<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934.
For the quarterly period ended November 28, 1998
------------------------------------------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934.
For the transition period from ____________________ to _________________________
Commission file number 0-10815
- --------------------------------------------------------------------------------
Certified Grocers of California, Ltd.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
<TABLE>
<CAPTION>
<S> <C>
California 95-0615250
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(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.)
</TABLE>
5200 Sheila Street, Los Angeles 90040
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(323) 264-5200
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Registrant's telephone number, including area code
- --------------------------------------------------------------------------------
(Former Name, former address and former fiscal year, if changed since last
report)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
----- -----
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Sections 12, 13, or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court. Yes No
----- -----
APPLICABLE ONLY TO CORPORATE ISSUERS
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Class A Shares 47,000 Shares as of November 28, 1998
Class B Shares 380,146 Shares as of November 28, 1998
Class C Shares 15 Shares as of November 28, 1998
1
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PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
- ----------------------------
CERTIFIED GROCERS OF CALIFORNIA, LTD. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(dollars in thousands)
<TABLE>
<CAPTION>
(Unaudited)
November 28, August 29,
1998 1998
----------------------- ---------------------
<S> <C> <C>
ASSETS
Current:
Cash and cash equivalents $ 10,717 $ 4,105
Accounts and notes receivable 108,168 95,672
Inventories 129,342 124,419
Prepaid expenses 4,499 4,744
Deferred taxes 3,853 3,853
----------------------- ---------------------
Total current assets 256,579 232,793
Properties, at cost 163,516 160,808
Less, accumulated depreciation (87,809) (84,509)
----------------------- ---------------------
75,707 76,299
Investments 41,518 41,341
Notes receivable 19,198 21,792
Other assets 17,286 16,993
----------------------- ---------------------
TOTAL ASSETS $410,288 $389,218
======================= =====================
LIABILITIES AND SHAREHOLDERS' EQUITY
Current:
Accounts payable $ 71,450 $ 80,870
Accrued liabilities 58,636 51,767
Notes payable 756 743
Patrons' excess deposits and estimated patronage dividends 16,583 13,630
----------------------- ---------------------
Total current liabilities 147,425 147,010
Notes payable, due after one year 142,936 125,130
Long-term liabilities 21,376 20,440
Patrons' deposits and certificates:
Patrons' required deposits 13,250 12,147
Subordinated patronage dividend certificates 6,158 6,158
Shareholders' equity:
Class A Shares 5,585 5,479
Class B Shares 56,992 56,992
Retained earnings 16,194 15,685
Net unrealized gain on appreciation of investments 428 233
Minimum pension liability adjustment (56) (56)
----------------------- ---------------------
Total shareholders' equity 79,143 78,333
----------------------- ---------------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $410,288 $389,218
======================= =====================
</TABLE>
The accompanying notes are an integral part of these statements.
2
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CERTIFIED GROCERS OF CALIFORNIA, LTD. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF EARNINGS (UNAUDITED)
(dollars in thousands)
<TABLE>
<CAPTION>
13 Weeks Ended
------------------------------------------------------------
November 28, November 29,
1998 1997
------------------------- ---------------------
<S> <C> <C>
Net sales $462,141 $486,953
------------------------- ---------------------
Costs and expenses:
Cost of sales 422,980 445,220
Distribution, selling and administrative 32,249 33,894
------------------------- ---------------------
Operating income 6,912 7,839
Interest expense (2,856) (3,215)
------------------------- ---------------------
Earnings before estimated patronage dividends and
provision for income taxes 4,056 4,624
Estimated patronage dividends (3,263) (3,792)
------------------------- ---------------------
Earnings before income tax provision 793 832
Provision for income taxes 250 285
------------------------- ---------------------
Net earnings $ 543 $ 547
========================= =====================
</TABLE>
The accompanying notes are an integral part of these statements.
3
<PAGE>
<TABLE>
<CAPTION>
CERTIFIED GROCERS OF CALIFORNIA, LTD. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)
FOR THE THIRTEEN WEEKS ENDED NOVEMBER 28, 1998 AND NOVEMBER 29, 1997
(dollars in thousands)
November 28, November 29,
1998 1997
-------------------- ----------------------
<S> <C> <C>
Cash flows from operating activities:
Net earnings $ 543 $ 547
-------------------- ----------------------
Adjustments to reconcile net earnings to net
cash utilized by operating activities:
Depreciation and amortization 3,864 3,262
(Gain) loss on disposal of properties (17) 66
Decrease (increase) in assets:
Accounts and notes receivable (12,496) (4,391)
Inventories (4,923) 4,298
Prepaid expenses 245 598
Notes receivable (58) (523)
Increase (decrease) in liabilities:
Accounts payable (9,420) (32,067)
Accrued liabilities 6,869 5,833
Patrons' excess deposits and estimated
patronage dividends 2,953 2,750
Long-term liabilities, other 936 838
-------------------- ----------------------
Net cash utilized by operating activities (11,504) (18,789)
-------------------- ----------------------
Cash flows from investing activities:
Purchase of properties (2,770) (4,350)
Proceeds from sales of properties 17 984
Increase in other assets (795) (1,017)
Investment in securities, net 18 (1,363)
Proceeds from sale of notes receivable 2,652
-------------------- ----------------------
Net cash utilized by investing activities ( 878) (5,746)
-------------------- ----------------------
Cash flows from financing activities:
Additions to long-term notes payable 18,000 27,793
Reduction of short-term notes payable (181) (653)
Increase (decrease) in members' required deposits 1,103 (265)
Repurchase of shares from members (183) (210)
Issuance of shares to members 255 88
-------------------- ----------------------
Net cash provided by financing activities 18,994 26,753
-------------------- ----------------------
Net increase in cash and cash equivalents 6,612 2,218
Cash and cash equivalents at beginning of year 4,105 7,900
-------------------- ----------------------
Cash and cash equivalents at end of period $ 10,717 $ 10,118
==================== ======================
Supplemental disclosure of cash flow information:
Cash paid during the period for:
Interest $2,938 $3,617
Income taxes 90
</TABLE>
The accompanying notes are an integral part of these statements.
