UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): September 29, 1999
Unified Western Grocers, Inc.
(Exact name of registrant as specified in its charter)
California 0-10815 95-0615250
(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification
incorporation) No.)
5200 Sheila Street
Commerce, California 90040
(Address of principal executive offices)(Zip code)
Registrant's telephone number, including area code: (323) 264-5200
Certified Grocers of California, Ltd.
(Former name or former address, if changed since last report)
Exhibit Index on Page 11
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Item 2. Acquisition or Disposition of Assets.
Effective September 29, 1999, Unified Western Grocers, Inc.
(formerly, "Certified Grocers of California, Ltd.") (the "Company") caused New
UG Corp., a wholly-owned subsidiary of the Company (the "Subsidiary"), to be
merged (the "Merger") with and into United Grocers, Inc. ("United"), pursuant to
the Agreement and Plan of Merger dated as of June 14, 1999, and amended as of
August 11, 1999, among the Company, the Subsidiary and United (the "Agreement").
United supplies groceries and related products to independent retail
grocers located in Oregon, Western Washington and Northern California. In
addition, United provides certain ancillary services to support the operation of
a grocery business. These services include marketing assistance, store design
and development, security services, information services, accounting and
financing.
As a result of the Merger, (i) the separate corporate existence of
the Subsidiary ceased, (ii) each share of United's Common Stock issued and
outstanding immediately prior to the effective time of the Merger (other than
treasury stock) was converted into the right to receive 0.228 shares of the
Company's capital stock, and (iii) United became a wholly-owned subsidiary of
the Company.
The first 100 shares received by a shareholder of United as a result
of the Merger will be Class A Shares and any additional shares will be Class B
Shares. No fractional shares will be issued as a result of the Merger and, in
lieu thereof, the value of any fractional share, based upon the book value of a
share of United's Common Stock as of April 2, 1999 (i.e., $57.90), will be added
to the shareholder's deposit account. Each treasury share of United has been
canceled and retired without any payment. Each United shareholder that becomes a
director of the Company will receive one Class C Share of the Company.
In connection with the Merger, the Company has amended its articles
of incorporation and bylaws to make certain changes to its name, authorized
number of directors, redemption policy and patronage dividend policy. For a
description of such changes see "Item 5. Other Events."
To finance the Merger, the Company has obtained a new $40 million
term loan from institutional lenders named in the term loan agreement (the "Term
Loan") and a $200 million revolving credit facility from banks named in the
revolving credit agreement (the "Revolving Credit").
The Revolving Credit provides for a five-year, $200 million
revolving credit facility secured by accounts receivables and inventory.
Borrowings bear interest at either:
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o LIBOR plus an applicable margin based on a funded debt to operating
cash flow ratio; or
o the higher of the lender's base rate or .50% above the lender's
federal funds borrowing rate.
The Revolving Credit permits advances at up to 85% of eligible
accounts receivable and at 40-60% of eligible inventory. The security interest
would be released if the Company achieves designated investment grade ratings
for a period of not less than one year. The pricing, structure and terms of the
facility can be modified, if necessary, to achieve syndication provided that
interest expense cannot increase more than 50 basis points.
The Term Loan from the Company's existing term lenders provides for
collateralization of the Company's existing $80 million 7.22% senior unsecured
notes with property, plant and equipment and the issuance of $40 million of new
ten year senior mortgage notes. The interest rate on the existing $80 million
senior notes has increased by .50% and the senior mortgage notes bear interest
at 2.8% over the applicable U.S. Treasury Rate for ten year notes. The interest
rate increase on the existing $80 million senior notes and the securitization of
both notes would be eliminated in the event the Company achieves designated
investment grade ratings for a period of not less than one year.
The Company's existing revolving credit lender, Rabobank Nederland,
received a fee of $1,750,000 at closing. In addition, Rabobank will receive an
annual administrative fee of $50,000.
These credit agreements contain customary representations,
warranties, covenants and default provisions for financings of this type,
including financial ratio covenants modeled after covenants contained in the
Company's previous loan agreements, modified to reflect the Merger and the
additional extension of credit reflected by the commitments.
The borrowings under these facilities are intended to provide funds
to meet the on-going borrowing requirements of the Company, to repay existing
institutional indebtedness of United, to fund redemption of shares of terminated
members and to meet other cash requirements of the Merger.
The foregoing description of the Merger is qualified by the terms
and conditions of the Agreement, a copy of which is filed as an exhibit hereto.
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Item 5. Other Events.
Amendment of Articles of Incorporation and Bylaws
In connection with the Merger, the Company has amended its articles
of incorporation and bylaws to change its name, authorized number of directors,
redemption policy and patronage dividend policy.
Name. The articles of incorporation were amended to change the name
of the Company from "Certified Grocers of California, Ltd." to "Unified Western
Grocers, Inc."
Directors. The Company's articles of incorporation were amended to
change the authorized number of directors to a flexible number not less than 15
nor more than 24. The board of directors will fix the exact number of directors
within that range. The initial number of directors has been fixed at 24. The
holders of Class A shares, voting as a class, are entitled to elect 80%, rounded
up to the nearest whole number, of the authorized directors, and the holders of
the Class B Shares are entitled to elect the remaining directors. If there are
no Class B Shares issued and outstanding, the holders of the Class A Shares will
be entitled to elect all the directors. Each director of United immediately
prior to the Merger has been elected to fill the vacancies created by this
amendment, to serve until the next annual meeting of the shareholders of the
Company. Prior to these amendments, the articles of incorporation provided for
15 directors, 12 of which were elected by the Class A Shares and three of which
were elected by the Class B Shares. In addition, the bylaws of the Company have
been amended to require the nominating committee to consider geographic
representation in selecting candidates for nomination as directors.
Redemption Policy. The articles of incorporation and the bylaws
were amended to change the redemption policy of the Company as follows:
o Class A Shares and Class B Shares held by a shareholder who is no
longer a qualified and active member-patron will be redeemed at the
book value of the Company as of the close of the fiscal year last
ended prior to termination of member status. However, with respect
to terminations occurring in the first full fiscal year following
the effective date of Merger, the repurchase price will be the
Company's book value at the fiscal year end prior to the effective
date of the Merger. Prior to these amendments, the articles of
incorporation provided for repurchase at the book value as of the
close of the fiscal year last ended prior to the date of repurchase.
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o Until the end of the third full fiscal year following the effective
date of the Merger, the Company will redeem excess Class B Shares at
the option of the shareholder, at either:
o an amount equal to the Company's book value as of the close of
the fiscal year prior to the effective date of the Merger; or
o an amount equal to the book value as of the close of the
fiscal year prior to the date the shares are tendered to the
Company for repurchase, provided the repurchase price will not
be paid until after the end of the third full fiscal year
following the effective date of the Merger.
o After the end of the third full fiscal year following the effective
date of the Merger, the Company will repurchase excess Class B
Shares tendered for redemption at the book value as of the close of
the fiscal year prior to the date the shares are tendered for
repurchase. Prior to these amendments, excess Class B Shares were
redeemed at the book value at the end of the fiscal year preceding
the date of repurchase.
o During the period beginning on the effective date of the Merger and
ending 120 days after the end of the first fiscal year following the
Merger, the Company will repurchase excess Class B Shares tendered
for redemption which are held by former shareholders of United at
the book value as of April 2, 1999 of the shares of United's Common
Stock for which the excess Class B Shares were exchanged in the
Merger. The purchase price will be evidenced by the promissory note
of the Company which will be payable in twenty equal quarterly
principal installments and will bear interest at 6% per year.
o The redemption policy will continue to provide that the amount of
Class B Shares which the Company will be obligated to redeem in any
fiscal year will be limited to 5% of the sum of:
o the number of Class B Shares outstanding as of the close of
the preceding fiscal year, and
o the number of Class B Shares issued as a part of the patronage
dividend for such preceding fiscal year.
During the period beginning on the effective date of the Merger and
ending 120 days after the end of the first fiscal year following the
Merger, the 5% limit will not apply to excess Class B Shares
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received in the Merger by former United shareholders which are
tendered for repurchase by the Company. The board of directors will
continue to have discretion to exceed the 5% limit.
o The obligation to redeem Class B Shares of terminated members has
been eliminated until after the end of the third full fiscal year
following the effective date of the Merger.
