entity shall have delivered to the Agent a
further certificate amending such prior certificate:
(i) A certified copy of the records of all actions taken by the
Borrower and each Guarantor, including all resolutions of such entity
authorizing or relating to the execution, delivery of the Loan Documents to
which it is a party and the consummation of the transactions contemplated hereby
and thereby;
(ii) A certified copy of the certificate or articles of
incorporation, bylaws and shareholder agreements of the Borrower and each
Guarantor and any other charter or formation documents of the Borrower and each
Guarantor certified by a Responsible Person of the Borrower or such Guarantor,
as the case may be, as being in full force and effect;
(iii) Certificate of the Secretary of State of each of the States
set forth on SCHEDULE 5.1 dated as of a date close to the Closing Date stating
that the Borrower and each Guarantor is a corporation in good legal standing
under the laws of States indicated on such Schedule as applicable thereto;
(iv) Certificates of the Franchise Tax Board of the States set
forth on SCHEDULE 5.1, dated as of a date close to the Closing Date, stating
that the Borrower and each Guarantor is in good standing under the laws of the
States listed on such Schedule as applicable thereto;
(v) Certificates of incumbency together with specimen signatures
with respect to the authorized representatives of the Borrower and each
Guarantor; and
(vi) Such other documents relating to the Borrower, each Guarantor
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and their Subsidiaries as the Lenders reasonably may request.
(b) CREDIT DOCUMENTS. The Agent shall have received, for the benefit
of the Lenders, in form and substance satisfactory to the Lenders, the following
dated as of the Closing Date:
(i) NOTES. Separate Notes, duly executed by the Borrower to each
of the Lenders in the stated principal amount of such Lender's Commitment.
(ii) GUARANTIES. Guaranties, duly executed by each Guarantor for
the benefit of the Agent and the Lenders.
(iii) BORROWING NOTICE. If a Borrowing will occur on the Closing
Date, a Borrowing Notice duly executed and delivered by a Responsible Person of
the Borrower requesting Loans to be funded at Closing.
(iv) BRINGDOWN CERTIFICATE. If the date of execution of this
Agreement precedes the Closing Date, a certificate, dated as of the Closing
Date, of a Responsible Person to the effect that (i) the representations and
warranties of the Borrower contained in SECTION 5 are true, accurate and
complete in all material respects as of the Closing as though made on such date
(except to the extent such representations and warranties specifically relate to
an earlier date, in which case they shall be true, accurate and complete in all
material respects as of such earlier date) and (ii) no Event of Default or
Potential Event of Default under this Agreement has occurred and is continuing.
(v) COMPLIANCE CERTIFICATE. A Compliance Certificate dated the
Closing Date and measured as of November 29, 1997, duly executed and delivered
by a Responsible Person, with appropriate insertions.
(c) OPINIONS OF COUNSEL. The Agent shall have received originally
executed legal opinions of counsel to the Borrower and the Guarantors in form
and substance satisfactory to the Lenders and their respective counsel, dated
the Closing Date and addressed to the Agent and the Lenders.
(d) UCC SEARCHES. The Lenders shall have received certified copies,
dated close to the Closing Date, of requests for copies or information (Form
UCC-3 or equivalent), or certificates, dated close to the Closing Date,
satisfactory to the Lenders, of a UCC Reporter Service, listing all effective
financing statements which name the Borrower or any of its Subsidiaries as
debtor and which are filed in the appropriate offices in the States in which are
located the chief executive offices or any offices or facilities of any of them,
together with copies of such financing statements, and accompanied by written
evidence (including UCC termination statements) satisfactory to the Lenders that
the Liens indicated in any such financing statements are either permitted under
SECTION 7.1 of this Agreement or have been terminated or released. By way of
clarification, and not limitation of the foregoing, the Borrower shall deliver
UCC termination statements for all Liens granted by the Borrower or any of its
Subsidiaries that secure the Existing
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Debt.
(e) INSURANCE. The Agent shall have received from the Borrower, in
form and substance satisfactory to the Lenders, certificates, binders and other
instruments or documents evidencing the insurance coverage and limits maintained
by the Borrower, in each case in compliance with the requirements of SECTION 6.3
of this Agreement.
(f) FINANCIAL STATEMENTS; PROJECTIONS. The Agent shall have received
(i) audited consolidated financial statements of the Borrower and its
consolidated Subsidiaries dated as of August 30, 1997, showing financial results
substantially in conformance with those presented to the Lenders previously,
(ii) company-prepared consolidated financial statements of the Borrower and its
consolidated Subsidiaries for the Fiscal Quarter ended November 29, 1997, and
(iii) company-prepared financial projections for the Borrower and their
consolidated Subsidiaries for the Fiscal Years ending August 30, 1998, through
August 31, 2002, to include projected income statements, balance sheets,
statement of cash flows and schedule of planned capital expenditures, in each
case for the upcoming Fiscal Year and including a substantive description of
each of the material underlying assumptions used in preparing such consolidated
financial forecasts, in form and detail reasonably satisfactory to the Lenders;
(g) NO MATERIAL ADVERSE CHANGE. There shall have occurred no Material
Adverse Change, as reasonably determined by Lenders, since November 29, 1997.
(h) NO LITIGATION. Except as disclosed and described in the Schedules
hereto, there shall not have been instituted or threatened any material
litigation or proceeding in any court or administrative forum or before any
arbitrator to which the Borrower or any of its Subsidiaries are, or are
threatened with becoming, a party, which the Lenders have reasonably determined,
after consultation with counsel, to pose a reasonable likelihood of resulting in
a Material Adverse Effect.
(i) CONSENTS. The Agent shall have received written evidence
reasonably satisfactory to the Lenders that all government and third party
approvals and consents necessary to the making or maintenance of the Loans
hereunder and the carrying on of the business of the Borrower has been obtained.
(j) ACCURATE INFORMATION. The information provided to the Agent or
the Lenders by or on behalf of the Borrower and its Subsidiaries, as well as the
representations and warranties of the various parties as contained in the Loan
Documents shall be true, accurate and complete in all material respects and the
projections shall have been prepared on a basis consistent with the historical
financial statements, and shall have been based on the good faith estimates and
assumptions of management of the Borrower, and the Borrower has no reason to
believe that such estimates and assumptions are not reasonable..
(k) FEE LETTER. Rabobank shall have received the Fee Letter dated as
of the Closing Date, duly executed by the Borrower, together with the fees and
any other items required pursuant to the Fee Letter.
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(l) FEES AND COSTS. The Agent shall have received an amount equal to
the aggregate of the Agent's good faith estimate of all fees (including Attorney
Costs), costs, expenses and other disbursements incurred by the Agent in
connection with the Closing of the transactions contemplated under this
Agreement and each of the other Loan Documents, which payment shall be subject
to post-Closing adjustment following receipt by Agent of all final invoices.
(m) TERMINATION OF EXISTING DEBT. The Agent shall have received
written evidence satisfactory to the Lenders in their sole discretion that the
Borrower's existing Indebtedness disclosed on SCHEDULE 7.3 (other than Patronage
Dividend Certificates) (the "Existing Debt") has been, or shall with the
proceeds of the first Loan be, terminated and paid in full, and all Liens
securing such Existing Debt have been, or upon the making of the first Loan
shall be, terminated or released.
(n) JOHN HANCOCK DEBT. The Agent shall have received a copy of the
fully executed Note Purchase Agreement evidencing the John Hancock Debt.
(o) OTHER DOCUMENTS. The Lenders shall have received such other
instruments, documents, information and items from the Borrower as reasonably
requested by the Lenders.
4.2 ALL LOANS. Unless waived in writing by Requisite Lenders, the
obligation of the Lenders to make any Loan is subject to the satisfaction of the
following further conditions precedent:
(a) PERFORMANCE OF AGREEMENTS. The Borrower shall have performed all
of its agreements under the Loan Documents and each of the other Loan Documents
to be performed on or before such Funding Date.
(b) NO EVENT OF DEFAULT OR POTENTIAL EVENT OF DEFAULT. No event shall
have occurred and be continuing or would result from the making of any Loans on
such Funding Date which constitutes an Event of Default or Potential Event of
Default.
(c) REPRESENTATIONS AND WARRANTIES. All representations and
warranties contained in the Loan Documents shall be true, accurate and complete
in all material respects with the same effect as though such representations and
warranties had been made on and as of such Funding Date (except to the extent
such representations and warranties specifically relate to an earlier date, in
which case they shall be true, accurate and complete in all material respects as
of such earlier date). Any Schedules referred to in any representations and
warranties shall be deemed to be amended upon receipt by the Agent of written
notice thereof.
(d) OTHER DOCUMENTS. The Agent shall have received such other
instruments and documents as it may have reasonably requested from the Borrower
in connection with the Loans to be made on such date.
SECTION 5. BORROWER'S REPRESENTATIONS AND WARRANTIES.
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The Borrower hereby warrants and represents to the Agent and each Lender
for itself and each of its Subsidiaries as follows and agrees that each of said
representations and warranties shall be deemed to survive until full, complete
and indefeasible payment and performance of the Obligations and shall apply anew
to each Borrowing hereunder:
5.1 EXISTENCE AND POWER. The Borrower and each of its Subsidiaries are
corporations duly organized and validly existing in good standing under the laws
of the respective jurisdictions of incorporation and are duly qualified and
licensed as a foreign corporation and authorized to do business in each
jurisdiction where their respective ownership of Property or conduct of business
requires such qualification and where the failure to so qualify would with
reasonable likelihood result in a Material Adverse Effect, and in each
jurisdiction where the Borrower or any of its Subsidiaries maintain an office (a
list of all such States is set forth on SCHEDULE 5.1); the Borrower and each of
its Subsidiaries have the corporate power and authority, rights and franchises
to own their respective Property and assets and to carry on their respective
businesses as now conducted; the Borrower and each of its Subsidiaries have the
corporate power and authority to execute, deliver and perform the terms of the
Loan Documents to which they are a party and all other instruments and documents
contemplated hereby or thereby.
5.2 LOAN DOCUMENTS AND NOTES AUTHORIZED; BINDING OBLIGATIONS. The
execution, delivery and performance of this Agreement and each of the other Loan
Documents to which the Borrower or any of its Subsidiaries is a party and the
execution, delivery and payment of the Notes have been duly authorized by all
necessary and proper corporate action on the part of the Borrower or such
Subsidiary, as the case may be. The Loan Documents to which the Borrower or any
of its Subsidiaries a party constitute legally valid and binding obligations of
the Borrower and such Subsidiaries enforceable against the Borrower and such
Subsidiaries in accordance with their respective terms, except as enforcement
thereof may be limited by bankruptcy, insolvency or other laws affecting the
enforcement of creditors' rights generally.
5.3 NO CONFLICT. The execution, delivery and performance of this
Agreement and each of the other Loan Documents and the execution, delivery and
payment of the Notes will not contravene any provision of the Borrower's
certificate or articles of incorporation or bylaws or other charter documents,
or any of its Subsidiaries' charter documents; will not contravene, conflict
with or violate any applicable law or regulation, or any order, writ, judgment,
injunction, decree, determination or award of any Governmental Authority; will
not violate or result in the breach of, or constitute a default under any
Contracts (as defined in SECTION 5.7) other than as set forth on SCHEDULE 5.7.
The Borrower and each of its Subsidiaries are not in violation or breach of or
default under any law, rule, regulation, order, writ, judgment, injunction,
decree, determination or award or any contract, agreement, lease, license,
indenture or other instrument to which they are a party, the non-compliance
with, the violation or breach of or the default under which would with
reasonable likelihood result in a Material Adverse Effect.
5.4 SUBSIDIARIES; CAPITAL STRUCTURE. SCHEDULE 5.4 sets forth and
identifies all Subsidiaries of the Borrower as of the Closing Date, together
with the jurisdiction of organization, and the authorized and issued Stock of
each such Subsidiary, by class and number, and the holders (including the
Borrower) of the authorized and issued Stock of each Subsidiary of the Borrower
and
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the percentage of each class legally owned or to be owned by such holders
(including the Borrower) as of the Closing Date and on a fully diluted basis.
SCHEDULE 5.4 further sets forth as of the Closing Date the authorized and issued
Stock of the Borrower by class and number. Except as set forth in the Bylaws of
the Borrower in effect as of the Closing Date, there are no options, warrants,
rights to purchase or similar rights, or plans to issue any of the foregoing,
covering the Stock of the Borrower or any of its Subsidiaries.
5.5 FINANCIAL CONDITION. The Borrower's financial statements as of August
31, 1997, copies of which heretofore has been delivered to the Agent by the
Borrower, and all other financial statements and other data submitted in writing
by the Borrower to the Agent or any Lender in connection with the request for
credit granted by this Agreement, are true, accurate and complete in all
material respects, and said financial statements and other data fairly present
the consolidated financial condition of the Borrower as of the date thereof, and
have been prepared in accordance with GAAP, subject to year-end audit
adjustments and the absence of footnotes. There has been no Material Adverse
Change since November 29, 1997, except as described in the Confidential
Information Booklet dated February 1998 (the "Confidential Booklet") heretofore
provided to the Lenders. The financial projections contained in the
Confidential Booklet have been prepared on a basis consistent with the
historical financial statements described above, except as described therein,
and are based on the good faith estimates and assumptions of management of the
Borrower, and the Borrower has no reason to believe that such estimates and
assumptions are not reasonable.
5.6 LITIGATION. Except as set forth on SCHEDULE 5.6, there are no claims,
actions, suits, proceedings or other litigation pending or, to the best of the
Borrower's knowledge, after Due Inquiry, threatened against the Borrower or any
of its Subsidiaries at law or in equity before any Governmental Authority or, to
the best of the Borrower's knowledge, after Due Inquiry, any investigation by
any Governmental Authority of the Borrower's or any of its Subsidiaries'
affairs, Properties or assets, which has a reasonable likelihood of resulting in
a Material Adverse Effect, and which is not provided for or disclosed in the
financial statements delivered to the Agent pursuant to SECTION 5.5.