4
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CERTIFIED GROCERS OF CALIFORNIA, LTD., AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
1. The consolidated condensed financial statements include the accounts of
Certified Grocers of California, Ltd. and all of its subsidiaries (the
"Company"). Intercompany transactions and accounts with subsidiaries have been
eliminated. The interim financial statements included herein have been prepared
by the Company without audit, pursuant to the rules and regulations promulgated
by the Securities and Exchange Commission (the "Commission"). Certain
information and footnote disclosures, normally included in the financial
statements prepared in accordance with generally accepted accounting principles,
have been omitted pursuant to Commission rules and regulations; nevertheless,
management believes that the disclosures are adequate to make the information
presented not misleading. These condensed financial statements should be read
in conjunction with the audited financial statements and notes thereto included
in the Company's latest annual report filed on Form 10-K. The results of
operations for the interim periods are not necessarily indicative of the results
for the full year.
2. The accompanying consolidated condensed financial statements reflect all
adjustments which are, in the opinion of management, both of a normal recurring
nature and necessary for a fair statement of the results of the interim periods
presented. Certain reclassifications have been made to prior period financial
statements to present them on a basis comparable with the current period's
presentation.
3. The Company reclassified $194,000 from long-term to short-term debt (a
noncash financing activity) for the thirteen weeks ended November 28, 1998, in
its Consolidated Condensed Statements of Cash Flows.
4. As of August 30, 1998, the Company adopted Statement of Financial Accounting
Standards No. 130, "Reporting Comprehensive Income." This statement establishes
standards for reporting and display of comprehensive income and its components.
Comprehensive income is net income, plus certain other items that are recorded
directly to shareholders' equity, bypassing net income. The only items
currently applicable to the Company are the unrealized gain or loss on
appreciation of investments and the minimum pension liability adjustment.
Comprehensive income was $739,000 and $768,000 for the thirteen weeks ended
November 28, 1998 and November 29, 1997, respectively. The adoption of the
Statement had no effect on the Company's results of operations or financial
position.
5. In March 1998, the Accounting Standards Executive Committee (AcSEC) issued
Statement of Position 98-1, "Accounting for the Costs of Computer Software
Developed or Obtained for Internal-Use" ("SOP 98-1"). The SOP will be effective
for fiscal years beginning after December 15, 1998. SOP 98-1 will require the
capitalization of certain costs incurred in connection with developing or
obtaining software for internal use. The Company does not anticipate there will
be a material impact on the results of operations or financial position after
SOP 98-1 is adopted.
The Financial Accounting Standards Board issued Statement No. 131,
"Disclosures about Segments of an Enterprise and Related Information," which
establishes standards for reporting information about operating segments and
requires reporting for selected information about operating segments in
financial statements. It also establishes standards for related disclosures
about products and services, geographic areas, and major customers. This
statement is effective for financial statements for periods beginning after
December 15, 1997. This statement does not need to be applied to interim
financial statements in the initial year of its application.
6. Prior to December 31, 1998, the Company owned an equity interest in SavMax
Foods, Inc. ("SavMax"), a member-patron of Certified. SavMax is an operator of
seven retail grocery stores with retail sales of approximately $110 million per
year. The investment consisted of (a) 10% of the outstanding Series A common
stock with an original cost of $2.5 million and (b) $6.3 million of 8.5% Series
B cumulative redeemable preferred stock. As of December 31, 1998, the Company
purchased the remaining common and preferred shares of SavMax for an aggregate
purchase price of approximately $4.5 million. The transaction also included an
ongoing covenant not to compete from a selling shareholder, termination of the
sellers' existing employment and consulting agreements and the entry into a
consulting arrangement with a selling shareholder. The Company intends to
operate SavMax as a separate entity on a temporary basis. An emphasis will be
placed on making certain operational changes designed to improve the performance
of SavMax and allow Certified to sell its interest in SavMax to a third party.
Due to the temporary nature of this investment, SavMax will be reflected as
an investment in the financial statements of Certified. As such, the operating
results, assets and liabilities of SavMax will not be included in Certified's
consolidated financial statements. The value of SavMax will be reviewed each
quarter and adjusted, if necessary, to reflect any probable impairment to the
carrying value of the investment.
5
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
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of Operations
- -------------
Liquidity and Capital Resources
The Company relies upon cash flow from operations, patron deposits,
shareholdings, and borrowings under the Company's credit lines, to finance
operations. Net cash utilized by operating activities totaled $11.5 million for
the first thirteen weeks of fiscal 1999 (the "1999 period"), as compared to
$18.8 million utilized by operations for the first thirteen weeks of fiscal 1998
(the "1998 period"). Net cash utilized for the 1999 period is primarily due to
increased accounts receivable and decreased accounts payable in the distribution
operations. At November 28, 1998, working capital was $109.2 million, as
compared to $85.8 million at August 29, 1998, and the Company's current ratio
was 1.7 to 1 at November 28, 1998 and 1.6 to 1 at fiscal 1998 year end. Working
capital varies primarily as a result of seasonal inventory requirements.
Capital expenditures totaled $2.8 million in the first thirteen weeks of
fiscal 1999. The 1999 expenditures include purchases of computer equipment,
leasehold improvements and warehouse equipment.
The Company has $80,000,000 in Senior Notes (the "Senior Notes")
outstanding to certain life insurance companies and pension funds. The Senior
Notes are unsecured, due in April 2008 and bear interest at 7.22% per annum.
The Company also has a $100,000,000 revolving credit facility with a group of
banks (the "Revolving Credit"). The Revolving Credit is unsecured, expires in
April 2003 and bears interest at the bank's base rate or at an adjusted LIBOR
rate plus a margin ranging from 0.375% to 0.90% depending on the Company's
leverage ratio. Both the Senior Notes and the Revolving Credit (the "Credit
Agreements") limit the incurrence of additional funded debt, restrict the
issuance of secured indebtedness and prohibit the payment of dividends (other
than patronage dividends). The Credit Agreements contain various financial
covenants pertaining to working capital, adjusted tangible net worth, funded
debt to EBITDA, funded debt to total capitalization, fixed charge coverage and
similar provisions. Obligations under the Credit Agreements are senior to the
rights of member patrons with respect to deposits and patronage dividend
certificates. GCC's existing $10,000,000 credit agreement will remain in place.