Patronage Dividend Policy. The Company's patronage dividend policy
was amended to provide that the Company will pay its patronage earnings to
member-patrons and associate-patrons on the basis of patronage business
transacted with the Company's two patronage earnings divisions: the Dairy
Division and the Cooperative Division.
o The Company will associate the Dairy Division with patronage
earnings generated by the fluid milk and juice bottling plant
located in Los Angeles, California. Patronage dividends for this
division will be paid solely to patrons who purchase manufactured
and related products from the Dairy Division.
o The Company will associate the Cooperative Division with patronage
earnings generated from all other patronage activities of the
Company and will not give distinction to geographic location. The
Cooperative Division will include the general merchandise activity
which previously was conducted in a non-patronage subsidiary of the
Company.
In the event of losses in one of these divisions, the loss will be
offset against earnings of the other division to determine net earnings
available for patronage dividends.
Guaranty
In connection with the Merger, the Company has fully and
unconditionally guaranteed all debt securities which United has issued, or may
issue from time to time, pursuant to that certain Indenture dated as of February
1, 1978, and as subsequently amended or supplemented (the "Indenture"), by and
between United and State Street Bank and Trust Company. On July 2, 1999, there
were outstanding approximately $31,302,000 aggregate principal amount of debt
securities of United under the Indenture.
Item 7. Financial Statements and Exhibits.
(a) Financial Statements. The following financial statements of United
hereby are incorporated by reference into this report from the
Company's Registration Statement on Form S-4 filed with the
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Securities and Exchange Commission on August 26, 1999 (File No.
333-85917) and should be read in conjunction with the financial
statements and other information contained therein.
o Report of Independent Accountants
o Consolidated Balance Sheets at October 3, 1997, October 2,
1998 and July 2, 1999 (Unaudited)
o Consolidated Statements of Operations for the years ended
September 27, 1996 (as restated), October 3, 1997 and October
2, 1998 and the nine month periods ended July 3, 1998 and July
2, 1999 (Unaudited)
o Consolidated Statements of Members' Equity for the years ended
September 27, 1996 (as restated), October 3, 1997 and October
2, 1998 and the nine month period ended July 2, 1999
(Unaudited)
o Consolidated Statements of Cash Flows for the years ended
September 27, 1996 (as restated), October 3, 1997 and October
2, 1998, and the nine month periods ended July 3, 1998 and
July 2, 1999 (Unaudited)
o Notes to Consolidated Financial Statements
(b) Pro Forma Financial Information. The following pro forma financial
information hereby is incorporated by reference into this report
from the Company's Registration Statement on Form S-4 filed with the
Securities and Exchange Commission on August 26, 1999 (File No.
333-85917) and should be read in conjunction with the financial
statements and other information contained therein.
o Unaudited Pro Forma Condensed Combined Balance Sheet at
May 29, 1999
o Notes to Unaudited Pro Forma Condensed Combined Balance Sheet
at May 29, 1999
o Unaudited Pro Forma Condensed Combined Statement of
Operations for the nine months ended May 29, 1999
o Notes to Unaudited Pro Forma Condensed Combined Statement of
Operations for the nine months ended May 29, 1999
o Unaudited Pro Forma Condensed Combined Statement of
Operations for the year ended August 29, 1998
o Notes to Unaudited Pro Forma Condensed Combined Statement of
Operations for the year ended August 29, 1998
(c) Exhibits. The following is a list of the exhibits filed as a part of
this report.
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Exhibit
Number Description
- ------ -----------
2.1 Agreement and Plan of Merger dated as of June 14, 1999 and amended
as of August 11, 1999, by and among the Company, the Subsidiary and
United [2.1]*+1
3.1 Amended and Restated Articles of Incorporation of the Company
3.2 Bylaws of the Company
4.1 Guarantee dated September 29, 1999 by the Company of debt securities
of United issued pursuant to that certain Indenture dated as of
February 1, 1978, and as subsequently amended and supplemented, by
and between United and State Street Bank and Trust Company
10.1 Note Purchase Agreement dated as of September 29, 1999, by and among
the Company and the persons listed on Schedule I thereto+
10.2 Secured Revolving Credit Agreement dated as of September 29, 1999,
by and among the Company, the lenders named therein and Rabobank
Nederland, New York Branch+
23.1 Consent of PricewaterhouseCoopers LLP, independent accountants of
United
99.1 Press Release of the Company and United dated June 16, 1999
99.2 Press Release of the Company dated September 28, 1999
99.3 Press Release of the Company dated September 30, 1999
- --------
* Indicates the exhibit number of the document in the original filing.
+ All schedules and exhibits have been omitted pursuant to Rule 601(b)(2) of
Regulation S-K. Such schedules and exhibits are listed and described in
the document filed as an exhibit hereto. The Company will furnish
supplementally any omitted schedule or exhibit to the Securities and
Exchange Commission upon request.
1 Filed as an exhibit to the Company's Registration Statement on Form S-4
filed with the Securities and Exchange Commission on August 26, 1999 (File
No. 333-85917).
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Item 8. Change in Fiscal Year.
On September 27, 1999, the Board of Directors of the Company
approved the change in the Company's fiscal year end from the Saturday nearest
August 31 to the Saturday nearest September 30. The transition period from
August 29, 1999, the day following the end of its last fiscal year, to October
2, 1999 will be covered on the Company's Quarterly Report on Form 10-Q for the
quarter ended January 1, 2000. Fiscal year 2000 will end on September 30, 2000.
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SIGNATURES
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 hereunto duly authorized.
Date: October 13, 1999 UNIFIED WESTERN GROCERS, INC.
By /s/ Richard J. Martin
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Richard J. Martin,
Senior Vice President -
Finance & Administration
and Chief Financial Officer
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EXHIBIT INDEX
Exhibit Page
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2.1 Agreement and Plan of Merger dated as of June 14, 1999 and N/A
amended as of August 11, 1999, by and among the Company, the
Subsidiary and United [2.1]
3.1 Amended and Restated Articles of Incorporation of the Company 12
3.2 Bylaws of the Company 19
4.1 Guarantee dated September 29, 1999 by the Company of debt 45
securities of United issued pursuant to that certain Indenture
dated as of February 1, 1978, and as subsequently amended and
supplemented, by and between United and State Street Bank and
Trust Company
10.1 Note Purchase Agreement dated as of September 29, 1999, by and 50
among the Company and the persons listed on Schedule I thereto
10.2 Secured Revolving Credit Agreement dated as of September 29, 173
1999, by and among the Company, the lenders named therein and
Rabobank Nederland, New York Branch
23.1 Consent of PricewaterhouseCoopers LLP, independent accountants 295
of United
99.1 Press Release of the Company and United dated June 16, 1999 296
99.2 Press Release of the Company dated September 28, 1999 298
99.3 Press Release of the Company dated September 30, 1999 300
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Exhibit 3.1
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AMENDED AND RESTATED
ARTICLES OF INCORPORATION
OF
CERTIFIED GROCERS OF CALIFORNIA, LTD.
The undersigned certify that:
1. They are the president and the secretary, respectively, of
Certified Grocers of California, Ltd., a California Corporation.
2. The articles of incorporation of this corporation are amended
and restated in full to read as set forth in Appendix A hereto, which is
incorporated herein by this reference.
3. The foregoing amendment and restatement of articles of
incorporation has been duly approved by the board of directors.
4. The foregoing amendment and restatement of articles of
incorporation has been duly approved by the required vote of shareholders in
accordance with Section 902 of the California Corporations Code. The total
number of outstanding shares of each class entitled to vote with respect to the
foregoing amendment was forty-six thousand eight hundred (46,800) Class A
shares, three hundred sixty-one thousand one hundred thirty-nine (361,139) Class
B shares and fifteen (15) Class C shares. The number of shares of each class
voting in favor of the foregoing amendment equaled or exceeded the vote
required, such required vote being a majority of the outstanding shares of Class
A stock, a majority of the outstanding shares of Class B stock and a majority of
the outstanding shares of Class C stock.
We further declare under penalty of perjury under the laws of the State of
California that the matters set forth in this certificate are true and correct
of our own knowledge.
DATE: September 29, 1999
/s/ Alfred A. Plamann
-------------------------------
Alfred A. Plamann, President
/s/ Robert M. Ling, Jr.
-------------------------------
Robert M. Ling, Jr., Secretary
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APPENDIX A
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AMENDED AND RESTATED ARTICLES OF INCORPORATION
FIRST: That the name of the corporation shall be the "Unified
Western Grocers, Inc."