5.7 CONSENTS AND APPROVALS. Except as set forth on SCHEDULE 5.7, no
approval, authorization or consent of any trustee or holder of any indebtedness
or obligation of the Borrower or of any other Person under any material
agreement, contract, lease or license or similar document or instrument to which
the Borrower or any of its Subsidiaries is a party or by which the Borrower or
any such Subsidiary is bound (collectively, "Contracts"), is required to be
obtained by the Borrower or any such Subsidiary in order to make or consummate
the transactions contemplated under the Loan Documents. Except as further set
forth in SCHEDULE 5.7, all material consents and approvals of, filings and
registrations with, and other actions in respect of, all Governmental
Authorities required to be obtained by the Borrower or any of its Subsidiaries
in order to make or consummate the transactions contemplated under the Loan
Documents have been, or prior to the time when required will have been,
obtained, given, filed or taken and are or will be in full force and effect.
5.8 SOLVENCY. As of the Closing Date and after giving effect to the
transactions contemplated by this Agreement and the other Loan Documents,
including all of the Loans made
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and to be made hereunder, and thereafter, the Borrower is Solvent and each of
its Subsidiaries is Solvent. For purposes of this Agreement, "Solvent" means
that (a) the fair market value of the Person's assets will be in excess of the
amount that will be required to be paid on or in respect of the existing debts
and other liabilities (including contingent liabilities, but excluding in the
case of any Guarantor the contingent liability evidenced by its Guaranty) of the
Person as they mature; (b) the Person shall not have unreasonably small capital
to carry on its business as conducted or as proposed to be conducted; (c) the
Person does not intend to or believe that it will incur debts beyond its ability
to pay such debts as they mature (taking into account the timing and amounts of
cash to be received by it and the amounts to be payable on or in respect of its
obligations); (d) the Person does not intend to hinder, delay or defraud either
present or future creditors; and (e) the Person will have received fair
consideration and reasonably equivalent value in exchange for incurring its
Obligations under the Loan Documents.
5.9 EMPLOYMENT AND LABOR AGREEMENTS. Except as set forth on SCHEDULE 5.9,
there are no employment agreements covering senior management of the Borrower or
any of its Subsidiaries and there are no collective bargaining agreements or
other labor agreements covering any employees of the Borrower or any such
Subsidiary. A true and complete copy of each such agreement has been furnished
to the Agent.
5.10 AGREEMENTS WITH AFFILIATES AND OTHER AGREEMENTS. Except as disclosed
on SCHEDULE 5.10, neither the Borrower nor any of its Subsidiaries has entered
into and, as of the Closing Date does not contemplate entering into, any
material agreement or contract with any Affiliate of the Borrower other than the
employment agreements disclosed on SCHEDULE 5.9, except for (a) transactions
among the Borrower and any Guarantor, (b) transactions on terms no less
favorable to the Borrower or its Subsidiaries than would be obtainable in an
arm's length transaction with a person not an Affiliate of the Borrower that is
reasonably comparable to the Affiliate transaction, based on the totality of the
circumstances, and (c) transactions in accordance with the practices of the
Borrower or its Affiliates, as the case may be, in effect as of the Closing
Date. Neither the Borrower nor any of its Subsidiaries is a party to or is bound
by any Contract or is subject to any restriction under its respective charter or
formation documents, which has a reasonable likelihood of resulting in a
Material Adverse Effect.
5.11 ERISA. All Employee Benefit Plans of the Borrower are listed on
SCHEDULE 5.11. All Pension Plans of the Borrower, including terminated Pension
Plans, that are intended to be qualified under Section 401(a) of the Code have
been determined by the IRS to be qualified. All Pension Plans of the Borrower
existing as of the date hereof continue to be so qualified. No "reportable
event" (as defined in Section 4043 of ERISA) has occurred and is continuing with
respect to any Pension Plan of the Borrower for which the thirty-day notice
requirement may not be waived other than those of which the appropriate
Governmental Authority has been notified. All Employee Benefit Plans of the
Borrower have been operated in all material respects in accordance with their
terms and applicable law, including ERISA, and no "prohibited transaction" (as
defined in ERISA and the Code) that would result in any material liability to
the Borrower or any of its Subsidiaries has occurred with respect to any such
Employee Benefit Plan.
5.12 LABOR MATTERS. There are no strikes or other labor disputes against
the Borrower
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or any of its Subsidiaries or, to the best of the Borrower's knowledge, after
Due Inquiry, threatened against the Borrower or any of its Subsidiaries, which
has a reasonable likelihood of resulting in a Material Adverse Effect. Hours
worked by and payment made to employees of the Borrower or, to the best of the
Borrower's knowledge, after Due Inquiry, or any of its Subsidiaries have not
been in violation of the Fair Labor Standards Act or any other applicable law
dealing with such matters which would have a reasonable likelihood of resulting
in a Material Adverse Effect. All payments due from the Borrower on account of
employee health and welfare insurance which would with reasonable likelihood
result in a Material Adverse Effect if not paid have been paid or, if not due,
accrued as a liability on the books of the Borrower.
5.13 MARGIN REGULATIONS. The Borrower does not own any "margin security,"
as that term is defined in Regulations G and U of the Federal Reserve Board, and
the proceeds of the Loans under this Agreement will be used only for the
purposes contemplated hereunder. None of the Loans will be used, directly or
indirectly, for the purpose of purchasing or carrying any margin security, for
the purpose of reducing or retiring any indebtedness which was originally
incurred to purchase or carry any margin security or for any other purpose which
might cause any of the Loans under this Agreement to be considered a "purpose
credit" within the meaning of Regulations G, T, U and X. The Borrower will not
take or permit any agent acting on its behalf to take any action which might
cause this Agreement or any document or instrument delivered pursuant hereto to
violate any regulation of the Federal Reserve Board.
5.14 TAXES. All material federal, state, local and foreign tax returns,
reports and statements required to be filed by the Borrower and, to the best of
the Borrower's knowledge, after Due Inquiry, by any of its Subsidiaries have
been filed with the appropriate Governmental Authorities and all Charges and
other impositions shown thereon to be due and payable by the Borrower or such
Subsidiary have been paid prior to the date on which any fine, penalty, interest
or late charge may be added thereto for nonpayment thereof, or any such fine,
penalty, interest, late charge or loss has been paid, or the Borrower or such
Subsidiary is contesting its liability therefor in good faith and has fully
reserved all such amounts in the financial statements provided to the Agent
pursuant to SECTION 6.1. The Borrower and each of its Subsidiaries has paid
when due and payable all material Charges upon the books of the Borrower or such
Subsidiary except as permitted pursuant to SECTION 6.4. Proper and accurate
amounts have been withheld by the Borrower and each of its Subsidiaries from its
employees for all periods in full and complete compliance with the tax, social
security and unemployment withholding provisions of applicable federal, state,
local and foreign law and such withholdings have been timely paid to the
respective Governmental Authorities. The Borrower and each of its Subsidiaries
has not executed or filed with the IRS or any other Governmental Authority any
agreement or other document extending, or having the effect of extending, the
period for assessment or collection of any Charges.
5.15 TRADEMARKS, PATENTS, COPYRIGHTS AND LICENSES. The Borrower and each
of its Subsidiaries possess and either own, or have the right to use to the
extent required, all necessary trademarks, trade names, copyrights, patents,
patent rights and licenses which are material to the conduct of their respective
businesses as now operated, and each such trademark, trade name, copyright,
patent and patent right owned as of the Closing Date is listed, together with
applicable federal, state or foreign application and registration numbers, on
SCHEDULE 5.15. The Borrower and
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each of its Subsidiaries conduct their respective businesses without
infringement or, to the best of the Borrower's knowledge, after Due Inquiry,
claim of infringement of any trademark, trade name, trade secret, service mark,
patent, copyright, license or other intellectual property Right of Others,
except where such infringement or claim of infringement would not with
reasonable likelihood result in a Material Adverse Effect. There is no
infringement or, to the best of the Borrower's knowledge, after Due Inquiry,
claim of infringement by others of any material trademark, trade name, trade
secret, service mark, patent, copyright, license or other intellectual property
right of the Borrower or any of its Subsidiaries.
5.16 NO BROKERS. No broker or finder acting on behalf of the Borrower
brought about the obtaining, making or closing of this Agreement or the credit
made available by the Lenders to the Borrower pursuant to this Agreement, and
neither the Borrower nor any Affiliate of the Borrower has any obligation to pay
any Person in respect of any finder's or brokerage fees in connection with the
credit facilities contemplated by this Agreement.
5.17 FULL DISCLOSURE. As of the Closing Date, no information contained in
this Agreement, the other Loan Documents or, to the best of the Borrower's
knowledge, any other documents or written materials furnished by or on behalf of
the Borrower to the Agent or any Lender pursuant to the terms of this Agreement
or any of the other Loan Documents contains any untrue or inaccurate statement
of a material fact or omits to state a material fact necessary to make the
statement contained herein or therein not misleading in light of the
circumstances under which made.
5.18 OTHER REGULATIONS. The Borrower is not: (a) a "public utility
company" or a "holding company," or an "affiliate" or a "subsidiary company" of
a "holding company," or an "affiliate" of such a "subsidiary company," as such
terms are defined in the Public Utility Holding Company Act or (b) an
"investment company," or an "affiliated person" of, or a "promoter" or
"principal underwriter" for, an "investment company," as such terms are defined
in the Investment Company Act. The making of the Loans hereunder and the
application of the proceeds and repayment thereof by the Borrower and the
performance of the transactions contemplated by this Agreement and the other
Loan Documents will not violate any provision of the Investment Company Act, or
any rule, regulation or order issued by the SEC thereunder.
5.19 HAZARDOUS MATERIALS. Neither the Borrower nor any of its Subsidiaries
has used Hazardous Materials on or affecting any premises at which the Borrower
or any of its Subsidiaries has a place of business (collectively and singly the
"premises") in any manner which violates federal, state or local laws,
ordinances, statutes, rules, regulations or judgments governing the use,
storage, treatment, handling, manufacture, transportation or disposal of
Hazardous Materials ("Environmental Laws"), which would with reasonable
likelihood result in a Material Adverse Effect. The Borrower has never received
any written notice ("Environmental Complaint") of any violations of
Environmental Laws (and, within five (5) days of receipt of any Environmental
Complaint the Borrower shall give the Agent a copy thereof), and to the best of
the Borrower's knowledge, after Due Inquiry, there have been no actions
commenced or threatened by any party for noncompliance with any Environmental
Laws.
5.20 YEAR 2000 ISSUES. The Borrower and each of its Subsidiaries has
adopted a plan (the
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"Year 2000 Plan") which adequately addresses, in the reasonable judgment of
senior management of the Borrower, the operational and financial issues ("Year
2000 Issues") arising from data in the Borrower's management information and
computer systems respecting dates prior to, on or after January 1, 2000. The
Year 2000 Plan is in process of implementation and, as a result thereof, Year
2000 Issues do not present a reasonable likelihood of resulting in a Material
Adverse Effect.
5.21 PATRONAGE DIVIDEND CERTIFICATES. All Patronage Dividend Certificates
issued as of the Closing Date are and shall remain, and all subsequently issued
Patronage Dividend Certificates shall be and remain, subordinate in right of
payment to the Indebtedness of the Borrower evidenced by this Agreement and the
other Loan Documents on terms no less favorable to the holders of "Senior
Indebtedness" under and as defined in the Indenture between the Borrower and
First Interstate Bank of California, as Trustee, relating to $3,000,000
Subordinated Patronage Dividend Certificates Due December 15, 2002 (the
"Indenture").
SECTION 6. BORROWER'S AFFIRMATIVE COVENANTS.
The Borrower covenants and agrees that, so long as any of the Commitments
shall be available and until the full, complete and indefeasible payment and
performance of the Obligations, unless Requisite Lenders shall otherwise consent
in writing, the Borrower shall, and shall cause each of its Subsidiaries, to do
all of the following:
6.1 RECORDS AND REPORTS. Maintain a system of accounting administered in
accordance with sound business practices to permit preparation of financial
statements in conformity with GAAP, and deliver each of the following to the
Agent:
(a) QUARTERLY FINANCIAL STATEMENTS. As soon as practicable and in any
event within forty-five (45) days after the end of each Fiscal Quarter (other
than the last Fiscal Quarter in a Fiscal Year), a consolidated balance sheet of
the Borrower and its consolidated Subsidiaries as at the end of such period and
the related consolidated statements of income, stockholders' equity and cash
flows of the Borrower and its Subsidiaries for such Fiscal Quarter, setting
forth, in the case of the balance sheet, in comparative form the figures as of
the end of the preceding Fiscal Year and, in the case of the statements of
income and cash flows, in comparative form the consolidated figures for the
corresponding periods of the previous Fiscal Year, all in reasonable detail and
certified by a Responsible Person that they (i) are complete and fairly present
the financial condition of the Borrower as at the dates indicated and the
results of its operations and cash flow for the periods indicated; (ii) disclose
all liabilities that are required to be reflected or reserved against under
GAAP, whether liquidated or unliquidated, fixed or contingent; and (iii) have
been prepared in accordance with GAAP, subject to changes resulting from audit
and normal year-end adjustments; provided, however, that delivery within the
time period specified above of copies of the Borrower's Quarterly Report on Form
10-Q prepared in compliance with the requirements therefor and filed with the
Securities and Exchange Commission shall be deemed to satisfy the requirements
of this SECTION 6.1(a);
(b) ANNUAL AUDITED FINANCIAL STATEMENTS. As soon as practicable and
in any event within ninety days (90) days after the end of each Fiscal Year, a
consolidated balance
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sheet of the Borrower and its consolidated Subsidiaries as at the end of such
Fiscal Year and the related consolidated statements of income, stockholders'
equity and cash flows of the Borrower and its consolidated Subsidiaries for such
Fiscal Year, setting forth in each case in comparative form the consolidated
figures for the previous Fiscal Year, all in reasonable detail and (i) in the
case of such consolidated financial statements, accompanied by a report thereon
of Deloitte & Touche, LLP, or other independent public accountants of recognized
national standing selected by the Borrower and reasonably satisfactory to
Requisite Lenders, which report shall not contain a disclaimer of opinion, shall
not express doubts about the ability of the Borrower or its Subsidiaries to
continue as a going concern, shall not be limited because of a restricted or
limited examination by such accountant of any material portion of the Borrower's
and its consolidated Subsidiaries' records, or otherwise be subject to a
qualification which the Requisite Lenders reasonably determine is material and
adverse, and shall state that such consolidated financial statements present
fairly the financial position of the Borrower, as at the dates indicated and the
results of operations and changes in financial position for the periods
indicated in conformity with GAAP applied on a basis consistent with prior years
(except as otherwise stated therein) and that the examination by such auditors
in connection with such consolidated financial statements has been made in
accordance with generally accepted auditing standards; provided, however, that
delivery within the time period specified above of copies of the Borrower's
Annual Report on Form 10-K prepared in compliance with the requirements therefor
and filed with the Securities and Exchange Commission shall be deemed to satisfy
the requirements of this SECTION 6.1(b).