Certified distributes at least 20% of the patronage dividends in cash and
distributes Class B Shares as a portion of the patronage dividends distributed
to its member-patrons.
Patrons are generally required to maintain subordinated deposits with the
Company and member-patrons purchase Class B shares to satisfy this requirement.
Upon termination of patron status, the withdrawing patron will be entitled to
recover deposits in excess of its obligations to the Company if permitted by the
applicable subordination provisions, and a member-patron also will be entitled
to have its shares redeemed, subject to applicable legal requirements, Company
policies and credit agreement limitations. The Company's current redemption
policy limits the Class B Shares that the Company is obligated to redeem in any
fiscal year to 5% of the number of Class B Shares deemed outstanding at the end
of the preceding fiscal year. In fiscal 1998, this limitation restricted the
Company's redemption of shares to 19,300 shares for $3.4 million. In fiscal
1999, the 5% limitation will restrict the Company's redemption of shares to
19,007 shares for $3.5 million. The number of shares tendered for redemption at
November 28, 1998, totaled 78,247 (or approximately $14.4 million using fiscal
1998 year end book value), which exceeds the amount that can be redeemed in
fiscal 1999. Consequently, the Company will be required to make redemptions in
fiscal 1999, 2000, 2001, and 2002 with such redemptions approximating $14.4
million based on 1998 year end book value. The redemption price for shares is
based upon their book value as of the end of the year preceding redemption.
Cash to fund redemption of shares is provided from operations, patron deposits,
current shareholdings and borrowings under the Company's credit lines.
Year 2000
The Company has had an active Year 2000 ("Y2K") program since August 1996.
This program includes a detailed review of the Company's software applications,
hardware, and embedded technology. The Company has utilized an outside
consultant to assess the embedded chip technology within its facilities. This
assessment found 95% of the chips to be either already compliant or in the
process of being updated by various vendors.
In 1996, the Company began assessing the application software of the
Company to determine risk of Y2K failure. The assessment process was used to
identify the business applications that would be at risk for potential century
date impact and to prioritize the critical, moderate, and low risk applications
for remediation or replacement. Applications that will be impacted by Y2K are
scheduled for remediation or replacement. The
6
<PAGE>
Company is approximately 80% complete with replacing or remediating business
critical applications, 50% complete with respect to applications that were
identified as moderate risk and 30% complete as to low risk applications. The
schedules for remediation or replacement are reviewed monthly by management. The
Company expects that all critical and moderate risk applications will be
completed by June 1999.
The Company had decided to replace certain systems that were not Y2K
compliant. The systems being replaced are older legacy systems that would have
been replaced prior to Y2K regardless of the non-compliant issue. The estimated
total cost of the Y2K project, including replacement of the legacy systems, is
approximately $5.9 million. The estimated total cost of the new systems is
approximately $3 million. The remaining $2.9 million will be expensed. The
total amount incurred on the project through November 28, 1998 was $4.1 million,
of which $1.7 million related to the cost to remediate software and $2.4 million
related to the replacement of systems including hardware.
The Company has notified its members of the Y2K issues through newsletters,
meetings, and discussions. Certified's Interactive Ordering Program, which
allows retailers to order electronically, and CertiNet, which is a comprehensive
in-store system, are Y2K compliant.
The Y2K project team is also addressing interaction with vendors and the
potential impact of Y2K issues. The Company has completed the upgrade and
implementation of the Y2K compliant version of the Uniform Commercial Standard
("UCS") transactions. The Company is working with UCS vendors to make sure that
processing of orders, invoices, and payments via electronic data interchange
will be Y2K compliant. For those UCS vendors that are not ready for Y2K, the
Company will have a contingency plan that will convert the vendor's data into
Y2K compliant data before processing through the Company's systems.
Additionally, the Company is a member of the National Grocers Association's
("NGA") Year 2000 Task Force, which was formed to assist retailers in resolving
the Y2K problem in their businesses through the sharing of information. The
objectives of this group are to: (1) identify the hardware and software systems
at risk; (2) communicate with the vendor community and establish definitive
position statements regarding cash systems; and (3) communicate these findings
to NGA members. Many of Certified's members are members of NGA. A
comprehensive report of the findings of the Task Force is available to all
members and vendors that are associated with Certified and the contents thereof
have been discussed at several recent industry meetings. The Company has set up
an electronic bulletin board with information on Y2K issues for its members.
As the Y2K program progresses, the Company will be developing additional
contingency plans. The Company's contingency plans will be intended to address
both remediation of systems and the overall business operating risk.
Since the Company has not confirmed with its members or vendors on their
state of readiness for Y2K, it is not possible for the Company to assess the
potential business interruption impact. Failure of the Company's members or
vendors to be Y2K compliant could have a material adverse impact on the
Company's operations. However, as discussed above, the Company is actively
working with members and vendors to address the Y2K issues.
7
<PAGE>
Results of Operations
The following table sets forth selected financial data of the Company
expressed as a percentage of sales for the periods indicated below:
<TABLE>
<CAPTION>
For the Thirteen Weeks Ended
----------------------------
<S> <C> <C>
November 28, 1998 November 29, 1997
---- ----
Net sales 100% 100%
Cost of sales 91.5 91.4
Distribution, selling and administrative 7.0 7.0
Operating income 1.5 1.6
Interest expense 0.6 0.7
Estimated patronage dividends 0.7 0.7
Earnings after dividend and before income taxes 0.2 0.2
Provision for income taxes 0.1 0.1
Net earnings 0.1 0.1
</TABLE>
Net sales
Net sales totaled $462.1 million for the 1999 period as compared to
$487.0 million in the 1998 period. The sales decrease of $24.9 million
represents a 5.1% decrease over the 1998 period. The reduction in sales is
primarily the result of reduced sales to Hughes Family Markets, Inc. ("Hughes")
and Nob Hill General Store Inc. ("Nob Hill"). Hughes and Nob Hill were acquired
by entities that have self-distribution programs; accordingly, product supply to
the Hughes and Nob Hill stores migrated into the corresponding self-distribution
facilities in the period between March 1998 through November 1998. The volume
lost as a result of the Hughes and Nob Hill transactions has been partially
offset by the addition of North State Grocery Company as a member-patron in
October 1998 and increased sales to the ongoing membership base.