SECOND: That the purposes for which it is formed are as follows:
(a) For the purpose of, and to facilitate, collective buying, in
quantities, of goods, wares, and merchandise at the lowest possible price with
the intent and power to resell the same to its stockholders, members, and to
other persons, for the purpose of manufacturing hereinafter named commodities
resell the same.
(b) Also, for the purpose of carrying on and conducting the business
of either a wholesale or retail grocer and generally to engage in the buying and
the selling at wholesale or retail prices, of goods, wares, merchandise,
groceries, fresh meats, cured meats, provisions, food stuffs, tobacco in any
form, cereals, hay, grain, products of the soil, canned goods of all varieties,
and, only to the extent allowed by United States of America, State and City laws
and ordinances, to buy, sell, or store either nonintoxicating or intoxicating
beverages.
(c) Also, for the purpose of enjoying the power to own, lease,
possess, use, occupy, and maintain grocery stores, warehouses, terminal
facilities, real property, or chattels for the delivery, reception, storage, or
shipment of the above described commodities, as well as for the sale thereof
either in wholesale or retail quantities either within the State of California,
or in any other state, or within any territory.
(d) Also, for the purpose of collective, or corporate, advertising
for the purpose of furthering the business of its stockholders in the retail and
wholesale grocery business.
(e) Also, for the purpose of enjoying the power to own, hold,
possess, and deal in the stocks, bonds, securities, and other evidences of
indebtedness of other corporations, or trusts, or associations engaged in the
same or similar line of business as this corporation either within the State of
California, or within any other state, or within any territory.
(f) Also, for the purpose of enjoying the power to create lawful
indebtedness, in the proper form or forms, which may become necessary to the
welfare of the corporation.
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(g) Also, for the purpose of enjoying the benefits of those general
powers of corporations enumerated in Section 354 of the Civil Code of California
which section is hereby incorporated herein by reference as though it were set
out herein in full.
(h) Also, for the purpose of acquiring, disposing of, manufacturing,
owning, investing in, holding, encumbering, using, leasing or otherwise dealing
in or with any property, real or personal, tangible or intangible, of any kind
whatever.
(i) Also, to engage in any one or more businesses or transactions
which the Board of Directors of this corporation may from time to time authorize
or approve, whether related or unrelated to those described in clauses (a)
through (h) of this Article.
(j) Also, to act as principal, agent, joint venturer, partner or in
any other capacity which may be authorized or approved by the Board of Directors
of this corporation.
(k) To do business anywhere in the world.
(l) To have and to exercise all the rights and powers that are now
or may hereafter be granted to a corporation by law.
The above purpose clauses are not limited by reference to or
inference from one another. Each clause is to be construed as a separate
statement conferring independent purposes and powers on the corporation.
THIRD: That the county in the State of California where the
principal office for the transaction of business of the corporation is to be
located is the County of Los Angeles.
FOURTH: That the corporate existence of this corporation shall
continue perpetually unless otherwise expressly provided by law.
FIFTH: The number of directors of this corporation shall be not
less than fifteen (15) nor more than twenty four (24), with the exact number of
directors to be fixed within such limits, by approval of the Board of Directors.
The holders of Class A Shares, voting as a class, shall be entitled to elect 80%
of the number of authorized directors so fixed (round up to the whole number).
The holders of Class B Shares, voting as a class, shall be entitled to elect the
remaining number of directors so fixed. If there are no Class B Shares issued
and outstanding, then the holders of Class A Shares shall be entitled to elect
all authorized directors so fixed.
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SIXTH: (a) This corporation is authorized to issue three classes
of shares, all without par value, to be designated "Class A Shares," "Class B
Shares," and "Class C Shares," respectively. The total number of Class A Shares
which this corporation is authorized to issue is five hundred thousand
(500,000); the total number of Class B Shares which this corporation is
authorized to issue is two million (2,000,000); the total number of Class C
Shares which this corporation is authorized to issue is twenty four (24).
(b) The rights, preferences, privileges and restrictions granted to
or imposed upon the Class A Shares are as follows:
(1) The Class A Shares of this corporation shall be issued
only to, and may be held only by, "member-patrons" of this corporation as that
term is defined in the bylaws of this corporation.
(2) It being the intent and purpose of this corporation to
limit ownership of its Class A Shares to qualified and active member-patrons as
defined in the bylaws, the Class A Shares may not be transferred except to the
corporation or except with the consent of the corporation to a transferee
approved by the corporation, in accordance with and subject to the bylaws of the
corporation.
(3) Except as otherwise expressly provided in these
Articles of Incorporation or expressly required by the California General
Corporation Law, the holders of the Class A Shares shall have exclusive voting
rights and powers, including the exclusive right to notice of shareholders'
meetings.
(c) The rights, preferences, privileges and restrictions granted to
or imposed upon the Class B Shares are as follows:
(1) Except as otherwise expressly provided by these
Articles of Incorporation or expressly required by the California General
Corporation Law, the holders of Class B Shares shall have no voting rights.
(2) The corporation, at the option of the Board of
Directors, may at any time or from time to time redeem any outstanding Class B
Shares that:
(A) Are held by other than a qualified and active
member-patron of this corporation as that term is defined in the bylaws; or
(B) Have been declared by the Board of Directors to be
"Excess Class B Shares" as that term is defined in the bylaws.
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(3) Such redemption shall be accomplished by the
corporation's giving a notice of redemption, as hereafter described, and by
paying the redemption price for such shares.
(A) The redemption price for shares held by other
than a qualified and active member-patron of this corporation as that term is
defined in the bylaws, shall be the greater of:
(i) One cent ($0.01) per share, or
(ii) An amount which is calculated by
(x) multiplying the number of shares to be repurchased by the book value per
share as of the close of the corporation's fiscal year last ended prior to the
date on which the holder ceases to be a qualified and active member, as
conclusively determined by the board of directors, provided that with respect to
terminations of membership occurring during the first full year following the
effective date of the Merger between United Grocers, Inc. and a wholly-owned
subsidiary of the Corporation (the "Merger") the book value shall be determined
as of the year end immediately preceding the effective date of the Merger, and
(y) subtracting from the amount computed in clause (x) the amounts of any and
all indebtedness that may be owing the corporation or any of its subsidiaries by
either the holder or the member from whom the holder has acquired said shares if
such acquisition was without the written consent of the corporation.
(B) The redemption price of Excess Class B Shares,
other than on termination of membership, and provided the member is in good
standing, is not in default or delinquent in any obligation to the Corporation
or any of its subsidiaries and there exists no grounds for termination of
membership and provided further that prior to the payment for said shares
neither the member nor the Corporation shall have terminated such membership,
shall be the greater of:
(i) one cent ($0.01) per share, or
(ii) during the period prior to the end of the
third full fiscal year of the Corporation following the Merger at the option of
the member made in writing at the time such shares are tendered for redemption,
either: (x) an amount which is equal to the book value of said shares as of the
close of the fiscal year prior to the effective date of the Merger, as
conclusively determined by the Board of Directors, the Corporation having the
right however to deduct any amounts owing to the Corporation or any of its
subsidiaries; or (y) an amount which is equal to the book value of said shares
as of the close of the fiscal year last ended prior to the date said shares are
tendered for repurchase, as conclusively determined by the Board of Directors,
the Corporation having the right however to deduct any amounts owing to the
Corporation or any of its subsidiaries; provided that no redemption pursuant to
subparagraph (y) shall be made until after the end of the third full fiscal year
of the Corporation following the effective date of the Merger.
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(iii) during the period following the end of the
third full fiscal year of the Corporation following the effective date of the
Merger, or during the period subsequent to the date of the filing of this
amendment with the Secretary of State of the State of California if the Merger
does not occur, an amount which is equal to the book value of said shares as of
the close of the fiscal year last ended prior to the date said shares are
tendered for repurchase, as conclusively determined by the Board of Directors,
the Corporation having the right however to deduct any amounts owing to the
Corporation or any of its subsidiaries.
(4) The notice of redemption called for above shall be given,
in writing, to each holder(s) of record, or his designate, of the Class B Shares
to be redeemed by personal delivery or mail, postage prepaid, to the last-known
address of the holder as shown on the records of the corporation. On or before
the date fixed for such redemption, each holder, or his designate if in
possession of the certificates, of any Class B Shares called for redemption
shall surrender the certificate or certificates for such share or shares to the
corporation at the place designated in the notice and shall thereupon be
entitled to receive payment of the redemption price. If such notice of
redemption shall have been duly given and if on the date fixed for redemption,
funds necessary for the redemption shall be available therefor, then all rights
with respect to such Class B Share or Shares so called for redemption, whether
or not surrendered, shall terminate except for the rights of the holders to
receive the redemption price, without interest, upon surrender of the
certificate or certificates therefor.