(c) CERTAIN FILINGS AND OTHER INFORMATION. Promptly after the sending
or filing thereof, copies of all reports or filings which the Borrower or any of
its Subsidiaries sends to any of their securities holders, the Securities and
Exchange Commission or any securities exchange on which the Borrower's or any of
its Subsidiaries' securities are listed or traded and any and all press releases
which the Borrower or any of its Subsidiaries issues or, as reasonably requested
by the Agent or the Lenders, other information (whether or not publicly filed);
(d) COMPLIANCE CERTIFICATES. As soon as practicable and in any event
within forty-five (45) days after the end of each Fiscal Quarter (other than the
last Fiscal Quarter in a Fiscal Year) and ninety (90) days after the end of each
Fiscal Year, a Compliance Certificate dated as of the last day of such period,
duly executed by a Responsible Person;
(e) FINANCIAL FORECASTS. No later than seventy-five (75) days
following the close of each Fiscal Year, a consolidated projected income
statement and any other protections prepared in the ordinary course of the
Borrower's business, in each case for the upcoming Fiscal Year and including a
substantive description of each of the material underlying assumptions used in
preparing such consolidated projected income statement or other projections in
form and detail reasonably satisfactory to the Lenders;
(f) AUDITORS' LETTERS. Promptly upon receipt thereof, copies of all
material reports submitted to the Borrower by their independent public
accountants in connection with each annual, interim or special audit of the
financial statements of the Borrower or its Subsidiaries made by such
accountants, including, without limitation, the comment letter submitted by such
accountants to management in connection with their annual audit;
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(g) NOTICES. Promptly upon any Responsible Person of the Borrower
obtaining actual knowledge (i) of any condition or event which constitutes an
Event of Default or Potential Event of Default under this Agreement, (ii) that
any Person has given any notice or taken any other action with respect to a
claimed default or event or condition of the type referred to in SECTION 9.1(c)
of this Agreement, (iii) of the institution of any litigation or investigation
by any Governmental Authority involving an alleged liability (regardless of
whether insured) of the Borrower or any of its Subsidiaries equal to or greater
than $1,000,000 or any adverse judgment in any litigation involving a potential
liability of the Borrower or any of its Subsidiaries equal to or greater than
$1,000,000, (iv) of a Material Adverse Change, (v) of any action or event which
has a reasonable likelihood of resulting in a Material Adverse Effect, (vi) of
the change of the executive office or the principal place of business of the
Borrower or any of its Subsidiaries (other than Subsidiaries not engaged in
business and with total assets of less than $10,000) or of the location of the
Borrower's or any of its Subsidiary's (other than Subsidiaries not engaged in
business and with total assets of less than $10,000) books and records, (vii) of
any change in the name of the Borrower or any of its Subsidiaries, or (viii) of
any change in the Borrower's certified accountant or any resignation, or
decision not to stand for re-election, by any member of its Board of Directors,
a certificate of a Responsible Person specifying the notice given or action
taken by such Person and the nature of such claimed default, Event of Default,
Potential Event of Default, event or condition and what action has been taken,
is being taken and is proposed to be taken with respect thereto;
(h) TERMINATION EVENTS; PROHIBITED TRANSACTIONS. Promptly upon
becoming aware of the occurrence of any (i) Termination Event in connection with
any Pension Plan or (ii) "prohibited transaction" (as such term is defined in
ERISA and the Code) in connection with any Employee Benefit Plan or any trust
created thereunder, a written notice specifying the nature thereof, what action
has been taken, is being taken or is proposed to be taken with respect thereto,
and, when known, any action taken or threatened by the IRS or the PBGC with
respect thereto;
(i) ERISA. With reasonable promptness, copies of (i) all notices
received by the Borrower or any of its ERISA Affiliates of the PBGC's intent to
terminate any Pension Plan or to have a trustee appointed to administer any
Pension Plan, (ii) each Schedule B (Actuarial Information) to the annual report
(Form 5500 Series) filed by the Borrower or any of its ERISA Affiliates with the
IRS with respect to each Pension Plan covering employees of the Borrower or any
of its Subsidiaries, and (iii) all notices received by the Borrower or any of
its ERISA Affiliates from a Multiemployer Plan sponsor concerning the imposition
or amount of withdrawal liability pursuant to Section 4202 of ERISA;
(j) PENSION PLANS. Promptly upon receipt, any challenge by the IRS to
the qualification under Section 401 or 501 of the Code of any Pension Plan;
(k) TAX RETURNS. Upon the request of the Agent or Requisite Lenders,
copies of all federal, state, local and foreign tax returns and reports in
respect of income, franchise or other taxes on or measured by income (excluding
sales, use or like taxes) filed by or on behalf of the Borrower; and
(l) OTHER INFORMATION. With reasonable promptness, such other
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information and data, including, without limitation, lists of Property and
accounts, agreements with insurers and reports, as from time to time may be
reasonably requested by the Agent or Requisite Lenders.
All financial statements to be delivered by the Borrower to the Agent
pursuant to this SECTION 6.1 will present fairly the financial condition of the
Borrower and its Subsidiaries taken as a whole as of the date thereof; will
disclose all liabilities of the Borrower and its consolidated Subsidiaries that
are required to be reflected or reserved against under GAAP, whether liquidated
or unliquidated, fixed or contingent; and will have been prepared in accordance
with GAAP. All tax returns submitted to the Agent will, to the best of the
Borrower's knowledge, be true and correct. The Borrower hereby agrees that each
time it submits a financial statement or tax return to the Agent, the Borrower
shall be deemed to represent and warrant to the Lenders that such financial
statement or tax return complies with all of the preceding requirements set
forth in this paragraph, as appropriate.
6.2 CORPORATE RIGHTS; FACILITIES; CONDUCT OF BUSINESS.
(a) MAINTENANCE OF EXISTENCE AND RIGHTS. Maintain and preserve in
full force and effect its corporate existence and all rights, licenses, leases,
qualifications, privileges, franchises and other authority adequate for the
conduct of its business except where the lapsing of any of the foregoing would
not with reasonable likelihood have a Material Adverse Effect;
(b) MAINTENANCE OF PROPERTIES. Maintain, preserve and protect its
material properties, assets, equipment and facilities in good order and working
repair and condition (taking into consideration ordinary wear and tear) and from
time to time make, or cause to be made, all needful and proper repairs, renewals
and replacements thereto;
(c) MAINTENANCE OF INTELLECTUAL PROPERTY. Maintain, preserve and
protect all of its rights to enjoy and use material trademarks, trade names,
service marks, patents, copyrights, licenses, leases, franchise agreements and
franchise registrations; and
(d) MAINTENANCE OF BUSINESS. Conduct its business in an orderly
manner without voluntary interruption.
6.3 INSURANCE. Maintain with financially sound and reputable companies,
reasonably satisfactory to the Agent, such insurance in such amounts and subject
to such deductibles and other terms as is usual in the businesses conducted and
previously conducted by the Borrower or its Subsidiaries, covering, without
limitation, product liability, fire, theft, public liability, personal injury,
property damage, worker's compensation and extended coverage insurance covering
the Borrower's and such Subsidiaries' respective Property and assets, as well as
business interruption and hazard insurance. The Borrower shall, if so requested
by the Agent or Requisite Lenders, deliver to the Agent, as often as the Agent
may reasonably request, schedules identifying all insurance then in effect and
certificates evidencing such insurance.
6.4 TAXES AND OTHER LIABILITIES. Promptly pay and discharge all Charges
when due and
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payable, except (a) such as may be paid thereafter without penalty or (b) such
as may be contested in good faith by appropriate proceedings and for which an
adequate reserve has been established and is maintained in accordance with GAAP.
6.5 INSPECTION RIGHTS; ASSISTANCE. Upon reasonable notice, from time to
time during normal business hours and without unreasonably interfering with the
Borrower's normal business activities, permit the Agent or any Lender, at its
own expense except as provided in the following sentence, or any agent,
representative or employee thereof, to examine and make copies of and abstracts
from the financial records and books of account of, and visit the Properties of,
the Borrower and to discuss the affairs, finances and accounts of the Borrower
with any of its executive officers to the extent any of the foregoing may be
relevant to the Borrower's obligations under the Loan Documents. If an Event of
Default or Potential Event of Default has occurred, the Borrower shall be
obligated to reimburse the Agent's and any Lender's reasonable out of pocket
expenses connected with any such inspection and examination of the Borrower.
6.6 COMPLIANCE WITH LAWS. Exercise all due diligence in order to comply
in all material respects with the requirements of all applicable laws, rules,
regulations, orders, writs, judgments, decrees, determinations and awards of any
Governmental Authority, non-compliance with which would have a reasonable
likelihood of resulting in a Material Adverse Effect; provided, however, that
the Borrower may contest any act, regulation, order, decree or direction in any
reasonable manner which shall not, in the reasonable opinion of Requisite
Lenders, adversely affect the Lenders' rights hereunder.
6.7 MATERIAL AGREEMENTS. Comply in all respects with the terms of each
agreement to which it is a party, except where all instances of any failure to
so comply would not, in the aggregate, be reasonably likely to result in a
Material Adverse Effect.
6.8 ENVIRONMENTAL CONDITION, INVESTIGATIONS AND INDEMNIFICATION.
(a) Use its properties and assets in such a manner as to comply with
all Environmental Laws and shall not use its properties and assets for the
disposal of, or to produce, store, handle, treat, release, or transport, any
Hazardous Materials other than in accordance with Environmental Laws, such that
there would not be a reasonable likelihood of the occurrence of a Material
Adverse Effect; take reasonable efforts to ensure that (i) none of its
properties or assets will be designated or identified in any manner pursuant to
any Environmental Laws as a Hazardous Materials disposal site, or a candidate
for closure pursuant to any Environmental Laws and (ii) no Lien arising under
any Environmental Laws will attach to any revenues or to any real or personal
property owned by the Borrower or its Subsidiaries.
(b) Conduct and complete all investigations, studies, sampling and
testing, and all remedial, removal and other actions necessary to clean up and
remove all Hazardous Materials on or affecting the premises, whether caused by
the Borrower or a third party, in accordance with all Environmental Laws, and in
accordance with the orders and directives of all federal, state, and local
governmental authorities.
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6.9 YEAR 2000 ISSUES. Take all action reasonably necessary and
appropriate to implement the Year 2000 Plan such that there will not exist a
reasonable likelihood that Year 2000 Issues will result in a Material Adverse
Effect.
6.10 ADDITIONAL GUARANTORS. In the event that the Borrower acquires any
additional Subsidiary with assets in excess of $30,000, or any existing
Subsidiary acquires total assets in excess of $30,000, the Borrower shall cause
such Subsidiary to execute a Guaranty.
6.11 FURTHER ASSURANCES. Execute, deliver and perform (in addition to the
obligations and documents which this Agreement expressly requires the Borrower
or its Subsidiaries to execute, deliver and perform) any and all further acts or
documents which the Agent or Requisite Lenders may reasonably require to give
full effect to the purposes of this Agreement or any of the other Loan
Documents. Without limiting the generality of the foregoing, upon the request
of the Agent or Requisite Lenders, the Borrower agrees to update from the
Closing Date the Schedules hereto, and affirm the accuracy of such Schedules as
of the date of such update, whereupon, with the concurrence of Requisite
Lenders, such updated Schedules shall be substituted for the preexisting
Schedules and all references in this Agreement to the Closing Date shall refer
to the date of such updated Schedules.
SECTION 7. BORROWER'S NEGATIVE COVENANTS.