Cost of sales
In the 1999 period, the overall gross margin as a percentage of net
sales is consistent with the 1998 period. An increase in service fees
implemented in mid-year 1998 was offset by a reduction in margins resulting from
the sale of certain retail operations in fiscal 1997.
Distribution, selling and administrative
Distribution, selling and administrative expenses were $32.2 million
(or 7.0% of net sales) in the 1999 period, as compared to $33.9 million (or 7.0%
of net sales) in the 1998 period. The level of expense as a percentage of sales
for the 1999 period is consistent with the 1998 period.
Interest
Interest expense in the 1999 period decreased from $3.2 million (0.7%
of net sales) in the 1998 period to $2.9 million (0.6% of net sales) in the 1999
period. The decrease is primarily due to lower interest rates associated with
the $180.0 million refinancing completed in April 1998.
Estimated patronage dividends
Estimated patronage dividends totaled $3.3 million for the 1999 period
as compared to $3.8 million for the 1998 period. The reduction is due to lower
sales through the cooperative divisions offset by reduced interest costs.
Net earnings
Net earnings for the 1999 period were $543,000 compared to net
earnings of $547,000 for the 1998 period. Net earnings are generated by the
Company's subsidiaries, which do not distribute patronage dividends.
Accordingly, subsidiary earnings are retained by the Company in order to enhance
the book value per share.
8
<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
Reference is made to the Company's Annual Report on Form 10-K for the
fiscal year ended August 29, 1998, for a description of the Company's
involvement with respect to the cleanup of hazardous waste at
Operating Industries, Inc. Superfund Site in Monterey Park,
California.
Item 2. Changes in Securities
None.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Submission of Matters to a Vote of Security Holders
None.
Item 5. Other Information
None.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit 4.15.1
Amendment No. 1 to Revolving Credit Agreement, dated as of May 1,
1998, between Certified Grocers of California, Ltd. and Cooperative
Centrale Raiffeisen-Boerenleenbank B.A., "Rabobank Nederland," New
York Branch as a lender and as the agent.
Exhibit 4.15.2
Amendment No. 2 and Limited Waiver to Revolving Credit
Agreement, dated as of December 24, 1998, between Certified Grocers of
California, Ltd. and Cooperative Centrale Raiffeisen-Boerenleenbank
B.A., "Rabobank Nederland," New York Branch as a lender and as the
agent.
Exhibit 27. Financial Data Schedule.
(b) Reports on Form 8-K
None.
9
<PAGE>
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Certified Grocers of California, Ltd.
-------------------------------------
(Registrant)
Dated: January 12, 1999 By ALFRED A. PLAMANN
------------------------------------
Alfred A. Plamann
President and
Chief Executive Officer
By RICHARD J. MARTIN
------------------------------------
Richard J. Martin
Senior Vice President --
Finance & Administration
and Chief Financial Officer
By RANDALL G. SCOVILLE
-------------------------------------
Randall G. Scoville
Vice President -- Accounting
and Chief Accounting Officer
10
<PAGE>
EXHIBIT 4.15.1
AMENDMENT NO. 1
TO
REVOLVING CREDIT AGREEMENT
THIS AMENDMENT NO. 1 TO REVOLVING CREDIT AGREEMENT dated as of May 1, 1998
(the "Amendment"), is entered into by and among CERTIFIED GROCERS OF CALIFORNIA,
LTD., a California corporation operating primarily on a cooperative basis (the
"Borrower"), the Lenders (as defined below), and COOPERATIEVE CENTRALE
RAIFFEISEN-BOERENLEENBANK B.A., "RABOBANK NEDERLAND", NEW YORK BRANCH
("Rabobank") as a Lender (as defined below) and as the Agent (as defined below).
RECITALS
A. The Borrower has entered into that Revolving Credit Agreement dated as
of April 10, 1998 (the "Credit Agreement"), among the Borrower, the Lenders
party thereto (which term shall include the Issuing Bank) (and their successors
and assigns) (collectively, the "Lenders") and Rabobank, not in its individual
capacity but solely in its capacity as the Agent (the "Agent").
B. The Lenders have extended credit to the Borrower for the purposes
permitted in the Credit Agreement.
C. Each Guarantor is indebted to the Lenders pursuant to and on the terms
set forth in, among other things, those unconditional Guaranties executed by
each Guarantor in respect of the Obligations.
D. Notwithstanding efforts to do so, the Borrower has been unable to
arrange for the release and termination of an Irrevocable Transferable Letter of
Credit No. 51794658 in the face amount of $1,500,000 for the benefit of TriNet
Essential Facilities XII, Inc. issued by BT Commercial Corporation. The Borrower
has requested that the Agent and the Lenders amend the Credit Agreement to
permit, among other things, the Indebtedness evidenced by such letter of credit
and the Lien securing the obligations thereunder.
E. The Agent and the Lenders have agreed to so amend the Credit Agreement,
but only to the extent, in accordance with the terms and subject to the
conditions and in reliance upon the representations and warranties set forth
below.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing recitals and other good
and valuable consideration, the receipt and adequacy of which is hereby
acknowledged, and intending to be legally bound, the parties hereto agree as
follows:
1
<PAGE>
1. DEFINITIONS. Capitalized terms used but not defined in this Amendment
shall have the meanings given to them in the Credit Agreement.
2. AMENDMENTS TO CREDIT AGREEMENT.
2.1 SECTION 1.1 (DEFINITIONS). A definition of the term "Requisite
Lenders" is deleted in its entirety and is replaced with the following:
"Requisite Lenders" means any combination of Lenders whose
combined Pro Rata Share (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
sixty-six and two-thirds percent (66-2/3%) of all such amounts
outstanding or the Aggregate Commitments, as the case may be.
2.2 SECTION 1.1 (DEFINITIONS). A definition of the term "TriNet
Letter of Credit" is added to read as follows:
"TriNet Letter of Credit" means the Irrevocable Transferable
Letter of Credit No. 51794658 in the face amount of $1,500,000 issued
for the benefit of TriNet Essential Facilities XII, Inc. by BT
Commercial Corporation under the Existing Debt more fully described in
SCHEDULE 7.3.