(5) Without prejudice to the foregoing, if, on, after, or
prior to any date fixed for any such redemption of any Class B Share or Shares
this corporation deposits with any bank or trust company in the City of Los
Angeles, State of California, as a trust fund, a sum sufficient to redeem on the
date fixed for redemption thereof, the Class B Share or Shares called for
redemption, with irrevocable instructions and authority to the bank or trust
company to give the notice of redemption thereof if such notice shall not
previously have been given by this corporation, or to complete the giving of
such notice if theretofore commenced, and to pay, on and after the date fixed
for redemption or prior thereto, the redemption price of the Class B Share or
Shares to their respective holders upon the surrender of their share
certificates, then from and after the date of the deposit (although prior to the
date fixed for redemption), the Class B Share or Shares so called shall be
deemed to be redeemed. The deposit shall be deemed to constitute full payment of
the Class B Share or Shares to the holders thereof and from and after the date
of the deposit such Class B Share or Shares shall be deemed to be no longer
outstanding, and the holders thereof shall cease to be shareholders with respect
to such Class B Share or Shares, and shall have no rights with respect thereto
except the right to receive from the bank or trust company payment of the
redemption price of such Class B Share or Shares without interest, upon the
surrender of their certificates therefor.
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(d) The rights, preferences, privileges and restrictions granted to
or imposed upon the Class C Shares are as follows:
(1) Except as otherwise expressly provided by these
Articles of Incorporation or expressly required by the California General
Corporation Law, the holders of Class C Shares shall have no voting rights.
(2) In the event of a voluntary or involuntary liquidation,
dissolution or winding up of this corporation, the holders of Class C Shares
shall not be entitled to receive, with respect to such shares, more than Ten
Dollars ($10.00) per share.
SEVENTH: (a) The liability of the directors of the corporation for
monetary damages shall be eliminated to the fullest extent permissible under
California law.
(b) The corporation is authorized to indemnify agents (as defined
in Section 317 of the Corporations Code) of the corporation to the fullest
extent permissible under California law.
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Exhibit 3.2
-----------
B Y L A W S
OF
UNIFIED WESTERN GROCERS, INC.
ARTICLE I
---------
SHAREHOLDERS
------------
Section 1. Qualifications for Class A Shareholders. It is the intent and
purpose of this Corporation to limit the ownership of its Class A Shares to
qualified and active member-patrons of this Corporation.
Applicants for membership as member-patrons (referred to sometimes as
"members") may be persons, firms, associations, corporations or other legal
entities, but must be of good and approved financial standing engaged in selling
groceries and related merchandise at retail or wholesale, must patronize the
Corporation in such amounts and such manner as may be prescribed by policies
adopted or approved by the Board of Directors, must comply with the conditions
and agreements contained in the application for membership and with the
Corporation's Bylaws and with such rules, regulations and policies for the
servicing of accounts as may from time to time be established by the
Corporation. Any applicant so qualified, wishing to become a member-patron,
shall make written application therefor in such form as the Corporation may from
time to time require. Any such application shall be considered by the Board of
Directors, and no membership shall be accepted or shares of the Corporation be
issued to any such applicant without the approval of the Board of Directors.
Section 2. Member-Patrons. The Class A Shares of this Corporation shall be
issued only to member-patrons of this Corporation. Each member-patron shall be
required to hold one hundred Class A Shares. No member-patron shall be entitled
to hold more than one hundred Class A Shares. Each member-patron shall also hold
such amount of Class B Shares of the Corporation as the Board of Directors may
establish as being required to be held by member-patrons whether based on a
percentage of average weekly purchases or on some other basis. In order to
qualify for and retain membership, patrons must qualify and be accepted as
member-patrons in accordance with Section 1, must patronize the Corporation in
such amounts and manner as may be prescribed from time to time by the Bylaws or
by policies adopted or approved by the Board of Directors, must purchase and
hold one hundred, and only one hundred, of the Corporation's Class A Shares
(provided that the time period over which such shares must be purchased shall be
determined by the Board of Directors), must hold such amount of Class B Shares
as may be specified by requirements regarding the holding of Class B Shares as
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may from time to time be established by the Board of Directors, must comply with
the agreements contained in the application for membership and with the
Corporation's Bylaws and with such rules, regulations, and policies for the
servicing of accounts as may from time to time be established by the Corporation
including, without limitation, payment of such service dues, maintenance of such
deposits and compliance with all terms of purchase and payment as may be
prescribed. Membership as a member-patron does not obligate the Corporation to
make any sale of merchandise or services or any extension of credit. Membership
as a member-patron is not transferable either voluntarily or by operation of
law.
Section 3. Affiliated Member-Patrons. Notwithstanding the provisions of
Section 2 above, the Board of Directors may, in its discretion, authorize the
acceptance and service of member-patrons without the issuance thereto of the
Corporation's Class A Shares when the Board determines that such action is
justified by reason of the fact that the ownership of such member-patron is the
same, or in the Board's determination sufficiently the same, as that of another
member-patron holding Class A Shares. Such member-patron however shall be
required to hold Class B Shares in the same manner as other member-patrons.
Section 4. Associate-Patrons. The Board of Directors may,
in its discretion, authorize doing business on a patronage basis
with patrons who are not member-patrons and who are referred to
herein as "associate-patrons."
Section 5. Rules and Regulations for Servicing Accounts.
The Board of Directors shall establish or shall authorize the
establishment,
from time to time, of such rules, regulations and policies for the
servicing of accounts as it shall deem advisable, including, without limitation,
rules prescribing monthly service dues, charges applicable on late payments of
accounts, amounts and manner of purchases, required deposits, guarantees and
other credit requirements and other terms of service, purchases and payment of
accounts.
Section 5.A Patronage Dividend Deposit Accounts. Without limiting the
requirement of any condition, rule, regulation or policy for the servicing of
accounts which may otherwise require patron deposits, member-patrons and
associate-patrons may be required to maintain "Patronage Dividend Deposit
Accounts" which shall consist of that portion of patronage dividends
distributable to such patrons and allocated by the Corporation on its books to
such patrons' Patronage Dividend Deposit Accounts. The indebtedness of the
Corporation respecting such accounts may be evidenced by the issuance of notes,
revolving fund certificates, retain certificates, certificates of indebtedness,
patronage dividend certificates or any other written evidences of indebtedness
of the Corporation (collectively, "Patronage Dividend Certificates"). The
portion of the patronage dividends to be so allocated and evidenced by the
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issuance of Patronage Dividend Certificates, together with the rate of interest
payable thereon and the maturity date thereof, will be determined by the Board
of Directors prior to their issuance. Such Patronage Dividend Deposit Accounts
shall be maintained, and the Patronage Dividend Certificates shall be issued and
held, on and be subject to such terms and conditions as may be prescribed by the
Corporation, including without limitation the right of the Corporation to set
off against principal and interest thereon all or any portion of amounts owing
to the Corporation or any of its subsidiaries. The indebtedness evidenced by
such Patronage Dividend Certificates shall be subordinated and subject in right
of payment to the prior payment in full of all "Senior Indebtedness" as that
term may be defined in such Patronage Dividend Certificates or in any indenture
under which they are issued and the terms and provisions of such subordination
shall be as set forth in such Patronage Dividend Certificates or in such
indenture.
Section 6. Termination of Membership as a Member-Patron.
Membership as a member-patron may be terminated:
(a) By written resignation of the member received by the
Treasurer of the Corporation;
(b) By the Corporation on default of the member in any requirement for
membership as set forth in the application for membership, the Bylaws of the
Corporation, or any rules, regulations or policies established by or pursuant to
the authorization of the Board of Directors;
(c) By the Corporation on the member's failure to timely pay or otherwise
meet any obligation to the Corporation or any of its subsidiaries or to comply
with any rule, regulation, requirement or policy for the servicing of accounts
that may be prescribed by the Corporation;
(d) By the Corporation pursuant to provisions of the application for
membership or other agreement with the member;
(e) By the Corporation on the levy of an attachment or execution against
any account of the member or any of the Corporation's shares held by the member
or on any such account or share being subjected to any other process of law;
(f) By the Corporation on the member's becoming insolvent, being adjudged
bankrupt, commencing any proceeding under any bankruptcy, insolvency,
arrangement or reorganization statute or making an assignment for the benefit of
creditors;
(g) By the Corporation on the death or incompetency of a
member;
(h) By the Corporation on the assignment, transfer or encumbrance, or
attempted or purported assignment, transfer or encumbrance, except to the
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Corporation or any of its subsidiaries, of any account of the member or of any
of the Corporation's shares held by the member;
(i) By the Corporation whenever it shall determine that for a period of
six months or more during any fiscal year of the Corporation any member's
account is one which entails an operating loss to the Corporation. Termination
of membership shall not relieve the patron of obligations incurred prior to
termination.