So long as any of the Commitments shall be available and until full,
complete and indefeasible payment and performance of the Obligations, unless
Requisite Lenders shall otherwise consent in writing, the Borrower covenants and
agrees as follows:
7.1 LIENS; NEGATIVE PLEDGES. The Borrower shall not, and shall not permit
any of its Subsidiaries to, create, incur, assume or suffer to exist any Lien or
Right of Others of any nature upon or with respect to any of their respective
Property, whether now or hereafter owned, leased or acquired, except
(collectively, the "Permitted Liens"):
(a) Existing Liens disclosed on SCHEDULE 7.1, other than those Liens
shown as items 3.a), b) and c) on such Schedule, provided that the obligations
secured thereby are not increased;
(b) Purchase money Liens on any Property acquired or held by the
Borrower or any of its Subsidiaries in the ordinary course of business, securing
Indebtedness incurred or assumed for the purpose of financing all or any part of
the cost of acquiring such Property; provided that (i) any such Lien attaches to
such Property concurrently with, or within twenty (20) days after, the
acquisition thereof, (ii) such Lien attaches solely to the Property so acquired
in such transaction, (iii) such Indebtedness is incurred to finance Capital
Expenditures, and (iv) the aggregate amount of Indebtedness secured by such
Liens does not exceed $20,000,000 at any time;
(c) Liens for taxes and other Charges if payment shall not at the time
be required to be made in accordance with SECTION 6.4 of this Agreement;
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(d) Liens in respect of pledges or deposits (i) under workers'
compensation laws, unemployment insurance and other types of social security or
similar legislation, (ii) under mechanic's and materialmen's lien laws in the
ordinary course of business, (iii) in connection with surety, appeal and similar
bonds incidental to the conduct of litigation, (iii) incidental to the conduct
of the business of the Borrower or any of its Subsidiaries and which were not
incurred in connection with the borrowing of money or the obtaining of advances
or credit, or (v) securing obligations contested in good faith; provided that
the Liens permitted by this SECTION 7.1(e) do not in the aggregate materially
detract from the value of the assets or Property of or materially impair the use
thereof in the operation of the businesses of the Borrower or any of its
Subsidiaries taken as a whole;
(e) Permitted Rights of Others;
(f) Easements, rights of way restrictions, minor defects or other
irregularities in title or other similar charges or encumbrances not interfering
in any material way with the ordinary course of the Borrower's or any of its
Subsidiaries' businesses;
(g) Liens relating to Capital Leases;
(h) Bankers' liens in the nature of rights of set-off arising in the
ordinary course of business of the Borrower or any of its Subsidiaries; and
(i) Liens existing on real property or equipment owned by a Person
that is acquired by or merged into the Borrower or any of its Subsidiaries (and
not created in anticipation thereof), so long as (i) such Liens encumber only
specific real property or equipment of such acquired or merged Person and (ii)
the aggregate amount of Indebtedness secured by such Liens does not exceed
$5,000,000 at any time;
(j) Liens on any assets of Grocers Capital Company or any of the
Insurance Subsidiaries;
(k) A Lien to secure the Indebtedness described in SECTION 7.3(i), in
the form of cash collateral in an amount not to exceed the face amount of such
Indebtedness; and
(l) Extensions or renewals of any Lien described in this SECTION
7.1.
7.2 INVESTMENTS. The Borrower shall not, and shall not permit any of its
Subsidiaries to, make or suffer to exist any Investment or enter into any
agreement to make any Investment, except:
(a) Investments in the Borrower's Subsidiaries and other Investments
existing on the Closing Date, in each case as disclosed on SCHEDULE 7.2(a);
(b) Investments hereafter made in any Guarantor;
(c) Investments in Cash Equivalents;
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(d) Investments received in the settlement of any debt owing to the
Borrower or any of its Subsidiaries, where such debt was incurred in the
ordinary course of business;
(e) Investments hereafter made in Grocers Capital Company to the
extent necessary to comply with that certain Second Amended and Restated
Operating Agreement dated as of April 22, 1994, between the Borrower and Grocers
Capital Company, provided that the Borrower assigns to the Agent for the benefit
of the Lenders a note evidencing any such Investment, which assignment shall
secure the Indebtedness evidenced by this Agreement and the Notes on a pari
passu basis with the John Hancock Debt pursuant to an intercreditor agreement in
form and substance satisfactory to the Requisite Lenders in their sole
discretion;
(f) Investments by Grocers Capital Company or any of the
Insurance Subsidiaries in the ordinary course of business;
(g) Investments by the Borrower in member-patrons of the Borrower as
may be approved by the Board of Directors of the Borrower; and
(h) Investments in capital stock of Persons engaged in the same
business as Borrower (or a business reasonably related thereto);
provided, however, at no time shall the aggregate initial value (as determined
in accordance with GAAP but without regard for any write-up or write-down of the
initial value) of outstanding Investments permitted under clauses (g) and (h),
above, exceed $20,000,000; provided further, however, that the Borrower shall
not, and shall not permit any of its Subsidiaries to, make any such Investments
if as of the date of any such Investment and after giving effect to such
Investment the Borrower and its consolidated Subsidiaries would fail to comply
with all covenants under SECTION 8, as measured as of such date.
7.3 LIMITATIONS ON INDEBTEDNESS; CONTINGENT OBLIGATIONS. The Borrower
shall not, and shall not permit any of its Subsidiaries to, create, incur,
assume, guarantee, agree to purchase or repurchase, permit the conversion of its
Stock into, or provide funds in respect of, or otherwise become or be or remain
liable with respect to, any Indebtedness (other than Indebtedness of the
Borrower or its Subsidiaries in favor of the Lenders and the Agent arising under
this Agreement, the Notes and the other Loan Documents) except:
(a) the John Hancock Debt;
(b) Indebtedness secured by Permitted Liens pursuant to SECTION
7.1(b), (g) and (i);
(c) Indebtedness incurred by Grocers Capital Company consisting
of a working capital credit facility at any time in an aggregate amount not to
exceed $10,000,000, and any Contingent Obligations of Grocers Capital Company
with respect to Indebtedness of another Person;
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(d) Indebtedness consisting of Patronage Dividend Certificates, so
long as the subordination provisions relating thereto are no less favorable to
the Lenders than under the Indenture;
(e) Indebtedness consisting of "daylight overdrafts" at the bank
holding the Designated Deposit Account;
(f) Indebtedness incurred by the Borrower or any of its Subsidiaries
in the form of Contingent Obligations with respect to Indebtedness of another
Person, including, without limitation, in the form of guaranties of leases of
real property or equipment entered into by member-patrons of the Borrower,
existing on the Closing Date, as disclosed on SCHEDULE 7.3;
(g) Indebtedness (in addition to the Indebtedness permitted pursuant
to SECTION 7.3(f)) incurred by the Borrower or any of its Subsidiaries in the
form of guaranties of leases of real property or equipment entered into by
patrons of the Borrower in the ordinary course of their businesses;
(h) Indebtedness in the form of any Rate Contract entered in the
ordinary course of business in an amount not to exceed the aggregate amount of
the related Indebtedness; and
(i) The letter of credit no. 5830158 issued by Bankers Trust Company
for the benefit of Milchwerke Mittelelbe GMBH Hoher Weg 3, as further described
in SCHEDULE 7.3, without any extension thereof.
7.4 EMPLOYEE LOANS AND EXECUTIVE COMPENSATION. The Borrower shall not
make or accrue, or permit any of its Subsidiaries to make or accrue, any loans
or other advances of money to any officer or employee of any of them, other than
reimbursable advances, relocation loans and other similar loans and advances
incurred in the ordinary course of the Borrower's business.
7.5 RESTRICTION ON FUNDAMENTAL CHANGES. The Borrower shall not, and shall
not permit any of its Subsidiaries to enter into, any transaction of merger or
consolidation, directly or indirectly, whether by operation of law or otherwise,
or liquidate, wind up or dissolve themselves (or suffer any liquidation or
dissolution), engage in any Asset Sales, suffer to occur a Change of Control;
provided, however, that (a) any of its Subsidiaries may be merged into the
Borrower or any wholly-owned Subsidiary of the Borrower, provided that no Event
of Default or Potential Event of Default has occurred and is continuing or would
result from such merger and the Borrower, if a party to such merger, is the
surviving entity, (b) the Borrower may sell assets (including Stock of a
Subsidiary of the Borrower) if such assets were acquired by the Borrower with
the intent and purpose of transferring such assets to a member-patron of the
Borrower, provided that the Borrower gives the Agent prior written notice of
such intent and purpose, (c) the Borrower may sell Investments permitted under
SECTION 7.2(c) in the ordinary course of business, (d) the Borrower or any
Subsidiary may sell any asset that was acquired by the Borrower or the
Subsidiary subsequent to the Closing Date if such asset is leased back to the
Borrower or the Subsidiary within 180 days after such sale, and (e) the Borrower
and its Subsidiaries may engage in Asset Sales in any Fiscal Year of assets
having a book value in an aggregate amount not to exceed $10,000,000.
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7.6 DIVIDENDS. The Borrower and its Subsidiaries may not declare, make,
pay or set apart any funds for the payment of any dividends or any other
distribution with respect to their Stock or to their shareholders on the basis
of their status as shareholders, make any payment on account of, or set apart
assets for a sinking or other analogous fund for, the purchase, redemption,
retirement or other acquisition of their Stock, whether now or hereafter
outstanding, or make any other distribution in respect thereof to their
shareholders on the basis of their status as shareholders, either directly or
indirectly, whether in cash or property or obligations of the Borrower or such
Subsidiary, except (a) Patronage Dividends, (b) redemption by the Borrower of
its Class A Shares and Class B Shares as required by the Bylaws of the Company
as in effect on the Closing Date, (c) dividends or other distributions made by a
Subsidiary of the Borrower to the Borrower or to a Guarantor, and (d) purchase
of Class B Shares of the Borrower for a price equal to or less than the
Discounted Value of the Class B Shares; provided that the Requisite Lenders
shall have first approved such purchase (which shall not be unreasonably
withheld or delayed).
7.7 TRANSACTIONS WITH AFFILIATES. The Borrower shall not, and shall not
permit any of its Subsidiaries to, enter into or be a party to any agreement or
transaction with any Affiliate of the Borrower, except (a) in the ordinary
course of and pursuant to the reasonable requirements of the Borrower's or its
Subsidiaries' businesses and upon fair and reasonable terms that are approved by
the respective Board of Directors, fully disclosed to the Agent and no less
favorable to the Borrower or its Subsidiaries, as the case may be, than would
obtain in a comparable arm's-length transaction with a Person not an Affiliate
of the Borrower and (b) such other agreements or transactions in accordance with
the practices of the Borrower or its Affiliates, as the case may be, in effect
as of the Closing Date.
7.8 MAINTENANCE OF BUSINESS. The Borrower shall not, and shall not permit
any of its Subsidiaries to, engage in any business materially different than the
businesses currently engaged in by the Borrower or such Subsidiary.
7.9 EVENTS OF DEFAULT. The Borrower shall not take or omit to take any
action, which act or omission would, with the lapse of time, or otherwise
constitute a Potential Event of Default or Event of Default under any of the
Loan Documents.
7.10 ERISA. If the Borrower or any ERISA Affiliate of a Borrower incurs
any obligation to contribute to any Pension Plan, then the Borrower shall not
(i) terminate, or permit such ERISA Affiliate to terminate, any Pension Plan so
as to result in any liability that would have a reasonable likelihood of
resulting in a Material Adverse Effect or (ii) make or permit such ERISA
Affiliate to make a complete or partial withdrawal (within the meaning of
Section 4201 of ERISA) from any Multiemployer Plan so as to result in any
liability that would have a reasonable likelihood of resulting in a Material
Adverse Effect.
7.11 NO USE OF ANY LENDER'S NAME. Except as required by law, the Borrower
shall not, and shall not permit any of its Subsidiaries to, use or authorize
others to use, any Lender's name or marks in any publication or public medium,
including, without limitation, any prospectus, without such Lender's advance
written authorization and neither the Borrower nor any Lender shall use or
authorize others to use the other party's name in any press release or
advertisement without the other
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party's advance written consent.
7.12 NEGATIVE PLEDGE CLAUSES. The Borrower shall not enter into or cause,
suffer or permit to exist any agreement with any Person (other than, with
respect to clause (i), below, the Agent and the Lenders pursuant to this
Agreement and the holders of the John Hancock Debt) which prohibits or limits
the ability of the Borrower or its Subsidiaries (other than Grocers Capital
Company): (i) to create, incur, assume or suffer to exist any Lien upon any of
its Property, assets or revenues, whether now owned or hereafter acquired;
provided, however, that the Borrower or its Subsidiaries may enter into such an
agreement in connection with Property acquired with the proceeds of purchase
money Indebtedness or any Capital Lease permitted by this Agreement when such
prohibition or limitation by its terms is effective only against the assets
subject to such Lien; and (ii) to make payments to the Borrower by way of
dividends, advances, reimbursement or otherwise.
7.13 PREPAYMENT OR MODIFICATION OF INDEBTEDNESS. The Borrower shall not,
without the prior written consent of Requisite Lenders, (a) make any prepayment
of any Indebtedness (other than Indebtedness of the Borrower or its Subsidiaries
in favor of the Lenders and the Agent arising under this Agreement, the Notes
and the other Loan Documents), or (b) modify or amend, or agree to any
modification or amendment of, the terms of any agreement or instrument
evidencing such other Indebtedness (including, without limitation, any
indentures relating to the issuance of Patronage Dividend Certificates) which is
in any way adverse to the interests of the Lenders and the Agent under this
Agreement and the Loan Documents.
SECTION 8. FINANCIAL COVENANTS OF BORROWER.
The Borrower covenants and agrees that so long as any Obligations shall be
outstanding or any Commitment shall be available, unless Requisite Lenders
otherwise shall consent in writing, the Borrower and its consolidated
Subsidiaries shall maintain all of the following financial covenants. The
Borrower agrees and understands that (except as expressly provided herein) all
covenants under this SECTION 8 shall be subject to compliance as measured as of
the last day of each Fiscal Quarter.