2.3 SECTION 2.1.1(d) (OVERADVANCES). SECTION 2.1.1(d) of the Credit
Agreement is deleted in its entirety and is replaced with the following:
(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 Aggregate
Commitments 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.
2.4 SECTION 2.1.1(g) (LETTER OF CREDIT SUBLIMIT UNDER REVOLVING
CREDIT FACILITY). Section 2.1.1(g) of the Credit Agreement is deleted in its
entirety and is replaced with the following:
2
<PAGE>
(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 Aggregate Commitments.
2.5 SECTION 4.1(m) (TERMINATION OF EXISTING DEBT). SECTION 4.1(m) of
the Credit Agreement is deleted in its entirety and is replaced with the
following:
(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 and the TriNet Letter of
Credit) (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.
2.6 SECTION 7.1(a) (LIENS; NEGATIVE PLEDGES). SECTION 7.1(a) of the
Credit Agreement is deleted in its entirety and is replaced with the following:
(a) Existing Liens disclosed on SCHEDULE 7.1, other than those
Liens shown as items 2.A), B) and C) on such Schedule, provided that
the obligations secured thereby are not increased;
2.7 SECTION 7.1 (LIENS; NEGATIVE PLEDGES). SECTION 7.1 of the Credit
Agreement is amended to include clauses (m) and (n) to read as follows:
(m) A Lien on cash collateral in favor of by BT Commercial
Corporation to secure the TriNet Letter of Credit; and
3
<PAGE>
(n) A Lien on shares of capital stock of any Lender that is
organized as a cooperative which are required to be pledged by the
Borrower, as approved by the Agent in its reasonable discretion.
2.8 SECTION 7.3 (LIMITATIONS ON INDEBTEDNESS; CONTINGENT
OBLIGATIONS). SECTION 7.3 of the Credit Agreement is amended to include clause
(j) to read as follows:
(j) The TriNet Letter of Credit, without any extension thereof.
2.9 SECTION 7.6 (DIVIDENDS). SECTION 7.6 of the Credit Agreement is
deleted in its entirety and is replaced with the following:
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); provided, however, that upon the occurrence and during
the continuation of an Event of Default, the Borrower may make such
dividends and distributions permitted hereby only to the extent
necessary to maintain its status as a cooperative under Subchapter T
of the Code.
3. LIMITATION OF AMENDMENTS.
3.1 The amendments set forth in SECTION 2, above, are effective for
the purposes set forth herein and shall be limited precisely as written and
shall not be deemed to (i) be a consent to any amendment, waiver or modification
of any other term or condition of any Loan Document, or (ii) otherwise prejudice
any right or remedy which
4
<PAGE>
the Lenders or the Agent may now have or may have in the future under or in
connection with any Loan Document.
3.2 This Amendment shall be construed in connection with and as part
of the Loan Documents and all terms, conditions, representations, warranties,
covenants and agreements set forth in the Loan Documents, except as herein
amended, are hereby ratified and confirmed and shall remain in full force and
effect.
4. REPRESENTATIONS AND WARRANTIES. In order to induce the Lenders and the
Agent to enter into this Amendment, the Borrower hereby represents and warrants
to each Lender and the Agent as follows:
4.1 Immediately after giving effect to this Amendment (i) the
representations and warranties contained in the Loan Documents (except to the
extent such representations and warranties relate to an earlier date, in which
case they are true and correct as of such date) are true, accurate and complete
in all material respects as of the date hereof and (ii) no Potential Event of
Default or Event of Default has occurred and is continuing;
4.2 The Borrower has the corporate power and authority to execute and
deliver this Amendment and to perform its obligations under the Credit
Agreement, as amended by this Amendment;
4.3 The articles of incorporation, bylaws and other organizational
documents of the Borrower delivered to each Lender on the Closing Date remain
true, accurate and complete and have not been amended, supplemented or restated
and are and continue to be in full force and effect;
4.4 The execution and delivery by the Borrower of this Amendment and
the performance by Borrower of its obligations under the Credit Agreement, as
amended by this Amendment, have been duly authorized by all necessary corporate
action on the part of the Borrower;
4.5 The execution and delivery by the Borrower of this Amendment and
the performance by the Borrower of its obligations under the Credit Agreement,
as amended by this Amendment, do not and will not contravene (i) any law or
regulation binding on or affecting the Borrower, (ii) the articles of
incorporation or bylaws of the Borrower, (iii) any order, judgment or decree of
any court or other governmental or public body or authority, or subdivision
thereof, binding on the Borrower, or (iv) any contractual restriction with a
Person other than an Affiliate binding on the Borrower;
4.6 The execution and delivery by the Borrower of this Amendment and
the performance by the Borrower of its obligations under the Credit Agreement,
as amended by this Amendment, do not require any order, consent, approval,
license, authorization or validation of, or filing, recording or registration
with, or exemption by any governmental or public body or authority, or
subdivision thereof, binding on the Borrower, except as already has been
obtained or made; and
5
<PAGE>
4.7 This Amendment has been duly executed and delivered by the
Borrower and is the binding obligation of the Borrower, enforceable against it
in accordance with its terms, except as such enforceability may be limited by
bankruptcy, insolvency, reorganization, liquidation, moratorium or other similar
laws of general application and equitable principles relating to or affecting
creditors' rights.
5. COUNTERPARTS. This Amendment may be executed in any number of
counterparts and all of such counterparts taken together shall be deemed to
constitute one and the same instrument.
6. EFFECTIVENESS. This Amendment shall be deemed effective upon the
satisfaction of all of the following conditions precedent:
6.1 AMENDMENT. The Borrower, each Lender and the Agent shall have
duly executed and delivered this Amendment to the Agent.
6.2 ACKNOWLEDGMENT OF AMENDMENT AND REAFFIRMATION OF GUARANTIES. The
Agent shall have received the Acknowledgment of Amendment and Reaffirmation of
Guaranties, duly executed and delivered by each Guarantor to the Agent.
7. GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED BY AND SHALL BE
CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
[Remainder of Page Intentionally Blank]
6
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly
executed and delivered as of the date first written above.