Section 7. Qualifications For Class B Shareholders. Unless and until the
Board of Directors shall expressly authorize Class B Shares to be issued to or
held by any person other than a member-patron, it is the intent and purpose of
this Corporation that the ownership of this Corporation's Class B Shares shall
be limited to qualified and active member-patrons of this Corporation or former
member-patrons who have tendered such shares to the Corporation for redemption.
Section 8. Required Class B Shares; Excess Class B Shares. The Board of
Directors may from time to time establish the amount of Class B Shares that
shall be held by member-patrons. This may be based upon the member's average
weekly purchases and/or upon any other basis that the Board may determine. The
requirement regarding the holding of Class B Shares as established by the Board
of Directors is subject to change from time to time by the Board of Directors
which may, in its discretion, add to, increase, decrease, limit, eliminate or
otherwise change such requirement.
Class B Shares held by a member-patron in excess of what is established by
the Board of Directors as the Class B Shares required to be held by such
member-patron will be considered "Excess Class B Shares."
Section 9. Nontransferability of Shares Changes in
Ownership of Members.
(a) Nontransferability of Shares. Neither the Class A Shares nor the Class
B Shares may be transferred without the prior written consent of the
Corporation. Such consent will not normally be given. Without in any way
limiting the generality of the foregoing:
(1) Corporation Election to Permit Transfer of Shares. The
Corporation may, but shall not be required to, permit the transfer of
such shares provided (i) the member's membership has not been terminated,
(ii) the member is not in default in any requirement for membership or in
any obligation to the Corporation or any of its subsidiaries, (iii) all
debts and obligations of the member to the Corporation and all of its
subsidiaries have been paid and satisfied or otherwise provided for to
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the satisfaction of the Corporation, (iv) the transfer is to a new
member-patron or to an existing member-patron and, in each case, is in
connection with the transfer of the transferor's business to such new
member-patron or existing member-patron, as the case may be, for
continuation of such business, (v) such transferee, if a new
member-patron, duly executes such forms then in use for application for
membership and qualifies in all respects for membership and meets all
credit requirements and has been accepted as a new member-patron with the
approval of the Board of Directors, and (vi) the Corporation has elected
not to purchase or redeem such shares.
(2) Proprietorships and Partnership Members. Any change in a
proprietorship or partnership which is a member will require a new
membership; however, where the change is a transfer of the business to a
family member or to a partnership or corporation in which a proprietor or
partner continues as a partner or major shareholder, the Corporation may
elect, but shall not be required, to treat such new membership as a
continuation of the prior membership and permit the transfer of shares
held by the prior member to the new member in accordance with (1) above.
The Corporation may, in the discretion of its managing officers, require
such guarantees of the obligations of partnership and proprietorship
members as said officers deem advisable.
(3) Corporate Members. The Corporation may elect, but shall not be
required, to treat as being a change in the ownership of the member and
requiring a new membership, any change in the control of the voting power
of the shareholders of a corporate member (whether by the transfer,
issuance or repurchase of shares or otherwise) (other than the transfer
among or issuance to members of the public of shares publicly traded and
widely held of a publicly owned corporate member). The transfer of stock
in a corporate member by any stockholder thereof shall not affect such
stockholder's liability on any guarantees given of the obligations of the
corporate member. The Corporation may, in the discretion of its managing
officers, require such guarantees of the obligations of a corporate
member, from any or all of its shareholders or from other persons, as
said officers deem advisable.
(b) Notification of Change in Ownership. Each member must inform the
Corporation in writing of any contemplated or actual changes in ownership of a
member--whether a proprietorship, partnership or corporate member (other than
the transfer in public trading of shares of a corporate member whose shares are
publicly traded).
Section 10. Shares Held as Security. All Class A Shares
and Class B Shares shall be pledged to, and the certificates for
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said shares held by, the Corporation to secure the prohibition against their
transfer, to secure the Corporation's rights to purchase or redeem said shares
and as security for the payment of any and all obligations of the member to the
Corporation or any of its subsidiaries.
Section 11. Repurchase of Shares. In addition to the rights of purchase or
redemption of shares as contained in the Articles of Incorporation and without
limiting or restricting, or being limited or restricted by, the provisions for
repurchase or redemption as contained in the Articles, the Corporation shall
have the right to repurchase Class A Shares and Class B Shares held by a member
upon or at any time after the termination of membership of such member, and in
the case of Excess Class B Stock, the right to repurchase Excess Class B Shares,
in accordance with the redemption policy set forth in Section 12.
The repurchase price for shares repurchased by the Corporation shall be
determined as follows:
(a) Except as provided in (b) below, the repurchase price for said shares
shall be the greater of:
(i) one cent ($0. 01) per share or
(ii) An amount which is calculated by (x) multiplying the number of
shares to be repurchased by the book value per share as of the close of
the Corporation's fiscal year last ended prior to the date on which the
holder ceases to be a qualified and active member, as conclusively
determined by the Board of Directors, provided that with respect to
termination of memberships occurring during the first full year following
the effective date of the Merger between United Grocers, Inc. (?United?)
and a wholly-owned subsidiary of the Corporation (the ?Merger?) the book
value shall be determined as of the year end immediately preceding the
Effective Time of the Merger, and (y) subtracting from the amount computed
in clause (x) the amounts of any and all indebtedness that may be owing
the Corporation or any of its subsidiaries by either the holder or the
member from whom the holder has acquired said shares if such acquisition
was without the written consent of the Corporation. Notwithstanding the
foregoing, with respect to Class A Shares received in the Merger by former
United shareholders that receive less than 100 Class A Shares in the
Merger and elect not to become a member and to have their shares
repurchased, the repurchase price shall equal an amount equal to the book
value as of April 2, 1999, of the United Common Shares for which the Class
A Shares were exchanged (which amount was $57.90 per United Common Share).
(b) On the repurchase of Excess Class B Shares, other than on termination
of membership, and provided the member is in good standing, is not in default or
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delinquent in any obligation to the Corporation or any of its subsidiaries and
there exist no grounds for termination of membership and provided further that
prior to the payment for said shares neither the member nor the Corporation
terminate such membership, the repurchase of Excess Class B Shares will be
effected by paying to the member, crediting to the member's account or
delivering a note as provided in (iii) below:
(i) during the period prior to the end of the third full fiscal year
of the Corporation following the effective date of the Merger, at the
option of the member made in writing at the time such shares are tendered
for redemption, either: (1)an amount which is equal to the book value of
said shares as of the close of the fiscal year prior to the effective date
of the Merger, as conclusively determined by the Board of Directors, the
Corporation having the right however to deduct any amounts owing to the
Corporation or any of its subsidiaries; or (2) an amount which is equal to
the book value of said shares as of the close of the fiscal year last
ended prior to the date said shares are tendered for repurchase, as
conclusively determined by the Board of Directors, the Corporation having
the right however to deduct any amounts owing to the Corporation or any of
its subsidiaries, provided that no redemption pursuant to this
subparagraph (2) shall be made until after the end of the third full
fiscal year of the Corporation following the effective date of the Merger;
(ii) during the period following the end of the third full fiscal
year of the Corporation following the effective date of the Merger, an
amount which is equal to the book value of said shares as of the close of
the fiscal year of the Corporation last ended prior to the date said
shares are tendered for repurchase, as conclusively determined by the
Board of Directors, the Corporation having the right however to deduct any
amounts owing to the Corporation or any of its subsidiaries; and
(iii) notwithstanding (i) and (ii) above, during the period ending
one year and 120 days after the effective date of the Merger, with respect
to Excess Class B Shares held by former shareholders of United and
received in the Merger, an amount which is equal to the book value as of
April 2, 1999 (which amount was $57.90 per United common share) of the
United common shares for which the Excess Class B Shares were exchanged,
payable by delivery of a non-negotiable note of the Corporation payable in
twenty quarterly installments and bearing interest at 6% per annum, the
Corporation having the right, however, to deduct any amounts owing to the
Corporation or any of its subsidiaries.