8.1 MINIMUM ADJUSTED TANGIBLE NET WORTH. Maintain Adjusted Tangible Net
Worth equal to an amount not less than the sum of (a) $80,000,000 plus (b) an
amount equal to one hundred percent (100.0%) of the Patronage Dividend
Certificates issued after the Closing Date that are first payable after the
Maturity Date plus (c) an amount equal to fifty percent (50.0%) of each prior
Fiscal Year's retained net income of the Borrower and its Subsidiaries (after
payment of Patronage Dividends made or distributed with respect to such Fiscal
Year) commencing with the Fiscal Year ending on August 29, 1998, minus (d) the
aggregate amount paid to purchase Class B Shares pursuant to SECTION 7.6(d).
8.2 MINIMUM WORKING CAPITAL. Maintain Working Capital in an amount equal
to not less than $50,000,000.
8.3 MINIMUM FIXED CHARGE COVERAGE RATIO. Maintain a Fixed Charge Coverage
Ratio as measured on a rolling four (4) Fiscal Quarter basis of not less than
1.80:1.00.
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8.4 MAXIMUM RATIO OF TOTAL FUNDED DEBT TO EBITDAP. Maintain as at the end
of each Fiscal Quarter the ratio of Total Funded Debt to EBITDAP as measured on
a rolling four (4) Fiscal Quarter basis not to exceed 4.0:1.00.
SECTION 9. EVENTS OF DEFAULT AND REMEDIES.
9.1 EVENTS OF DEFAULT. The occurrence of any one or more of the following
shall constitute an Event of Default:
(a) INSTALLMENTS OF PRINCIPAL. The Borrower shall fail to pay any
installment of principal under this Agreement or any of the Notes on the date
such installment shall become due and payable; or
(b) OTHER PAYMENTS. The Borrower shall fail to pay any installment of
interest on any Loan or any of the other Obligations of the Borrower to the
Lenders or the Agent arising under this Agreement, the Notes or any of the other
Loan Documents when and as the same shall become due and payable, whether by
acceleration or otherwise and such failure shall not have been cured to
Requisite Lenders' satisfaction within three (3) Business Days; or
(c) CROSS DEFAULTS. The Borrower or any of its Subsidiaries shall
after any required notice thereunder and after the expiration of applicable
grace periods (i) default in the repayment of any principal of or the payment of
any interest on any Indebtedness exceeding in the aggregate a principal amount
of $5,000,000 , or (ii) breach or violate any term or provision of any
promissory note, loan agreement, mortgage, indenture or other evidence of such
Indebtedness pursuant to which amounts outstanding in the aggregate exceed
$5,000,000, and such failure continues after the applicable grace or notice
period, if any, if the effect of such breach is to permit the acceleration of
such Indebtedness (or any Contingent Obligation to become payable or any
collateral in respect thereof to be demanded (whether or not waived by the note
holder or obligee)); or
(d) REPRESENTATIONS AND WARRANTIES. Any representation or warranty
made by or on behalf of the Borrower in this Agreement or any statement or
certificate at any time given in writing pursuant hereto or in connection
herewith shall be false, misleading or incomplete in any material respect when
made; or
(e) SPECIFIC DEFAULTS. The Borrower shall fail or neglect to perform,
keep or observe any of the covenants contained in SECTIONS 7 OR 8 of this
Agreement; or
(f) OTHER DEFAULTS. Subject to SECTIONS 9.1(a), (b) and (e) of this
Agreement, the Borrower or any of its Subsidiaries shall fail or neglect to
perform, keep or observe any covenant or provision of this Agreement or of any
of the other Loan Documents or any other document or agreement executed by the
Borrower or its Subsidiaries in connection therewith and the same has not been
cured to Requisite Lenders' satisfaction within thirty (30) calendar days after
the Borrower shall become aware thereof, whether by written notice from the
Agent or any Lender or otherwise or should reasonably have become aware thereof;
or
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(g) INSOLVENCY; VOLUNTARY PROCEEDINGS. The Borrower or any of its
Subsidiaries (i) shall cease or fail to be Solvent, or generally shall fail to
pay, or admit in writing its inability to pay, its debts as they become due,
subject to applicable grace periods, if any, whether at stated maturity or
otherwise; (ii) shall voluntarily liquidate, dissolve or cease to conduct its
business in the ordinary course (except for entities without material assets or
revenues); (iii) shall commence any Insolvency Proceeding with respect to
itself; or (iv) shall take any action to effectuate or authorize any of the
foregoing; or
(h) INVOLUNTARY PROCEEDINGS. (i) Any involuntary Insolvency
Proceeding shall be commenced or filed against the Borrower or any of its
Subsidiaries, or any writ, judgment, warrant of attachment, execution or similar
process shall be issued or levied against a substantial part of the Borrower's
or any of its Subsidiaries' Properties, and any such proceeding or petition
shall not be dismissed, or such writ, judgment, warrant of attachment, execution
or similar process shall not be released, vacated or fully bonded within sixty
(60) days after commencement, filing or levy; (ii) if the Borrower or any of its
Subsidiaries shall admit the material allegations of a petition against it in
any Insolvency Proceeding, or an order for relief (or similar order under non-
U.S. law) is ordered in any Insolvency Proceeding; or (iii) the Borrower or any
of its Subsidiaries shall acquiesce in the appointment of a receiver, trustee,
custodian, conservator, liquidator, mortgagee in possession (or agent therefor),
or other similar Person for itself or a substantial portion of its Property or
business; or
(i) MONETARY JUDGMENTS. There shall be a money judgment, writ or
warrant of attachment or similar process entered or filed against the Borrower
or any of its Subsidiaries which is not fully covered by insurance (subject to
reasonable deductibles) and remains unvacated, unbonded, unstayed or unpaid or
undischarged for more than thirty (30) days (whether or not consecutive) or in
any event later than five (5) Business Days prior to the date of any proposed
sale thereunder, which, together with all such other unvacated, unbonded,
unstayed, unpaid and undischarged judgments or attachments against the Borrower
and any of its Subsidiaries exceeds in the aggregate $2,500,000; or
(j) NON-MONETARY JUDGMENTS. Any non-monetary judgment, order or
decree shall be rendered against the Borrower which has a reasonable likelihood
of resulting in a Material Adverse Effect, and there shall be any period of
thirty (30) consecutive days during which a stay of enforcement of such judgment
or order, by reason of a pending appeal or otherwise, shall not be in effect; or
(k) INVALIDITY OF LOAN DOCUMENTS. Any material provision of the Loan
Documents, for any reason other than the satisfaction in full of the Obligations
thereunder, shall cease to be, or shall be asserted by the Borrower not to be, a
legal, valid and binding obligation of the Borrower or its applicable
Subsidiaries, enforceable in accordance with its terms, and such occurrence has
not been cured to Requisite Lenders' satisfaction within five (5) Business Days
after the Borrower shall have received notice of such failure from the Agent or
any Lender or within thirty (30) days of when a Responsible Person shall have
become aware thereof (whichever period is less); or
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(l) CHANGE OF CONTROL. There shall occur any Change of Control;
or
(m) SUSPENSION OF BUSINESS OPERATIONS. If the Borrower or any of its
Subsidiaries shall, other than in the ordinary course of business (as determined
by past practices), suspend all or any part of its operations material to the
conduct of the business of the Borrower or such Subsidiary for a period of more
than sixty (60) consecutive days, which suspension in the good faith judgment of
the Agent would with reasonable likelihood be expected to have a Material
Adverse Effect; or
(n) MATERIAL ADVERSE CHANGE. There shall have been a Material Adverse
Change or any event which would be reasonably likely to result in a Material
Adverse Effect, in the reasonable determination of Requisite Lenders.
9.2 WAIVER OF DEFAULT. Any Event of Default may be waived only with the
written consent of Requisite Lenders; except that any Event of Default under any
of SECTIONS 9.1(a), 9.1(b), 9.1(g) and 9.1(h) of this Agreement may only be
waived with the written consent of all Lenders. Any Event of Default so waived
shall be deemed to have been cured and not to be continuing; but no such waiver
shall be deemed a continuing waiver or shall extend to or affect any subsequent
like default or impair any rights arising therefrom.
9.3 REMEDIES. Upon the occurrence and continuance of any Event of Default
or Potential Event of Default, the Lenders shall have no further obligation to
advance money or extend credit to or for the benefit of the Borrower. In
addition, upon the occurrence and during the continuance of an Event of
Default, the Lenders or the Agent, on behalf of the Lenders, may, at the option
of Requisite Lenders, do any one or more of the following, all of which are
hereby authorized by the Borrower:
(a) Declare all or any of the Obligations of the Borrower under this
Agreement, the Notes, the other Loan Documents and any other instrument executed
by the Borrower pursuant to the Loan Documents to be immediately due and
payable, and upon such declaration such Obligations so declared due and payable
shall immediately become due and payable; provided that if such Event of Default
is under part (g) or (h) of SECTION 9.1 of this Agreement, then all of the
Obligations shall become immediately due and payable forthwith without the
requirement of any notice or other action by the Lenders or the Agent;
(b) Terminate this Agreement as to any future liability or obligation
of the Lenders; provided that if such Event of Default is under part (g) or (h)
of SECTION 9.1 of this Agreement, then all future liability and obligations of
the Lenders shall immediately terminate without the request or notice or other
action by the Lenders or the Agent.
(c) To the extent permitted by laws applicable to the making of
dividends or distributions to equity holders, but without regard to any negative
effect on the Borrower's tax status, require the Borrower to cause each of its
Subsidiaries to dividend to the Borrower all cash flow;
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(d) Exercise in addition to all other rights and remedies granted
hereunder, any and all rights and remedies granted under the Loan Documents or
otherwise available at law or in equity; and
(e) Demand that the Borrower (i) deposit cash with the Agent in an
amount equal to the amount of any Letter of Credit Undrawn Amount remaining
undrawn, as collateral security for the repayment of any future drawings under
such Letters of Credit, and the Borrower shall forthwith deposit and pay such
amounts, and (ii) pay in advance all Letter of Credit fees and commissions
scheduled or payable over the remaining term of each Letter of Credit.
9.4 SET-OFF.
(a) RIGHTS OF SET-OFF. Subject to SECTION 9.4(b) below, during the
continuance of an Event of Default, any deposits or other sums credited by or
due from any Lender to the Borrower may be set off against the Obligations and
any and all other liabilities, direct or indirect, absolute or contingent, due
or to become due, now existing or hereafter arising, of the Borrower to the
Lenders.
(b) REQUISITE LENDERS' CONSENT TO SET-OFF REQUIRED. Each Lender
agrees that it shall not, and that it shall not attempt to, exercise any right
of set-off, banker's lien or similar remedy against any of the Property of the
Borrower without the prior written consent of the Agent or Requisite Lenders.
9.5 SHARING OF PAYMENTS. If, other than as expressly provided elsewhere
herein, any Lender shall receive from the Borrower or any other source
whatsoever on account of the Loans made by it any payment (whether voluntary,
involuntary, through the exercise of any right of set-off, bankers' lien,
counterclaim, cross-action, enforcement of any claim evidenced by this Agreement
or any of the other Loan Documents or by proof thereof in any case under the
Bankruptcy Code or similar proceeding or otherwise) which is in excess of its
respective Pro Rata Share of payments on account of the Loans obtained by all
Lenders with respect to such Loans, such Lender shall forthwith (a) notify the
Agent of such fact and (b) make such dispositions and arrangements with each
other Lender with respect to such excess, either by way of distribution until
the amount of such excess has been exhausted, assignment of claims, subrogation
or otherwise, as shall result in each such Lender receiving in respect of the
amounts due such Lender, under this Agreement its ratable share of such
payments; provided, however, that if all or any part of such excess payment is
thereafter recovered from such Lender, such disposition and arrangements shall
be rescinded and the amount restored to the extent of such recovery, but without
interest.
9.6 RIGHTS AND REMEDIES CUMULATIVE. The Lenders' and the Agent's rights
and remedies under this Agreement shall be cumulative. The Lenders and the
Agent shall have all other rights and remedies not inconsistent herewith as
provided at law or in equity. No exercise by any Lender or the Agent of one
right or remedy shall be deemed an election. No delay by any Lender or the
Agent shall constitute a waiver, election or acquiescence by such party.
SECTION 10. AGENT.
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10.1 APPOINTMENT AND AUTHORIZATION. Each Lender hereby irrevocably
appoints, designates and authorizes Rabobank as the Agent under this Agreement
and under each of the other Loan Documents and irrevocably authorizes the Agent
to take such action on its behalf under and subject to the provisions of this
Agreement and each other Loan Document and to exercise such powers and perform
such duties as are expressly delegated to it by the terms of this Agreement or
any other Loan Document, together with such powers as are reasonably incidental
thereto. Notwithstanding any provision to the contrary contained elsewhere in
this Agreement or in any other Loan Document, the Agent shall not have any
duties or responsibilities, except those expressly set forth herein, nor shall
the Agent have or be deemed to have any fiduciary relationship with any Lender,
and no implied covenants, functions, responsibilities, duties, obligations or
liabilities shall be read into this Agreement or any other Loan Document or
otherwise exist against the Agent.
10.2 DELEGATION OF DUTIES. 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.
10.3 LIABILITY OF AGENT. None of the Agent-Related Persons shall (a) be
liable for any action taken or omitted to be taken by any of them under or in
connection with this Agreement or any other Loan Document (except for its own
gross negligence or willful misconduct), or (b) be responsible in any manner to
any Lender for any recital, statement, representation or warranty made by the
Borrower or any Affiliate of the Borrower, or any officer thereof, contained in
this Agreement or in any other Loan Document, or in any certificate, report,
statement or other document referred to or provided for in, or received by the
Agent under or in connection with, this Agreement or any other Loan Document, or
the validity, effectiveness, genuineness, enforceability or sufficiency of this
Agreement or any other Loan Document, or for any failure of the Borrower or any
other party to any Loan Document to perform their obligations hereunder or
thereunder. No Agent-Related Person shall be under any obligation to any Lender
to ascertain or to inquire as to the observance or performance of any of the
agreements contained in, or conditions of, this Agreement or any other Loan
Document, or to inspect the Properties, books or records of the Borrower or any
of its Affiliates.