BORROWER CERTIFIED GROCERS OF CALIFORNIA, LTD.,
a California corporation
By: /s/ David A. Woodward
----------------------------
David A. Woodward
Treasurer
AGENT AND COOPERATIEVE CENTRALE RAIFFEISEN-
LENDER BOERENLEENBANK B.A., "RABOBANK
NEDERLAND", NEW YORK BRANCH,
as the Agent and as a Lender
By: /s/ Dana W. Hemenway
----------------------------
Name: Dana W. Hemenway
--------------------------
Title: Vice President
-------------------------
By: /s/ W. Jeffrey Vollack
----------------------------
Name: W. Jeffrey Vollack
--------------------------
Title: Senior Credit Officer
-------------------------
Senior Vice President
-------------------------
7
<PAGE>
ACKNOWLEDGMENT OF AMENDMENT
AND REAFFIRMATION OF GUARANTIES
SECTION 1. Each Guarantor hereby acknowledges and confirms that it
has reviewed and approved the terms and conditions of the Amendment No. 1 to
Revolving Credit Agreement dated as of even date herewith (the "Amendment").
SECTION 2. Each Guarantor hereby consents to the Amendment and
agrees that its respective Guaranty relating to the Obligations of the Borrower
under the Credit Agreement shall continue in full force and effect, shall be
valid and enforceable and shall not be impaired or otherwise affected by the
execution of the Amendment or any other document or instrument delivered in
connection herewith.
SECTION 3. Each Guarantor severally represents and warrants that,
after giving effect to the Amendment, all representations and warranties
contained in its respective Guaranty are true, accurate and complete as if made
the date hereof.
Dated as of May 1, 1998
GUARANTORS: CROWN GROCERS, INC.
By: /s/ David A. Woodward
--------------------------
David A. Woodward
Treasurer
GROCER DEVELOPMENT CENTER, INC.
By: /s/ David A. Woodward
--------------------------
David A. Woodward
Treasurer
GROCERS EQUIPMENT COMPANY
By: /s/ David A. Woodward
--------------------------
David A. Woodward
Treasurer
8
<PAGE>
GROCERS GENERAL MERCHANDISE COMPANY
By: /s/ David A. Woodward
--------------------------
David A. Woodward
Treasurer
GROCERS AND MERCHANTS MANAGEMENT COMPANY
By: /s/ David A. Woodward
--------------------------
David A. Woodward
Treasurer
GROCERS SPECIALTY COMPANY
By: /s/ David A. Woodward
--------------------------
David A. Woodward
Treasurer
9
<PAGE>
EXHIBIT 4.15.2
AMENDMENT NO. 2
AND LIMITED WAIVER
TO
REVOLVING CREDIT AGREEMENT
THIS AMENDMENT NO. 2 AND LIMITED WAIVER TO REVOLVING CREDIT AGREEMENT
dated as of December 24, 1998 (the "Amendment"), is entered into by and among
CERTIFIED GROCERS OF CALIFORNIA, LTD., a California corporation operating
primarily on a cooperative basis (the "Borrower"), the Lenders (as defined
below), and COOPERATIEVE CENTRALE RAIFFEISEN-BOERENLEENBANK B.A., "RABOBANK
NEDERLAND", NEW YORK BRANCH ("Rabobank") as a Lender (as defined below) and as
the Agent (as defined below).
RECITALS
A. The Borrower has entered into that Revolving Credit Agreement dated as
of April 10, 1998, as amended by that Amendment No. 1 to Revolving Credit
Agreement dated as of May 1, 1998 (as amended from time to time, the "Credit
Agreement"), among the Borrower, the Lenders party thereto (which term shall
include the Issuing Bank) (and their successors and assigns) (collectively, the
"Lenders") and Rabobank, not in its individual capacity but solely in its
capacity as the Agent (the "Agent").
B. The Lenders have extended credit to the Borrower for the purposes
permitted in the Credit Agreement.
C. Each Guarantor is indebted to the Lenders pursuant to and on the terms
set forth in, among other things, those unconditional Guaranties executed by
each Guarantor in respect of the Obligations.
D. The Borrower desires to acquire, directly or indirectly through its
wholly-owned Subsidiary, Crown Grocers, Inc., a California corporation ("Crown
Grocers"), one hundred percent of the issued and outstanding stock of Sav Max
Foods, Inc., a California corporation ("Sav Max"), that the Borrower does not
already own, for an aggregate purchase price of approximately $4,500,000 (the
"Proposed Acquisition"). Sav Max is the operator of seven warehouse style
grocery stores in California. Sav Max is a member-patron of the Borrower.
Subsequent to the closing of the Proposed Acquisition, the Borrower intends to
sell the Sav Max stores to one or more member-patrons of the Borrower (the
"Proposed Sale"). For accounting purposes, the Borrower shall not treat Sav Max
as a consolidated Subsidiary, but shall treat Sav Max as an asset held for sale
(the "Proposed Accounting Treatment"). Sav Max has incurred Indebtedness to
Wells Fargo Bank in the approximate principal amount outstanding of $3,400,000,
the payment and performance of which (i) is secured by Liens upon the Property
of Sav Max and (ii) constitutes a Contingent Obligation of the Borrower (the
"Sav Max Indebtedness"). Subsequent to the Proposed Acquisition, the Borrower
intends to retain the Sav Max
1
<PAGE>
Indebtedness or to cause the restructure or refinancing thereof (the "Proposed
Debt Restructure"), and to incur Contingent Obligations in support thereof.
E. The Borrower has requested that the Agent and the Lenders consent to
the Proposed Acquisition, the Proposed Sale, the Proposed Accounting Treatment,
the retention of the Sav Max Indebtedness and the Proposed Debt Restructure
(collectively, the "Proposed Terms"), and amend the Credit Agreement and waive
certain provisions thereof to permit, among other things, the Proposed Terms.
F. The Agent and the Lenders have agreed to consent to the Proposed Terms,
and so amend and waive certain provisions of the Credit Agreement, but only to
the extent, in accordance with the terms and subject to the conditions and in
reliance upon the representations and warranties set forth below.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing recitals and other good
and valuable consideration, the receipt and adequacy of which is hereby
acknowledged, and intending to be legally bound, the parties hereto agree as
follows:
1. DEFINITIONS. Capitalized terms used but not defined in this Amendment
shall have the meanings given to them in the Credit Agreement.