Section 12. Share Redemption Policy. As used herein, unless the context
otherwise requires, the terms "redeem" and "redemption" include repurchase. The
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Corporation will redeem the shares of members on termination of membership in
accordance with and subject to limitations of the share redemption policy
described below.
Provided that the redemption price equals or exceeds $l000 the Corporation
will also upon request redeem the excess Class B Shares of a member who owns
Class B Shares in excess of that which is required to be held by such member
("Excess Class B Shares"). Any such redemption of Excess Class B Shares will be
governed by the same rules that govern the redemption of shares upon termination
of membership. The redemption price for shares being redeemed shall be as set
forth in Section 11. Such redemption is subject to the following priorities and
restrictions.
1. Restrictions on Redemption.
--------------------------
Redemption is subject to the restrictions imposed by (a) the
Corporations Code of the State of California, (b) any loan agreement, security
agreement, mortgage, indenture or contract approved by the Board of Directors,
to which the Corporation is or will be a party, and which includes a restriction
that prohibits the redemption of shares during the existence thereunder of a
breach or default by the Corporation, and (c) other applicable legal
restrictions. The determination of the Board of Directors as to whether or not,
and to what extent redemptions are permitted by such restrictions shall be
within the authority of the Board and such determination shall be conclusive.
2. Redemption Policy.
-----------------
Subject to the Board of Directors' determining that the Corporation
is able to meet the requirements set forth in Paragraph 1 above, shares will be
redeemed in accordance with the following:
(a) Class A Shares eligible for redemption by reason of
termination of membership will be redeemed in the order in which
memberships terminate, and will be redeemed prior to the redemption
of any Class B Shares which have not yet been redeemed but are
eligible for redemption either by reason of termination of
membership or as Excess Class B Shares tendered for redemption. All
determinations by the Company of the order in which memberships
terminate or shares are tendered shall be conclusive.
(b) The aggregate amount of Class B Shares which the
Corporation will be obligated to redeem in any fiscal year will be
limited to 5% of the sum of (i) the number of Class B Shares
outstanding as of the close of the preceding fiscal year plus (ii)
the number of Class B Shares issued as a part of the
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patronage dividend for such preceding fiscal year ("the five
percent limit"); provided that until after the end of the third
full fiscal year following the effective date of the Merger the
Corporation shall not be obligated to redeem any Class B Shares
eligible for redemption by reason of termination of membership of
such member; and provided further that shares repurchased pursuant
to Section 11(b)(iii) shall not be subject to the 5% limitation on
the obligation to redeem.
(c) Subject to the limitations contained in (b) above, in any
fiscal year, the Corporation will redeem, up to the five percent
limit, Class B Shares which were eligible for redemption in a prior
year, either by reason of termination of membership in a prior year
or which were Excess Class B Shares tendered for redemption in a
prior year, but which have not yet been redeemed, provided that if
the five percent limit would preclude redemption of all such
shares, then such shares will be redeemed pro rata. In the event
that the five percent limit would permit the redemption of all such
shares and would permit the redemption of other Class B Shares as
well, then, subject to the five percent limit, the Corporation will
redeem other Class B Shares eligible for redemption by reason of
termination of membership or which are Excess Class B Shares
tendered for redemption, in the order in which memberships
terminate or shares are tendered for redemption. All determinations
by the Corporation of the order in which memberships terminate or
shares are tendered shall be conclusive.
(d) Except as provided in Section 11(b)(iii), the redemption
of shares may be accomplished by paying to the member or crediting
to the member's account the redemption price. In making such
payment or credit for the redemption of shares, the Corporation
shall have the right to deduct any amounts owing by the member to
the Corporation or any of its subsidiaries. Such payment or credit
for the redemption of shares will be made within 120 days after
such shares have become eligible for redemption, either by reason
of termination of membership or tender in the case of Excess Class
B Shares, and are otherwise entitled to be redeemed in accordance
with legal limitations and as provided in paragraphs (a), (b) and
(c) above. In no event will interest be payable on the redemption
price for any delay in paying or crediting the redemption price.
(e) Without regard to each year's five-percent limit or any
other provision of paragraphs (a), (b) or (c) above, the
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Corporation's Board of Directors will have the absolute discretion
to redeem Excess Class B shares or to redeem Class A or Class B
Shares of any outgoing member regardless of when the membership
terminated or the Class B shares were tendered. The Board of
Directors will also have the right to elect to redeem Excess Class
B Shares even though such redemption has not been requested and
without regard to the five percent limit or any other provision of
paragraphs (a), (b), or (c) above.
(f) The Board of Directors will have the absolute discretion,
without regard to the five-percent limit or any other provision of
the redemption policy, to authorize the Corporation to agree with
any shareholder to purchase Class B Shares held by such shareholder
and to make such purchase and payment for such shares in such
manner as may be agreed upon, subject only to corporate law
requirements.
ARTICLE II
----------
Section 1. Place of Meetings. Meetings of shareholders shall be held at
any place within or outside the State of California designated by the Board of
Directors. In the absence of any such designation, shareholders' meetings shall
be held at the principal executive office of the Corporation.
Section 2. Annual Meetings. The annual meeting of shareholders shall be
held each year on a date and at a time designated by the Board of Directors. At
each annual meeting Directors shall be elected, and any other proper, business
may be transacted.
Section 3. Special Meetings. Special meetings of the shareholders may be
called at any time by the Board of Directors, the Chairman of the Board, the
Vice Chairman of the Board, the President, or by the holders of shares entitled
to cast not less than ten (10) percent of the votes at such meeting. Upon
request in writing to the Chairman of the Board, the President, any vice
President or the Secretary by any person (other than the Board of Directors)
entitled to call a special meeting of shareholders, the officer forthwith shall
cause notice to be given to the shareholders entitled to vote that a meeting
will be held at a time requested by the person or persons calling the meeting,
not less than 35 nor more than 60 days after the receipt of the request. If the
notice is not given within 20 days after receipt of the request, the persons
entitled to call the meeting may give the notice.
Section 4. Notice of Shareholders' Meetings. Written notice of each
annual or special meeting of shareholders shall be given not less than 10 nor
more than 60 days before the date of the meeting to each shareholder entitled to
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vote thereat. Such notice shall state the place, date, and hour of the meeting
and (i) in the case of a special meeting the general nature of the business to
be transacted, and no other business may be transacted, or (ii) in the case of
the annual meeting, those matters which the Board, at the time of the mailing of
the notice, intends to present for action by the shareholders, but, subject to
the provisions of applicable law, any proper matter may be presented at the
meeting for such action. The notice of any meeting at which Directors are to be
elected shall include the names of nominees intended at the time of the notice
to be presented by management for election.
Section 5. Manner of Giving Notice. Notice of a shareholders' meeting
shall be given either personally or by mail or telegraphic or other means of
written communication, charges prepaid, addressed to the shareholder at the
address of such shareholder appearing on the books of the Corporation or given
by the shareholder to the Corporation for the purpose of notice; or, if no such
address appears or is given, at the place where the principal executive office
of the Corporation is located or by publication at least once in a newspaper of
general circulation in the county in which the principal executive office is
located. Notice shall be deemed to have been given at the time when delivered
personally or deposited in the mail or sent by telegram or other means of
written communication.
Section 6. Quorum. A majority of the shares entitled to vote, represented
in person or by proxy, shall constitute a quorum at any meeting of shareholders.
The shareholders present at a duly called or held meeting at which a quorum is
present may continue to do business until adjournment, notwithstanding the
withdrawal of enough shareholders to leave less than a quorum, if any action
taken (other-than adjournment) is approved by at least a majority of the
shareholders required to constitute a quorum.
Section 7. Adjourned Meeting: Notice. Any shareholders' meeting, annual
or special, whether or not a quorum is present, may be adjourned from time to
time by the vote of the majority of the shares represented at that meeting,
either in person or by proxy, but in the absence of a quorum, no other business
may be transacted at that meeting, except as provided in Section 6 of this
Article II.
When any meeting of shareholders is adjourned to another time or place,
notice need not be given of the adjourned meeting if the time and place are
announced at the meeting at which the adjournment is taken, unless a new record
date for the adjourned meeting is fixed, or unless the adjournment is for more
than 45 days from the date set for the original meeting, in which case notice of
the adjourned meeting shall be given to each shareholder of record entitled to
vote at the adjourned meeting in accordance with the provisions of Sections 4
and 5 of this Article II. At any adjourned meeting the Corporation may
transact any business which might have been transacted at the original meeting.