10.4 RELIANCE BY AGENT.
(a) The Agent shall be entitled to rely, and shall be fully protected
in relying, upon any writing, resolution, notice, consent, certificate,
affidavit, letter, telegram, facsimile, telex or telephone message, statement or
other document or conversation believed by it to be genuine and correct and to
have been signed, sent or made by the proper Person or Persons, and upon advice
and statements of legal counsel directed to the Agent (including counsel to the
Borrower), independent accountants and other experts selected by the Agent. The
Agent shall be fully justified in failing or refusing to take any action under
this Agreement or any other Loan Document unless it shall first receive such
advice or concurrence of Requisite Lenders or all the Lenders where so required
as it deems appropriate and, if it so requests, it shall first be indemnified to
its satisfaction by the Lenders against any and all liability and expense which
may be incurred by
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it by reason of taking or continuing to take any such action. The Agent shall in
all cases be fully protected in acting, or in refraining from acting, under this
Agreement or any other Loan Document in accordance with a request or consent of
Requisite Lenders or all the Lenders where so required and such request and any
action taken or failure to act pursuant thereto shall be binding upon all of the
Lenders.
(b) For purposes of determining compliance with the conditions
precedent specified in SECTION 4, each Lender that has executed this Agreement
or shall hereafter execute and deliver an Assignment and Acceptance in
accordance with SECTION 11.2(a) of this Agreement shall be deemed to have
consented to, approved or accepted or to be satisfied with each document or
other matter either sent by the Agent to such Lender for consent, approval,
acceptance or satisfaction, or required thereunder to be consented to or
approved by or acceptable or satisfactory to Lender, unless an officer of the
Agent responsible for the transactions contemplated by the Loan Documents shall
have received notice from such Lender prior to the initial Borrowing specifying
its objection thereto and either such objection shall not have been withdrawn by
notice to the Agent to that effect or such Lender shall not have made available
to Agent such Lender's ratable portion of such Borrowing.
10.5 NOTICE OF DEFAULT. The Agent shall not be deemed to have knowledge or
notice of the occurrence of any Potential Event of Default or Event of Default,
except with respect to defaults in the payment of principal, interest and fees
required to be paid to the Agent on behalf and for the benefit of the Lenders,
unless the Agent shall have received written notice from a Lender or the
Borrower referring to this Agreement, describing such Potential Event of 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 give notice
thereof to the Lenders. The Agent shall take such action with respect to such
Potential Event of Default or Event of Default as shall be requested by
Requisite Lenders in accordance with this SECTION 10; provided, however, that
unless and until the Agent shall have received any such request, the Agent may
(but shall not be obligated to) take such action, or refrain from taking such
action, with respect to such Potential Event of Default or Event of Default as
it shall deem in the best interest of the Lenders.
10.6 NON-RELIANCE. Each Lender expressly acknowledges that none of the
Agent-Related Persons has made any representation or warranty to it and that no
act by the Agent hereafter taken, including any review of the affairs of the
Borrower, shall be deemed to constitute any representation or warranty by the
Agent to any Lender. Each Lender confirms to the Agent that it has not relied,
and will not hereafter rely, on the Agent to check or inquire on such Lender's
behalf into the adequacy, accuracy or completeness of any information provided
by the Borrower or any other Person under or in connection with the Loan
Documents or the transactions herein contemplated (whether or not the
information has been or is hereafter distributed to such Lender by the Agent).
Each Lender represents to the Agent that it has, independently and without
reliance upon the Agent and based on such documents and information as it has
deemed appropriate, made its own appraisal of and investigation into the
business, prospects, operations, property, financial and other condition and
creditworthiness of the Borrower, and all applicable bank regulatory laws
relating to the transactions contemplated thereby, and made its own decision to
enter into this Agreement and extend credit to the Borrower under and pursuant
to this Agreement. Each Lender also represents that it will, independently and
without reliance upon the Agent and based on such documents and
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information as it shall deem appropriate at the time, continue to make its own
credit analysis, appraisals and decisions in taking or not taking action under
this Agreement and the other Loan Documents, and to make such investigations as
it deems necessary to inform itself as to the business, prospects, operations,
property, financial and other condition and creditworthiness of the Borrower.
Except for notices, reports and other documents expressly herein required to be
furnished to the Lenders by the Agent, the Agent shall not have any duty or
responsibility to provide any Lender with any credit or other information
concerning the business, prospects, operations, property, financial and other
condition or creditworthiness of the Borrower which may come into the possession
of any Agent-Related Persons. The Agent shall not be responsible to any Lender
for the execution, effectiveness, genuineness, validity, enforceability,
collectibility or sufficiency of this Agreement or any other Loan Document or
for any representations or warranties, recitals r statements made herein or
therein or made in any written or oral statements, or in any financial or other
statements, instruments, reports or certificates or any other documents
furnished or made by the Agent to the Lenders or by or on behalf of the Borrower
to the Agent or any Lender in connection with the Loan Documents and the
transactions contemplated thereby or for the financial condition or business
affairs of the Borrower or any other Person liable for the payment of any
Obligations, nor shall the Agent be required to ascertain or inquire as to the
performance or observance of any of the terms, conditions, provisions, covenants
or agreements contained in any of the Loan Documents or as to the use of the
proceeds of the Loans or as to the existence or possible existence of any Event
of Default or Potential Event of Default.
10.7 INDEMNIFICATION. Whether or not the transactions contemplated hereby
shall be consummated, the Lenders shall indemnify upon demand all Agent-Related
Persons (to the extent not reimbursed by or on behalf of the Borrower and
without limiting the obligation of the Borrower to do so), ratably from and
against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses and disbursements of any kind
whatsoever which may at any time (including at any time following the repayment
of the Loans and the termination or resignation of the related Agent) be imposed
on, incurred by or asserted against any such Person in any way relating to or
arising out of this Agreement or any document contemplated by or referred to
herein or therein or the transactions contemplated hereby or thereby or any
action taken or omitted by any such Person under or in connection with any of
the foregoing; provided, however, that no Lender shall be liable for the payment
to Agent-Related Persons of any portion of such liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements resulting from such Person's gross negligence or willful
misconduct. Without limitation of the foregoing, each Lender shall reimburse
the Agent upon demand for its ratable share of any costs or other out-of-pocket
expenses (including Attorney Costs) incurred by the Agent in connection with the
preparation, execution, delivery, administration, modification, amendment or
enforcement (whether through negotiations, legal proceedings or otherwise) of,
or legal advice in respect of rights or responsibilities under, this Agreement,
any other Loan Document, or any document contemplated by or referred to herein
to the extent that the Agent is not reimbursed for such expenses by or on behalf
of the Borrower. Without limiting the generality of the foregoing, if the IRS
or any other Governmental Authority of the United States of America or other
jurisdiction asserts a claim that the Agent did not properly withhold tax from
amounts paid to or for the account of any Lender (because the appropriate form
was not delivered, was not properly executed, or because such Lender
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failed to notify the Agent of a change in circumstances which rendered the
exemption from, or reduction of, withholding tax ineffective, or for any other
reason), such Lender shall indemnify the Agent fully for all amounts paid,
directly or indirectly, by the Agent as tax or otherwise, including penalties
and interest, and including any taxes imposed by any jurisdiction on the amounts
payable to the Agent under this SECTION 10.7, together with all costs and
expenses (including Attorney Costs). The obligation of the Lenders in this
SECTION 10.7 shall survive the payment of all Obligations.
10.8 AGENT IN INDIVIDUAL CAPACITY. Rabobank and its Affiliates may make
loans to, issue letters of credit for the account of, accept deposits from,
acquire equity interests in and generally engage in any kind of banking, trust,
financial advisory or other business with the Borrower and its Affiliates as
though Rabobank were not the Agent hereunder and without notice to or consent of
the Lenders. With respect to its Loans, Rabobank shall have the same rights and
powers under this Agreement as any other Lender and may exercise the same as
though it were not the Agent, and the terms "Lender" and "Lenders" shall include
Rabobank in its individual capacity.
10.9 SUCCESSOR AGENT. The Agent may, and at the request of Requisite
Lenders shall, resign as the Agent upon thirty (30) days' notice to the Borrower
and the Lenders. If the Agent shall resign as Agent under this Agreement,
Requisite Lenders shall appoint from among the Lenders a successor agent for the
Lenders. If no successor agent is appointed prior to the effective date of the
resignation of the Agent, the Agent may appoint, after consulting with the
Lenders and the Borrower, a successor agent from among the Lenders. Upon the
acceptance of its appointment as successor agent hereunder, such successor agent
shall succeed to all the rights, powers and duties of the retiring Agent and the
term "Agent" shall mean such successor agent and the retiring Agent's
appointment, powers and duties as Agent shall be terminated. After any retiring
Agent's resignation hereunder as Agent, the provisions of this SECTION 10 shall
inure to its benefit as to any actions taken or omitted to be taken by it while
it was the Agent under this Agreement. If no successor agent has accepted
appointment as Agent by the date which is thirty (30) days following a retiring
Agent's notice of resignation, the retiring Agent's resignation shall
nevertheless thereupon become effective and the Lenders shall perform all of the
duties of the Agent hereunder until such time, if any, as Requisite Lenders
appoint a successor agent as provided for above.
SECTION 11. AMENDMENTS AND WAIVERS; ASSIGNMENTS, PARTICIPATION, ETC.
11.1 AMENDMENTS AND WAIVERS. No amendment, modification or waiver of any
provision of this Agreement or any other Loan Document, and no consent with
respect to any departure by the Borrower therefrom, shall be effective unless
the same shall be in writing and signed by Requisite Lenders and acknowledged by
the Agent, and then such waiver shall be effective only in the specific instance
and for the specific purpose for which given; provided, however, that no such
waiver, amendment, or consent shall, unless in writing and signed by all Lenders
and acknowledged by the Agent, do any of the following:
(a) increase or extend the Commitment of any Lender (or reinstate any
Commitment terminated pursuant to SECTION 9.3 of this Agreement) or subject any
Lender to any additional obligations;
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(b) postpone or delay any date fixed for any payment of principal,
interest, fees or other amounts due to the Lenders (or any of them) hereunder or
under any Loan Document;
(c) reduce the principal of, or the rate of interest specified herein
on any Loan, or of any fees or other amounts payable hereunder or under any Loan
Document;
(d) change the percentage of the Commitments or of the aggregate
unpaid principal amount of the Loans which shall be required for the Lenders or
any of them to take any action hereunder;
(e) amend this SECTION 11.1;
and, provided further, that no amendment, modification, waiver or consent shall,
unless in writing and signed by the Agent in addition to Requisite Lenders or
all Lenders, as the case may be, affect the rights or duties of the Agent under
this Agreement or any other Loan Document.
11.2 ASSIGNMENTS, PARTICIPATION, ETC.
(a) Any Lender may, with the written consent executed by the Borrower
(at all times other than during the existence of an Event of Default in which
event the Borrower's consent shall not be required) and the Agent (and written
notice to each other Lender), which consents shall not be unreasonably withheld
or delayed, at any time assign and delegate to one or more Eligible Assignees
(provided that no written consent of the Borrower, the Issuing Bank or the Agent
shall be required in connection with any assignment and delegation by such
Lender to an Affiliate of such Lender which Affiliate is controlled by or under
common control with such Lender) (each an "Assignee") all, or any ratable part
of all, of the Loans, the Commitments and the other rights and obligations of
such Lender hereunder, in a minimum amount of the aggregate Commitments of
$5,000,000; provided, however, that the Borrower and the Agent may continue to
deal solely and directly with such Lender in connection with the interest so
assigned to an Assignee until (a) written notice of such assignment, together
with payment instructions, addresses and related information with respect to the
Assignee, shall have been given to the Borrower and the Agent by such Lender and
the Assignee; (b) such Lender and its Assignee shall have delivered to the
Borrower and the Agent an Assignment and Acceptance in the form of EXHIBIT F
("Assignment and Acceptance") together with any Note or Notes subject to such
assignment; and (c) the assignor Lender or Assignee has paid to the Agent a
processing fee of $3,000; provided that no processing fee shall be charged for
any assignment to a Lender or an Affiliate of a Lender, and further provided
that the Borrower shall not pay any fees or costs in connection with such
assignment.
(b) From and after the date that the Agent notifies the assigning
Lender that it has received an executed Assignment and Acceptance and payment of
the above-referenced processing fee, (i) the Assignee thereunder shall be a
party hereto and, to the extent that rights and obligations hereunder have been
assigned to it pursuant to such Assignment and Acceptance, shall have the rights
and obligations of a Lender under the Loan Documents, and (ii) the assigning
Lender shall, to the extent that rights and obligations hereunder and under the
other Loan Documents have been assigned by it pursuant to such Assignment and
Acceptance, relinquish its rights and be
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released from its obligations under the Loan Documents; provided, however, that
the assigning Lender shall not relinquish its rights to indemnification pursuant
to SECTION 12.5 of this Agreement, such rights to indemnification shall survive
the assignment and the assigning Lender shall retain such rights co-extensively
with the other Indemnitees.
(c) Within five (5) Business Days after its receipt of notice by the
Agent that it has received an executed Assignment and Acceptance and payment of
the processing fee, the Borrower shall execute and deliver to the Agent new
Notes on the same terms and conditions as the original Notes evidencing such
Assignee's assigned Loans and Commitments and, if the assignor Lender has
retained a portion of its Loans and its Commitments, replacement Notes in the
principal amount of the Loans retained by the assignor Lender (such Notes to be
in exchange for, but not in payment of, the Notes held by such Lender).