2. AMENDMENTS TO CREDIT AGREEMENT.
2.1 SECTION 1.1 (DEFINITIONS). A definition of the term "Crown
Grocers" is added to read as follows:
"Crown Grocers" means Crown Grocers, Inc., a California
corporation, and one hundred percent (100%) Subsidiary of the
Borrower.
2.2 SECTION 1.1 (DEFINITIONS). A definition of the term "Sav Max" is
added to read as follows:
"Sav Max" means Sav Max Foods, Inc., a California corporation.
2.3 SECTION 1.1 (DEFINITIONS). A definition of the term "Sav Max
Indebtedness" is added to read as follows:
"Sav Max Indebtedness" means the Indebtedness of Sav Max to Wells
Fargo Bank in the original principal amount of $3,850,000, evidenced
by that certain Credit Agreement dated as of February 1996, as amended
from time to time, the payment and performance of which (i) is secured
by Liens upon the Property of Sav Max and (ii) constitutes a
Contingent Obligation of the Borrower.
2
<PAGE>
2.4 SECTION 6.10 (ADDITIONAL GUARANTORS). SECTION 6.10 of the Credit
Agreement is deleted in its entirety and is replaced with the following:
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;
provided, however, that in the event that the Borrower directly or
indirectly through Crown Grocers acquires Sav Max as a Subsidiary, Sav
Max shall not be required to execute a Guaranty.
2.5 SECTION 7.3 (LIMITATIONS ON INDEBTEDNESS; CONTINGENT
OBLIGATIONS). SECTION 7.3 of the Credit Agreement is amended to include clause
(k) to read as follows:
(k) in the event that Sav Max becomes a Subsidiary of Borrower,
unsecured Indebtedness incurred by Sav Max at any time in an aggregate
amount not to exceed $8,000,000, and any unsecured Contingent
Obligation of the Borrower or any of its Subsidiaries in support
thereof; provided, however, that such Indebtedness may be incurred
only upon the satisfaction in full, or refinancing of, the Sav Max
Indebtedness.
3. CONSENT AND LIMITED WAIVER.
3.1 The Lenders hereby consent to the Proposed Terms. The Lenders
hereby waive:
(a) the requirement of SECTION 6.10 of the Credit Agreement to the
extent that following the Proposed Acquisition Sav Max would be required to
execute and deliver a Guaranty;
(b) the limitation on Liens set forth in SECTION 7.1 of the Credit
Agreement to the extent that the retention of the Sav Max Indebtedness would
constitute a breach thereof and cause an Event of Default;
(c) the limitation on Investments set forth in SECTION 7.2 of the
Credit Agreement to the extent that the Proposed Acquisition would constitute a
breach thereof and cause an Event of Default;
(d) the limitation on Indebtedness set forth in SECTION 7.3 of the
Credit Agreement to the extent that the retention of the Sav Max Indebtedness or
the Proposed Debt Restructure and the incurrence of any unsecured Contingent
Obligation of the Borrower or any of its Subsidiaries in support thereof, would
constitute a breach thereof and cause an Event of Default;
3
<PAGE>
(e) the limitation on transactions with Affiliates set forth in
SECTION 7.7 of the Credit Agreement to the extent that the Proposed Acquisition,
the retention of the Sav Max Indebtedness, the Proposed Sale or the Proposed
Debt Restructure would constitute a breach thereof and cause an Event of
Default; and
(f) the limitation on negative pledge clauses set forth in SECTION
7.12 of the Credit Agreement to the extent that the retention of the Sav Max
Indebtedness would cause a breach thereof and cause an Event of Default.
3.2 The Lenders hereby acknowledge that as required by SECTION 7.5 of
the Credit Agreement, the Borrower has provided prior written notice of its
intent to acquire Sav Max for the purpose of transferring the assets of Sav Max
to one or more member-patrons of the Borrower.
4. LIMITATION OF AMENDMENTS AND WAIVER.
4.1 The amendments set forth in SECTION 2, above, and the waivers and
consents set forth in SECTION 3, above, are effective for the purposes set forth
herein and shall be limited precisely as written and shall not be deemed to (i)
be a consent to any amendment, waiver or modification of any other term or
condition of any Loan Document, (ii) be a waiver of any other breach or
violation on any other occasion of the section of the Credit Agreement which is
the subject of the waiver set forth in SECTION 3, above, or (iii) otherwise
prejudice any right or remedy which the Lenders or the Agent may now have or may
have in the future under or in connection with any Loan Document.
4.2 This Amendment shall be construed in connection with and as part
of the Loan Documents and all terms, conditions, representations, warranties,
covenants and agreements set forth in the Loan Documents, except as herein
amended, are hereby ratified and confirmed and shall remain in full force and
effect.
5. REPRESENTATIONS AND WARRANTIES. In order to induce the Lenders and
the Agent to enter into this Amendment, the Borrower hereby represents and
warrants to each Lender and the Agent as follows:
5.1 Immediately after giving effect to this Amendment (i) the
representations and warranties contained in the Loan Documents (except to the
extent such representations and warranties relate to an earlier date, in which
case they are true and correct as of such date) are true, accurate and complete
in all material respects as of the date hereof and (ii) no Potential Event of
Default or Event of Default has occurred and is continuing;
5.2 The Borrower has the corporate power and authority to execute and
deliver this Amendment and to perform its obligations under the Credit
Agreement, as amended by this Amendment;
5.3 The articles of incorporation, bylaws and other organizational
documents of the Borrower delivered to each Lender on the Closing Date remain
true,
4
<PAGE>
accurate and complete and have not been amended, supplemented or restated and
are and continue to be in full force and effect;
5.4 The execution and delivery by the Borrower of this Amendment and
the performance by Borrower of its obligations under the Credit Agreement, as
amended by this Amendment, have been duly authorized by all necessary corporate
action on the part of the Borrower;
5.5 The execution and delivery by the Borrower of this Amendment and
the performance by the Borrower of its obligations under the Credit Agreement,
as amended by this Amendment, do not and will not (a) contravene (i) any law or
regulation binding on or affecting the Borrower, (ii) the articles of
incorporation or bylaws of the Borrower, or (iii) any order, judgment or decree
of any court or other governmental or public body or authority, or subdivision
thereof, binding on the Borrower, or (b) violate or result in the breach of, or
constitute a default under any Contracts other than as set forth on Schedule 5.7
of the Credit Agreement.