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Section 8. Voting. The shareholders entitled to vote at any meeting of
shareholders shall be determined in accordance with the provisions of Section 9
of this Article II, subject to the provisions of Sections 702 to 704, inclusive,
of the Corporations Code of California. The shareholders' vote may be by voice
vote or by ballot; provided, however, that any election of Directors must be by
ballot if demanded by any shareholder at the meeting and before the voting
begins. If a quorum is present, the affirmative vote of the majority of the
shares represented at the meeting and entitled to vote on any matter (other than
the election of Directors) shall be the act of the shareholders, unless the vote
of a greater number or voting by classes is required by California General
Corporation Law or by the Articles of Incorporation.
Subject to the following sentence and to the provisions of Section 708 of
the California General Corporation Law, every shareholder entitled to vote at
any election of Directors may cumulate such shareholder's votes and give one
candidate a number of votes equal to the number of Directors to be elected
multiplied by the number of votes to which the shareholder's shares are
entitled, or distribute the shareholder's votes on the same principle among as
many candidates as the shareholder thinks fit. No shareholder shall be entitled
to cumulate votes for any candidate or candidates pursuant to the preceding
sentence unless such candidate or candidates' names have been placed in
nomination prior to the voting and the shareholder has given notice at the
meeting prior to the voting of the shareholder's intention to cumulate the
shareholder's votes. If any one shareholder has given such notice, all
shareholders may cumulate their votes for candidates in nomination.
Section 9. Record Date for Shareholders of Record.
(a) In order that the Corporation may determine the shareholders entitled
to notice of any meeting or to vote or entitled to receive payment of any
distribution or allotment of any rights or entitled to exercise any rights in
respect of any other lawful action, the Board may fix, in advance, a record date
which shall not be more than 60 nor less than 10 days prior to the date of such
meeting nor more than 60 days prior to any other action.
(b) If no record date is fixed:
(1) The record date for determining shareholders entitled to notice
of or to vote at a meeting of shareholders shall be at the close of
business on the business day next preceding the day on which notice is
given or, if notice is waived, at the close of business on the business
day next preceding the day on which the meeting is held.
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(2) The record date for determining shareholders entitled to give
consent to corporate action in writing without a meeting, when no prior
action by the Board has been taken, shall be the day on which the first
written consent is given.
(3) The record date for determining shareholders for any other
purpose shall be at the close of business on the day on which the Board
adopts the resolution relating thereto, or the 60th day prior to the date
of such other action, whichever is later.
(c) A determination of shareholders of record entitled to notice of or to
vote at a meeting of shareholders shall apply to any adjournment of the meeting
unless the Board fixes a new record date for the adjourned meeting, but the
Board shall fix a new record date if the meeting is adjourned for more than 45
days from the date set for the original meeting.
(d) Shareholders on the record date are entitled to notice and to vote or
to receive the distribution or allotment of rights or to exercise the rights, as
the case may be, notwithstanding any transfer of any shares on the books of the
Corporation after the record date, except as otherwise provided in the Articles
or by agreement or by the California General Corporation Law.
Section 10. Action Without Meeting. Subject to Section 603 of the
California General Corporation Law, any action which, under any provision of the
California General Corporation Law, may be taken at any annual or special
meeting of shareholders, may be taken without a meeting and without prior notice
if a consent in writing, setting forth the action so taken, shall be signed by
the holders of outstanding shares having not less than the minimum number of
votes that would be necessary to authorize or take such action at a meeting at
which all shares entitled to vote thereon were present and voted.
Section 11. Proxies. Every person entitled to vote shares has the right to
do so either in person or by one or more persons authorized by a written proxy
executed by such shareholder and filed with the Secretary. Any proxy duly
executed is not revoked and continues in full force and effect until revoked by
the Person executing it prior to the vote pursuant thereto by a writing
delivered to the corporation stating that the proxy is revoked or by a
subsequent proxy executed by, or by attendance at the meeting and voting in
person by, the person executing the proxy; provided, however, that no proxy
shall be valid after the expiration of 11 months from the date of its execution
unless otherwise provided in the proxy.
Section 12. Organization. The Chairman of the Board of Directors, or
in his absence, any Vice Chairman, or in their absence the President, shall
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call the meeting of the stockholders to order and shall act as Chairman of such
meeting. In the absence of the Chairman of the Board of Directors, and of the
Vice Chairman of the Board of Directors, and the President, stockholders shall
appoint a Chairman for such meetings. The Secretary of the Company, or in his
absence the Assistant Secretary, shall act as Secretary at any meeting of the
stockholders, but in the absence of the Secretary and the Assistant Secretary at
any meeting of the stockholders, the presiding officer may appoint any person to
act as Secretary of the meeting.
Section 13. Inspectors of Election. In advance of any meeting of
shareholders, the Board may appoint any persons other than nominees for office
as inspectors of election to act at such meeting and any adjournment thereof. If
inspectors of meeting may, and on the request of any shareholder or
shareholder's proxy shall, make such appointment at the meeting. The number of
inspectors shall be either one or three. If appointed at a meeting on the
request of one or more shareholders or proxies, the majority of shares present
shall determine whether one or three inspectors are to be appointed.
The duties of such inspectors shall be as prescribed by Section 707(b) of
the California General Corporation Law and shall include: determining the number
of shares outstanding and the voting power of each; the shares represented at
the meeting, the existence of a quorum; the authenticity, validity, and effect
of proxies; receiving votes, ballots, or consents; hearing and determining all
challenges and questions in any way arising in connection with the right to
vote; counting and tabulating all votes or consents, determining when the polls
shall close; determining the result; and doing such acts as may be proper to
conduct the election or vote with fairness to all shareholders. If there are
three inspectors of election, the decision, act, or certificate of a majority is
effective in all respects as the decision, act, or certificate of all.
ARTICLE III
-----------
DIRECTORS
---------
Section 1. Powers. Subject to the provisions of the new California General
Corporation Law and any limitations in the Articles of Incorporation and these
Bylaws relating to action required to be approved by the shareholders or by the
outstanding shares, the business and affairs of the Corporation shall be managed
and all corporate powers shall be exercised by or under the direction of the
Board of Directors.
Without prejudice to these general powers, and subject to the same
limitations, the Directors shall have the power to:
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(a) To select and remove all the other officers, agents and employees of
the Corporation, prescribe the powers and duties for them as may not be
inconsistent with law, or with the Articles or these Bylaws, fix their
compensation, and require from them security for faithful service.
(b) To conduct, manage, and control the affairs and business of the
Corporation and to make such rules and regulations therefor not inconsistent
with law, or with the Articles of Incorporation or these Bylaws, as they may
deem best.
(c) Change the principal executive office or the principal business office
in the State of California from one location to another; cause the Corporation
to be qualified to do business in any other state, territory, dependency, or
country, and conduct business within or without the State of California; and
designate any place within or without the State of California for the holding of
any shareholders' meeting, or meetings.
(d) To adopt, make, and use a corporate seal, and to prescribe the forms
of certificates of stock, and to alter the form of such seal and of such
certificates from time to time as in their judgment they may deem best.
(e) To authorize the issuance of shares of stock of the Corporation from
time to time, upon such terms and for such consideration as may be lawful.
(f) To borrow money and incur indebtedness for the purposes of the
Corporation, and to cause to be executed and delivered therefor; in the
corporate name, promissory notes, bonds, debentures, deeds of trust, mortgages,
pledges, hypothecations, or other evidences of debt and securities therefor.
Section 2. Number and Qualifications of Directors. The number of Directors
of this Corporation shall be as specified in, and such Directors shall be
elected as provided in, Article Fifth of this Corporation's Articles of
Incorporation. Directors in order to qualify for election must be either an
employee of the Corporation or a shareholder, or a member of a partnership which
is a shareholder, or an employee of a corporation which is a shareholder. Any
director who shall, if an employee, cease to be employed by the Corporation, or
if not an employee, cease to be engaged in the grocery business either as
proprietor, partner of a firm or employee of a corporation which proprietor,
firm or corporation is engaged in the grocery business, and is a shareholder,
for a period of six months, shall automatically become disqualified to act as a
director.
Section 3. Election and Term of Office. The Directors shall be elected at
each annual meeting of shareholders but if any such annual meeting is not held
or the Directors are not elected thereat, the Directors may be elected at any
special meeting of shareholders held for that purpose. Each director
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shall hold office until the next annual meeting and until a successor has been
elected and qualified.