Immediately upon each Assignor, Lender or its Assignee's making its processing
fee payment under the Assignment and Acceptance, this Agreement shall be deemed
to be amended to the extent, but only to the extent, necessary to reflect the
addition of the Assignee and the resulting adjustment of the Commitments arising
therefrom. The Commitments allocated to each Assignee shall reduce such
Commitments of the assigning Lender pro tanto.
(d) Any Lender may at any time sell to one or more commercial banks or
other Persons not Affiliates of the Borrower and not reasonably known after Due
Inquiry by such Lender to be an active competitor of the Borrower (a
"Participant") participating interests in any Loans, the Commitment of that
Lender and the other interests of that Lender (the "Originating Lender")
hereunder and under the other Loan Documents in a minimum amount of $5,000,000;
provided, however, that (i) the Originating Lender's obligations under this
Agreement shall remain unchanged, (ii) the Originating Lender shall remain
solely responsible for the performance of such obligations, (iii) the Borrower
and the Agent shall continue to deal solely and directly with the Originating
Lender in connection with the Originating Lender's rights and obligations under
this Agreement and the other Loan Documents, and (iv) no Lender shall transfer
or grant any participating interest under which the Participant shall have
rights to approve any amendment to, or any consent or waiver with respect to,
this Agreement or any other Loan Documents, except to the extent such amendment,
consent or waiver would require unanimous consent of Lenders as described in
clauses (a), (c) and (d) of the first proviso to SECTION 11.1 of this Agreement.
In the case of any such participation, the Participant shall be entitled to the
benefit of SECTIONS 3.1, 3.3, 3.6, 11.1 of this Agreement (but solely with
respect to those matters set forth in clauses (a), (c) and (d) thereof requiring
the consent of all Lenders), and 12.3 as though it were also a Lender hereunder,
and if amounts outstanding under this Agreement are due and unpaid, or shall
have been declared or shall have become due and payable upon the occurrence of
an Event of Default, each Participant shall be deemed to have the right of set-
off in respect of its participating interest in amounts owing under this
Agreement to the same extent as if the amount of its participating interests
were owing directly to it as a Lender under this Agreement.
(e) Each Lender agrees to take normal and reasonable precautions and
exercise due care to maintain the confidentiality of all information identified
as "confidential" by the Borrower and provided to it by the Borrower, or by the
Agent on the Borrower's behalf, in
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connection with this Agreement or any other Loan Document, and neither it nor
any of its Affiliates shall use, or disclose any such information for any
purpose or in any manner other than pursuant to the terms contemplated by this
Agreement; except to the extent such information (i) was or becomes generally
available to the public other than as a result of a disclosure by such Lender,
or (ii) was or becomes available on a non-confidential basis from a source other
than the Borrower, provided that such source is not bound by a confidentiality
agreement with the Borrower known to Lender; provided, however, that any Lender
may disclose such information (a) at the request or pursuant to any requirement
of any Governmental Authority to which such Lender is subject or in connection
with an examination of such Lender by any such authority; (b) pursuant to
subpoena or other court process; (c) when otherwise required to do so in
accordance with the provisions of any applicable Requirement of Law; and (d) to
such Lender's independent auditors and other professional advisors, provided
that such auditors and professional advisors shall be required to similarly
protect the confidentiality of such information. Notwithstanding the foregoing,
the Borrower authorizes each Lender to disclose to any Participant or Assignee
(each, a "Transferee") and to any prospective Transferee, such financial and
other information in such Lender's possession concerning the Borrower which has
been delivered to the Agent or the Lenders pursuant to this Agreement or which
has been delivered to the Agent or the Lenders by the Borrower in connection
with the Lenders' credit evaluation of the Borrower prior to entering into this
Agreement; provided that, unless otherwise agreed in writing in advance by the
Borrower, such Transferee agrees in writing to such Lender and the Borrower to
keep such information confidential to the same extent required of Lenders
hereunder.
(f) Notwithstanding any other provision contained in this Agreement or
any other Loan Document to the contrary, any Lender may assign all or any
portion of the Loans or Notes held by it to any Federal Reserve Bank or the
United States Treasury as collateral security pursuant to Regulation A of the
Board of Governors of the Federal Reserve System and any Operating Circular
issued by such Federal Reserve Bank, provided that any payment in respect of
such assigned Loans or Notes made by the Borrower to or for the account of the
assigning or pledging Lender in accordance with the terms of this Agreement
shall satisfy the Borrower's obligations hereunder in respect to such assigned
Loans or Notes to the extent of such payment. No such assignment shall release
the assigning Lender from its obligations hereunder.
SECTION 12. MISCELLANEOUS.
12.1 NO WAIVER BY AGENT OR LENDERS. No failure or delay on the part of the
Agent or any Lender in the exercise of any power, right or privilege under this
Agreement, the Notes or any of the other Loan Documents shall impair such power,
right or privilege or be construed to be a waiver of any default or acquiescence
therein, nor shall any single or partial exercise of any such power, right or
privilege preclude other or further exercise thereof or of any other right,
power or privilege.
12.2 ENTIRE AGREEMENT; CONSTRUCTION.
(a) This Agreement, the Notes and each of the other Loan Documents
dated as of the date hereof, taken together, constitute and contain the entire
agreement among the
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Borrower, the Lenders and the Agent and supersede any and all prior agreements,
negotiations, correspondence, understandings and communications among the
parties, whether written or oral, respecting the subject matter hereof.
(b) This Agreement is the result of negotiations between and has been
reviewed by the Borrower, the Lenders executing this Agreement as of the Closing
Date and the Agent and their respective counsel; accordingly, this Agreement
shall be deemed to be the product of the parties hereto, and no ambiguity shall
be construed in favor of or against the Borrower, the Lenders or the Agent. The
Borrower, the Lenders and the Agent each severally agree that they intend the
literal words of this Agreement and the other Loan Documents and that no parole
evidence shall be necessary or appropriate to establish the Borrower's, any
Lender's or the Agent's actual intentions.
12.3 INDEMNIFICATION. To the fullest extent permitted by law, the Borrower
agrees to protect, indemnify, defend and hold harmless the Agent, each Lender
and each of their respective directors, officers, employees and agents and any
Person who controls any of them within the meaning of the federal, state and
foreign securities laws (each an "Indemnitee" and collectively, the
"Indemnitees") from and against any liabilities, losses, obligations, damages,
penalties, expenses or costs of any kind or nature and from any suits,
judgments, claims or demands (including, without limitation, in respect of or
for reasonable fees and other disbursements of counsel for and consultants of
such Indemnitees in connection with any investigative, administrative or
judicial proceeding, whether or not such Indemnitees shall be designated a party
thereto) based on any federal, state, local or foreign law or other statutory
regulation, including, without limitation, securities, environmental and
commercial law or other statutory regulation, which arises under common law or
at equitable cause or on contract or otherwise on account of or in connection
with any matter or thing or any action or failure to act by the Indemnitees, or
any of them, arising out of or relating to the Loan Documents or any agreement
or instrument contemplated by the Loan Documents, except to the extent such
liability arises from the willful misconduct or gross negligence of any of the
Indemnitees (collectively, the "Indemnified Matters"). Upon receiving knowledge
of any suit, claim, demand or any other matter asserted by any Person that the
Agent or any Lender believes is covered by this indemnity, the Agent or such
Lender shall give the Borrower notice of the matter and an opportunity to defend
it, at the Borrower's sole cost and expense, with legal counsel reasonably
satisfactory to the Agent and the Lenders. The Agent or the Lenders may also
require the Borrower to defend the matter. The obligations of the Borrower
under this SECTION 12.5 shall survive the payment and performance of the
Obligations and the termination of this Agreement. To the extent that the
undertaking to indemnify, pay and hold harmless set forth in this SECTION 12.5
may be unenforceable because it is violative of any law or public policy, the
Borrower shall contribute the maximum portion which it is permitted to pay and
satisfy under applicable law to the payment and satisfaction of all Indemnified
Matters incurred by the Indemnitees.
12.4 NOTICES.
(a) All notices, requests and other communications provided for
hereunder shall be in writing (including, unless the context expressly otherwise
provides, by facsimile transmission, provided that any matter transmitted by the
Borrower by facsimile (i) shall be
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confirmed by receipt of electronic confirmation, and (ii) shall be followed
promptly by a hard copy original thereof) and mailed, faxed or delivered, to the
address or facsimile number specified for notices on the applicable signature
page hereof; or, as directed to the Borrower or the Agent, to such other address
as shall be designated by such party in a written notice to the other parties,
and as directed to each other party, at such other address as shall be
designated by such party in a written notice to the Borrower and the Agent.
(b) All such notices, requests and communications shall, when
transmitted by overnight delivery, be effective when delivered for overnight
(next day) delivery, or if delivered, upon delivery, except that notices
pursuant to SECTIONS 2 or 10 of this Agreement and notices transmitted by
facsimile machine shall not be effective until actually received by the Agent.
(c) The Borrower and the Lenders acknowledge and agree that any
agreement of the parties to receive certain notices by telephone and facsimile
is for their mutual benefit and convenience. Any party shall be entitled to
rely on the authority of any Person purporting to be a Person authorized by any
other party to give such notice and the party relying on such authorization
shall not have any liability to any other Person on account of any action taken
or not taken by such party in reliance upon such telephonic or facsimile notice.
The obligation of the Borrower to repay the Loans shall not be affected in any
way or to any extent by any failure by the Agent to receive written confirmation
of any telephonic or facsimile notice or the receipt by the Agent of a
confirmation which is at variance with the terms understood by the Agent to be
contained in the telephonic or facsimile notice.
12.5 NOTIFICATION OF ADDRESSES, LENDING OFFICES, ETC. Each Lender shall
notify the Agent in writing of any changes in the address to which notices to
such Lender should be directed, of addresses of its Lending Office, of payment
instructions in respect of all payments to be made to it hereunder and of such
other administrative information as the Agent shall reasonably request.
12.6 COUNTERPARTS. This Agreement and any amendments, waivers, consents or
supplements hereto may be executed in any number of counterparts, and by
different parties hereto in separate counterparts, each of which when so
executed and delivered shall be deemed an original, but all such counterparts
together shall constitute but one and the same instrument. Each such agreement
shall become effective upon the execution of a counterpart hereof or thereof by
each of the parties hereto or thereto, delivery of each such counterpart to the
Agent, and notification thereof by the Agent has been received by the Borrower
and the Lenders.
12.7 COSTS AND EXPENSES. The Borrower shall, whether or not the
transactions contemplated hereby shall be consummated, and in addition to costs
and expenses required to be paid at Closing under SECTION 4.1 of this Agreement:
(a) pay or reimburse Rabobank (including in its capacity as the Agent)
within thirty (30) days after demand for all costs and expenses incurred by
Rabobank (including in its capacity as the Agent) in connection with the
preparation, delivery, administration and execution of, and any amendment,
supplement, waiver or modification to (in each case, whether or not
consummated), this Agreement, any other Loan Document and any other documents
prepared in
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connection herewith (including any commitment letter and related documents
preceding this Agreement) or therewith, and the consummation of the transactions
contemplated hereby and thereby, including the reasonable Attorney Costs
incurred by Rabobank as to any amendments, supplements, waivers or modifications
(including in its capacity as the Agent) with respect hereto and thereto;
(b) pay or reimburse the Agent and each Lender within thirty (30) days
after demand for all costs and expenses incurred by them in connection with the
enforcement, attempted enforcement, or preservation of any rights or remedies
(including in connection with any "workout" or restructuring regarding the
Loans, and including in any Insolvency Proceeding or appellate proceeding) under
this Agreement, any other Loan Document, and any such other documents, including
Attorney Costs incurred by the Agent and any Lender; and
(c) pay or reimburse Rabobank (including in its capacity as the Agent)
within thirty (30) days after demand for all reasonable audit, environmental
inspection and review, search and filing, registration and recording, costs,
fees and expenses, incurred or sustained by Rabobank (including in its capacity
Agent) in connection with the matters referred to under clauses (a) and (b) of
this SECTION 12.9 of this Agreement.
12.8 RELIANCE BY LENDERS. All covenants, agreements, representations and
warranties made herein by the Borrower shall, notwithstanding any investigation
by the Lenders or the Agent be deemed to be material to and to have been relied
upon by the Lenders.
12.9 NO SET-OFFS BY BORROWER. All sums payable by the Borrower pursuant
to this Agreement, the Notes or any of the other Loan Documents shall be payable
without notice or demand and shall be payable in United States Dollars without
set-off or reduction of any manner whatsoever; provided, however, that
notwithstanding the requirement that all payments be made without set-off or
reduction, if any invoice by the Agent for interest, loan fees or letter of
credit commissions incorrectly states that the Borrower owes an amount greater
than the amount actually due, the Borrower pays the amount due on such invoice
and then such error is corrected by Agent or determined as having been made by a
court having jurisdiction pursuant to the terms of this Agreement, then the
Borrower may apply the amount of such overpayment toward future payments due
hereunder or, in the event no further payments will fall due hereunder, recover
such overpayment from the Lenders.
12.10 SUCCESSORS AND ASSIGNS. The provisions of this Agreement shall
be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns, except that the Borrower may not assign or
transfer any of its rights or obligations under this Agreement without the prior
written consent of the Agent and each Lender.
12.11 HEADINGS. Section and subsection headings in this Agreement are
included herein for convenience of reference only and shall not constitute a
part of this Agreement for any other purpose or be given any substantive effect.