5.6 The execution and delivery by the Borrower of this Amendment and
the performance by the Borrower of its obligations under the Credit Agreement,
as amended by this Amendment, do not require any order, consent, approval,
license, authorization or validation of, or filing, recording or registration
with, or exemption by any governmental or public body or authority, or
subdivision thereof, binding on the Borrower, except as already has been
obtained or made; and
5.7 This Amendment has been duly executed and delivered by the
Borrower and is the binding obligation of the Borrower, enforceable against it
in accordance with its terms, except as such enforceability may be limited by
bankruptcy, insolvency, reorganization, liquidation, moratorium or other similar
laws of general application and equitable principles relating to or affecting
creditors' rights.
6. COUNTERPARTS. This Amendment may be executed in any number of
counterparts and all of such counterparts taken together shall be deemed to
constitute one and the same instrument.
7. EFFECTIVENESS. This Amendment shall be deemed effective upon the
satisfaction of all of the following conditions precedent:
7.1 AMENDMENT. The Borrower, each Lender and the Agent shall have
duly executed and delivered this Amendment to the Agent.
7.2 ACKNOWLEDGMENT OF AMENDMENT AND REAFFIRMATION OF GUARANTIES. The
Agent shall have received the Acknowledgment of Amendment and Reaffirmation of
Guaranties, duly executed and delivered by each Guarantor to the Agent.
8. GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED BY AND SHALL BE
CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
5
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed and delivered as of the date first written above.
BORROWER CERTIFIED GROCERS OF CALIFORNIA, LTD.,
a California corporation
By: /s/ DAVID A. WOODWARD
------------------------------------------
David A. Woodward
Treasurer
AGENT AND COOPERATIEVE CENTRALE RAIFFEISEN-
LENDER BOERENLEENBANK B.A., "RABOBANK
NEDERLAND", NEW YORK BRANCH,
as the Agent and as a Lender
By: /s/ Hans Denbaas
------------------------------------
Name: Hans Denbaas
----------------------------------
Title:
---------------------------------
By: /s/ Ronald Klein
------------------------------------
Name: Ronald Klein
----------------------------------
Title:
---------------------------------
LENDERS COBANK, ACB
By: /s/ Donald F. Noltemeyer
------------------------------------
Name: Donald F. Noltemeyer
----------------------------------
Title:
---------------------------------
By:__________________________________________
Name:________________________________________
Title:_______________________________________
6
<PAGE>
SUNTRUST BANK, CENTRAL FLORIDA, N.A.
By: /s/ Signature illegible
------------------------------------------
Name:
----------------------------------------
Title: First Vice President
---------------------------------------
By: /s/ Signature illegible
------------------------------------------
Name:
----------------------------------------
Title: First Vice President
---------------------------------------
Union Bank of California, N.A.
By: /s/ Robert Petersen
----------------------------------
Name: Robert Petersen
--------------------------------
Title: R.V.P.
-------------------------------
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
Harris Trust and Savings Bank
By: /s/ Erica T. Kuhlmann
----------------------------------
Name: Erica T. Kuhlmann
--------------------------------
Title: Vice President
-------------------------------
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
7
<PAGE>
NATIONAL CONSUMER COOPERATIVE BANK,
d/b/a NATIONAL COOPERATIVE BANK
By: /s/ John S. Goldthwait, Jr.
----------------------------------
Name: John S. Goldthwait, Jr.
--------------------------------
Title:
-------------------------------
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
8
<PAGE>
ACKNOWLEDGMENT OF AMENDMENT
AND REAFFIRMATION OF GUARANTIES
SECTION 1. Each Guarantor hereby acknowledges and confirms that it has
reviewed and approved the terms and conditions of the Amendment No. 2 and
Limited Waiver to Revolving Credit Agreement dated as of even date herewith (the
"Amendment").
SECTION 2. Each Guarantor hereby consents to the Amendment and agrees that
its respective Guaranty relating to the Obligations of the Borrower under the
Credit Agreement shall continue in full force and effect, shall be valid and
enforceable and shall not be impaired or otherwise affected by the execution of
the Amendment or any other document or instrument delivered in connection
herewith.
SECTION 3. Each Guarantor severally represents and warrants that, after
giving effect to the Amendment, all representations and warranties contained in
its respective Guaranty are true, accurate and complete as if made the date
hereof.
Dated as of December 24, 1998
GUARANTORS: CROWN GROCERS, INC.
GROCER DEVELOPMENT CENTER, INC.
GROCERS EQUIPMENT COMPANY
GROCERS GENERAL MERCHANDISE COMPANY
GROCERS AND MERCHANTS MANAGEMENT COMPANY
GROCERS SPECIALTY COMPANY
By: /s/ D A WOODWARD
--------------------------------------
David A. Woodward
Treasurer of each of the Guarantors
9
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<PAGE>
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<CIK> 0000320431
<NAME> CERTIFIED GROCERS OF CALIFORNIA LTD
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> AUG-28-1999
<PERIOD-START> AUG-30-1998
<PERIOD-END> NOV-28-1998
<CASH> 10,717
<SECURITIES> 41,518
<RECEIVABLES> 108,168
<ALLOWANCES> (5,355)
<INVENTORY> 129,342
<CURRENT-ASSETS> 256,579
<PP&E> 163,516
<DEPRECIATION> (87,809)
<TOTAL-ASSETS> 410,288
<CURRENT-LIABILITIES> 147,425
<BONDS> 142,936
0
0
<COMMON> 62,577
<OTHER-SE> 16,194
<TOTAL-LIABILITY-AND-EQUITY> 410,288
<SALES> 462,141
<TOTAL-REVENUES> 462,141
<CGS> 422,980
<TOTAL-COSTS> 455,229
<OTHER-EXPENSES> 0
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<INCOME-PRETAX> 793
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