12.12 SEVERABILITY. Whenever possible, each provision of this Agreement,
the Notes and
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each of the other Loan Documents shall be interpreted in such a manner as to be
valid, legal and enforceable under the applicable law of any jurisdiction.
Without limiting the generality of the foregoing sentence, in case any provision
of this Agreement, the Notes or any of the other Loan Documents shall be
invalid, illegal or unenforceable under the applicable law of any jurisdiction,
the validity, legality and enforceability of the remaining provisions, or of
such provision in any other jurisdiction, shall not in any way be affected or
impaired thereby.
12.13 NO THIRD PARTIES BENEFITED. This Agreement is made and entered
into for the sole protection and legal benefit of the Borrower, the Lenders and
the Agent, and their permitted successors and assigns, and except as otherwise
expressly provided in this Agreement, no other Person shall be a direct or
indirect legal beneficiary of, or have any direct or indirect cause of action or
claim in connection with, this Agreement or any of the other Loan Documents.
Neither the Agent nor any Lender shall have any obligation to any Person not a
party to this Agreement or other Loan Documents.
12.14 RELATIONSHIP OF PARTIES. The relationship between the Borrower,
on the one hand, and the Lenders and the Agent, on the other, is, and at all
times shall remain, solely that of a borrower and lenders. Neither the Lenders
nor the Agent shall under any circumstances be construed to be partners or joint
venturers of the Borrower or any of its Affiliates; nor shall the Lenders nor
the Agent under any circumstances be deemed to be in a relationship of
confidence or trust or a fiduciary relationship with the Borrower or any of its
Affiliates, or to owe any fiduciary duty to the Borrower or any of its
Affiliates. The Lenders and the Agent do not undertake or assume any
responsibility or duty to the Borrower or any of its Affiliates to select,
review, inspect, supervise, pass judgment upon or otherwise inform the Borrower
or any of its Affiliates of any matter in connection with its or their Property,
any security held by the Agent or any Lender or the operations of the Borrower
or any of its Affiliates. The Borrower and each of their Affiliates shall rely
entirely on their own judgment with respect to such matters, and any review,
inspection, supervision, exercise of judgment or supply of information
undertaken or assumed by any Lender or the Agent in connection with such matters
is solely for the protection of the Lenders and the Agent and neither the
Borrower nor any of its Affiliates is entitled to rely thereon.
12.15 TIME. Time is of the essence as to each term or provision of this
Agreement and each of the other Loan Documents.
12.16 WAIVER OF PUNITIVE DAMAGES. Notwithstanding anything to the contrary
contained in this Agreement, the Borrower hereby agrees that it shall not seek
from the Lenders or the Agent punitive damages under any theory of liability.
12.17 GOVERNING LAW. EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN ANY OF
THE LOAN DOCUMENTS, IN ALL RESPECTS, INCLUDING ALL MATTERS OF CONSTRUCTION,
VALIDITY AND PERFORMANCE, THIS AGREEMENT AND THE OBLIGATIONS ARISING HEREUNDER
SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF
THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND PERFORMED IN SUCH STATE,
WITHOUT REGARD TO THE PRINCIPLES THEREOF REGARDING CONFLICT OF LAWS, AND ANY
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APPLICABLE LAWS OF THE UNITED STATES OF AMERICA.
12.18 PERSONAL JURISDICTION. THE BORROWER, THE AGENT, EACH LENDER AND
ALL ASSIGNEES AND PARTICIPANTS HEREBY IRREVOCABLY AGREE THAT ANY LEGAL ACTION OR
PROCEEDING WITH RESPECT TO THIS AGREEMENT, THE LOAN DOCUMENTS OR ANY OF THE
AGREEMENTS, DOCUMENTS OR INSTRUMENTS DELIVERED IN CONNECTION HEREWITH MAY BE
BROUGHT IN THE COURTS OF THE STATE OF NEW YORK OR OF THE UNITED STATES OF
AMERICA, LOCATED IN THE BOROUGH OF MANHATTAN, CITY OF NEW YORK, AS THE AGENT MAY
ELECT, AND, BY EXECUTION AND DELIVERY HEREOF, ACCEPTS AND CONSENTS TO, FOR
ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, THE
JURISDICTION OF THE AFORESAID COURTS AND AGREES THAT SUCH JURISDICTION SHALL BE
EXCLUSIVE, UNLESS WAIVED BY THE AGENT IN WRITING, WITH RESPECT TO ANY ACTION OR
PROCEEDING BROUGHT HEREUNDER BY THE BORROWER AGAINST THE AGENT OR ANY LENDER.
THE PARTIES HEREBY WAIVE, TO THE FULL EXTENT PERMITTED BY LAW, ANY RIGHT TO STAY
OR TO DISMISS ANY ACTION OR PROCEEDING BROUGHT BEFORE SAID COURTS ON THE BASIS
OF FORUM NON CONVENIENS.
12.19 WAIVER OF JURY TRIAL. THE BORROWER, EACH LENDER AND THE AGENT,
HEREBY IRREVOCABLY WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL WITH RESPECT TO
ANY ACTION, CLAIM OR OTHER PROCEEDING ARISING OUT OF ANY DISPUTE IN CONNECTION
WITH THIS AGREEMENT, THE NOTES OR ANY OF THE OTHER LOAN DOCUMENTS, ANY RIGHTS OR
OBLIGATIONS HEREUNDER OR THEREUNDER, OR THE PERFORMANCE OF SUCH RIGHTS AND
OBLIGATIONS.
WITNESS the due execution of this Revolving Credit Agreement by the
respective duly authorized officers of the undersigned as of the date first
written above.
BORROWER CERTIFIED GROCERS OF CALIFORNIA, LTD.,
a California corporation
By:________________________________
David A. Woodward
Treasurer
Notices to Borrower to be sent to:
CERTIFIED GROCERS OF CALIFORNIA, LTD.
2601 South Eastern Avenue
Los Angeles, California 90040
Attention: Chief Executive Officer and
Corporate Secretary
Telephone: (213) 723-7476
Facsimile: (213) 888-2915
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With a copy to:
SHEPPARD, MULLIN, RICHTER & HAMPTON LLP
333 South Hope Street, 48th Floor
Los Angeles, California 90071-1448
Attention: Charles E. McCormick, Esq.
Telephone: (213) 620-1780
Facsimile: (213) 620-1398
AGENT COOPERATIEVE CENTRALE RAIFFEISEN-
BOERENLEENBANK B.A., "RABOBANK
NEDERLAND", NEW YORK BRANCH,
as the Agent and as a Lender
By:______________________________
Bradford F. Scott
Vice President
By:______________________________
Name:____________________________
Title:___________________________
Payment Office and Domestic Lending Office:
RABOBANK NEDERLAND
245 Park Avenue
New York, New York 10167
Attention: Corporate Services Department
Wiring Instructions:
Bank of New York
ABA No. 021000018
A/C Rabobank New York
A/C No. 802 6002533
Re: Certified Grocers of California, Ltd.
Notices to be sent to:
Rabobank Nederland
245 Park Avenue
New York, New York 10167
Attention: Corporate Finance Department
Telephone: (212) 916-7800
Facsimile: (212) 818-0233
With a copy to:
Rabobank Nederland
Four Embarcadero Center, Suite 3200
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San Francisco, California 94111
Attention: Bradford F. Scott
Telephone: (415) 782-9808
Facsimile: (415) 986-8349
With a copy to:
Cooley Godward llp
One Maritime Plaza, 20th Floor
San Francisco, California 94111
Attention: Peter H. Carson, Esq.
Telephone: (415) 693-2000
Telecopy: (415) 951-3699
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May 6, 1998
Certified Grocers of California, Ltd.
2601 South Eastern Avenue
Los Angeles, CA 90040
Re: Form S-2 Registration Statement of Certified Grocers of California, Ltd.
Ladies and Gentlemen:
This opinion is rendered to you in connection with a Registration Statement
on Form S-2 (the "Registration Statement") being filed by Certified Grocers of
California, Ltd. (the "Company") with the Securities and Exchange Commission
on May 6, 1998 in connection with the registration under the Securities Act of
1933, as amended, of $50,000,000 Partially Subordinated Patrons' Deposit
Accounts (the "Deposit Accounts") of the Company.
We have acted as counsel for the Company in connection with the preparation
of the Registration Statement. In rendering the opinion expressed below, we
have examined the following agreements, instruments and other documents:
(a) The form of Retail Grocer Application and Agreement for Service
Affiliation with and the Purchase of Shares of Certified Grocers of
California, Ltd. and Pledge Agreement;
(b) The form of Account Guarantee Deposit (Member Patron);
(c) The form of Retail Grocer Application and Agreement for Continuing
Service Affiliation with Certified Grocers of California, Ltd. and Pledge
Agreement;
(d) The form of Retail Grocer Application for Service Affiliation as
Associate Patron of Certified Grocers of California, Ltd. and Pledge
Agreement;
(e) The forms of Subordination Agreement executed by member patrons
before January 14, 1994;
(f) The forms of Subordination Agreement executed by associate patrons
before January 14, 1994;
(g) The form of Subordination Agreement executed by member patrons on or
after January 14, 1994;
(h) The form of Subordination Agreement executed by associate patrons on
or after January 14, 1994; and
(i) Such corporate records, officers' certificates and other documents as
we have deemed necessary as a basis for the opinion expressed below.
In rendering the opinion set forth below, we have assumed:
(1) The genuineness of all signatures, the authenticity of all documents
submitted to us as originals, the conformity to the originals of all
documents submitted to us as copies, and the authenticity of all such
originals; and
(2) The conformity of all executed agreements and other documents to the
forms of such agreements and other documents reviewed by us in rendering
this opinion.
On the basis of the foregoing, and subject to the qualifications and
limitations set forth below, it is our opinion that the Deposit Accounts will,
upon the offering and sale thereof in the manner referred to in the
Registration Statement, be binding obligations of the Company, subject to
bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and
similar laws of general applicability relating to or affecting creditors'
rights and general equity principles (regardless of whether such
enforceability is considered in a proceeding in equity or at law).
Exhibit 5.1
<PAGE>
This opinion letter is solely for your benefit in connection with the
subject transaction, and it may not be relied upon by or quoted to, nor,
except as stated in the immediately following paragraph, may copies of it be
delivered to or used by, any other person for any purpose whatsoever without
our prior written consent in each instance.
We hereby consent to the use of this opinion as an exhibit to the
Registration Statement and the use of our name in the Registration Statement.
Respectfully submitted,
/s/ Sheppard, Mullin, Richter &
Hampton LLP
<PAGE>
CERTIFIED GROCERS OF CALIFORNIA, LTD. AND SUBSIDIARIES
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
<TABLE>
<CAPTION>
SIX
MONTHS FISCAL YEAR
ENDED ---------------------------------------
2/28/98 1997 1996 1995 1994 1993
------- ------- ------- ------- ------- -------
(THOUSANDS OMITTED EXCEPT FOR RATIOS)
<S> <C> <C> <C> <C> <C> <C>
Adjusted net earnings(1):
Net earnings.................. $ 1,179 $ 2,307 $ 1,517 $ 769 $ 94 $ 473
Income tax provision.......... 584 1,103 745 106 203 530
Interest expense.............. 6,507 13,020 14,406 15,260 15,405 15,784
Estimated interest component
of rental expense(c)......... 775 1,790 2,105 2,263 2,214 2,099
Patronage Dividends........... 7,410 14,464 13,200 11,571 10,837 12,880
------- ------- ------- ------- ------- -------
Adjusted net earnings(a)..... $16,455 $32,684 $31,973 $29,969 $28,753 $31,766
======= ======= ======= ======= ======= =======
Fixed Charges(1):
Gross rental expense.......... $ 7,381 $17,050 $20,539 $21,051 $22,707 $23,326
Less, estimated rent
component.................... 6,606 15,260 18,434 18,788 20,493 21,227
------- ------- ------- ------- ------- -------
Estimated interest component
of rental expense(c)......... 775 1,790 2,105 2,263 2,214 2,099
Interest incurred............. 6,507 13,020 14,406 15,260 15,405 15,784
------- ------- ------- ------- ------- -------
Fixed charges(b)............. $ 7,282 $14,810 $16,511 $17,523 $17,619 $17,883
======= ======= ======= ======= ======= =======
Ratio of Earnings to Fixed
Charges(a)/(b)................ 2.26 2.21 1.94 1.71 1.63 1.78
======= ======= ======= ======= ======= =======
</TABLE>
- --------
(a)(b)(c) -- Cross Reference on page.
(1) Earnings used in computing the ratio of earnings to fixed charges consist
of earnings before patronage dividends, provision for income taxes, and
cumulative effect of change in accounting principle in 1994 of $2.5
million, plus fixed charges. Fixed charges consist of interest expense
(including amortization of deferred financing costs) and the portion of
rental expense that is representative of the interest factor.
Exhibit 12.1
<PAGE>
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration Statement
of Certified Grocers of California, Ltd. on Form S-2 of our report dated
October 31, 1997, appearing in the Annual Report on Form 10-K of Certified
Grocers of California, Ltd. for the years ended August 30, 1997 and August 31,
1996 and to the reference to us under the heading "Experts" in the Prospectus,
which is part of such Registration Statement.
Deloitte & Touche LLP
Los Angeles, California
May 5, 1998
Exhibit 23.2
<PAGE>
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in this Registration Statement
on Form S-2 of our report dated November 27, 1995, appearing on page 15 of the
Annual Report on Form 10-K, on our audit of the related consolidated statement
of earnings, shareholders' equity, and cash flow for the fiscal year ended
September 2, 1995. We also consent to the reference to our Firm under the
caption "Experts."
Coopers & Lybrand L.L.P.
Los Angeles, California
May 4, 1998
Exhibit 23.3