Section 4. Vacancies. Any director may resign effective upon giving
written notice to the Chairman of the Board, the President, Secretary, or the
Board, unless the notice specifies a later time for the effectiveness of such
resignation. If the resignation is effective at a future time, a successor may
be elected to take office when the resignation becomes effective.
Vacancies in the Board excepting those existing as a result of a removal
of a director by the vote or written consent of the shareholders, may be filled
by a majority of the remaining Directors, though less than a quorum, or by a
sole remaining director, and each director so elected shall hold office until
the next annual meeting and until such director's successor has been elected and
qualified.
A vacancy or vacancies in the Board shall be deemed to exist in case of
the death, resignation, or removal of any director, or if the authorized number
of Directors be increased, or if the shareholders fail, at any annual or special
meeting of shareholders at which any director or Directors are elected, to elect
the full authorized number of Directors to be voted for that meeting.
The Board may declare vacant the office of a director who has been
declared of unsound mind by an order of court or convicted of a felony.
The shareholders may elect a director or Directors at any time to fill any
vacancy or vacancies not filled by the Directors. Any such election by written
consent requires the consent of a majority of the outstanding shares entitled to
vote. If the Board accepts the resignation of a director tendered to take effect
at a future time, the Board or the shareholders shall have power to elect a
successor to take office when the resignation is to become effective.
No reduction of the authorized number of Directors shall have the effect
of removing any director prior to the expiration of the director's term of
office.
Section 5. Nominating Committee. On or before the last monthly meeting of
the Board of Directors of the Corporation in October of each year, the Directors
shall appoint a Nominating Committee of three or more of its members to select
nominees for election as Directors of the Corporation for the ensuing year and
until their successors are elected and qualified. The President of the
Corporation shall be an exofficio member of the Nominating Committee. The
Nominating Committee shall give due consideration to geographic representation
in selecting a slate of nominees for election to the Board of Directors.
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The Nominating Committee shall submit its nominations to the Board of
Directors on or before the last monthly meeting of Directors in January of each
year, and the nominees so selected shall be those submitted by the Board of
Directors to the shareholders to be voted upon at the regular annual meeting of
the shareholders of the Corporation.
Section 6. Place of Meetings and Meetings by Telephone. Regular meetings
of the Board of Directors may be held at any place within or outside the State
of California that has been designated from time to time by resolution of the
Board. In the absence of such a designation, regular meetings shall be held at
the principal executive office of the Corporation. Special meetings of the Board
shall be held at any place within or outside the State of California that has
been designated in the notice of the meeting or, if not stated in the notice or
there is no notice, at the principal executive office of the Corporation. Any
meeting, regular or special, may be held by conference telephone or similar
communication equipment, so long as all Directors participating in the meeting
can hear one another, and all such Directors shall be deemed to be present in
person at the meeting.
Section 7. Regular Meetings. Regular meetings of the Board of Directors
shall be held without call at such time as shall from time to time be fixed by
the Board of Directors. Such regular meetings may be held without notice.
Section 8. Special Meetings. Special meetings of the Board for any
purpose or purposes may be called at any time by the Chairman of the Board, the
President, or the Secretary or by any two Directors.
Special meetings of the Board shall be held upon four days' written notice
or 48 hours' notice given personally or by telephone, telegraph, telex, or other
similar means of communication. Any such notice shall be addressed or delivered
to each director at such director's address as it is shown upon the records of
the Corporation or as may have been given to the Corporation by the Director for
purposes of notice or, if such address is not shown on such records or is not
readily ascertainable, at the place in which the meetings of the Directors are
regularly held.
Notice by mail shall be deemed to have been given at the time a written
notice is deposited in the United States mails, postage prepaid. Any other
written notice shall be deemed to have been given at the time it is personally
delivered to the recipient or is delivered to a common carrier for transmission,
or actually transmitted by the person giving the notice by electronic means, to
the recipient. Oral notice shall be deemed to have been given at the time it is
communicated, in person or by telephone or wireless, to the recipient or to a
person at the office of the recipient who the person giving the notice has
reason to believe will promptly communicate it to the recipient.
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Section 9. Quorum. A majority of the authorized number of Directors
constitutes a quorum of the Board for the transaction of business, except to
adjourn as hereinafter provided. Every act or decision done or made by a
majority of the Directors present at a meeting duly held at which a quorum is
present shall be regarded as the act of the Board, unless a greater number be
required by law or by the Articles. A meeting at which a quorum is initially
present may continue to transact business notwithstanding the withdrawal of
Directors, if any action taken is approved by at least a majority of the
required quorum for such meeting.
Section 10. Adjournment. A majority of the Directors present, whether or
not a quorum is present, may adjourn any Directors' meeting to another time and
place. Notice of the time and place of holding an adjourned meeting need not be
given to absent Directors if the time and place be fixed at the meeting
adjourned. If the meeting is adjourned for more than 24 hours, notice of any
adjournment to another time or place shall be given prior to the time of the
adjourned meeting to the Directors who were not present at the time of the
adjournment.
Section 11. Action Without Meeting. Any action required or permitted to be
taken by the Board may be taken without a meeting if all members of the Board
shall individually or collectively consent in writing to such action. Such
consent or consents shall have the same effect as a unanimous vote of the Board
and shall be filed with the minutes of the proceedings of the Board.
Section 12. Fees and Compensation. Directors and members of committees may
receive such compensation, if any, for their services, and such reimbursement
for expenses, as may be fixed or determined by the Board.
Section 13. Presiding Officers. At the first meeting of the Board of
Directors each year (at which a quorum shall be present), held next after the
annual meeting of the stockholders, the Board shall elect from its membership a
chairman, a First Vice Chairman and a Second Vice Chairman. The Chairman of the
Board of Directors shall preside at all meetings of the Board of Directors. The
First Vice Chairman of the Board of Directors shall preside at all meetings of
the Board of Directors during the absence or disability of the Chairman. The
Second Vice Chairman of the Board of Directors shall preside at all meetings of
the Board of Directors during the absence or disability of the Chairman and the
First Vice Chairman.
Section 14. Election of Officers. At the first meeting of the Board of
Directors each year (at which a quorum shall be present), held next after the
annual meeting of the stockholders, the Directors shall proceed to the election
of the executive officers of the Corporation.
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Section 15. Committees. The Board of Directors may, by resolution adopted
by a majority of the authorized number of Directors, designate one or more
committees, each consisting of two or more Directors, to serve at the pleasure
of the Board. The Board may designate one or more Directors as alternate members
of any committee. The Board may delegate to such committee any of the authority
of the Board except with respect to:
(a) The approval of any action for which the General Corporation Law also
requires shareholders' approval or approval of the outstanding shares;
(b) The filling of vacancies on the Board or on any committee;
(c) The fixing of compensation of the Directors for serving on any
committee;
(d) The amendment or repeal of Bylaws or the adoption of new Bylaws;
(e) The amendment or repeal of any resolution of the Board which by its
express terms is not so amendable or repealable;
(f) A distribution to the shareholders of the Corporation except at a rate
or in a periodic amount or within a price range determined by the Board;
(g) The appointment of other committees of the Board or the members
thereof.
The Board shall have the power to prescribe the manner in which
proceedings of any committee shall be conducted. In the absence of any such
prescription, such committee shall have the power to prescribe the manner in
which its proceedings shall be conducted. Unless the Board or such committee
shall otherwise provide, the regular and special meetings and other actions of
any such committee shall be governed by the provisions of this Article
applicable to meetings and actions of the Board. Minutes shall be kept of each
meeting of each committee.
ARTICLE IV
----------
OFFICERS
--------
Section 1. Officers. The officers of the Corporation shall be a President,
one or more vice Presidents, a Secretary, a Treasurer and chief financial
officer. The Corporation may also have, at the discretion of the Board of
Directors, a Chairman and one or more Vice Chairmen of the Board, one or more
Assistant Secretaries, one or more Assistant Treasurers, and such other officers
as may be appointed in accordance with the provisions of Section 3 of this
Article. One person may hold two or more offices.
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Section 2. Election. The officers of the Corporation, except such officers
as may be elected or appointed in accordance with the provisions of Section 3 or
Section 5 of this Article, shall be chosen annually by, and shall serve at the
pleasure of, the Board, and shall hold their respective offices until their
resignation, removal or other disqualification from service, or until their
respective successors shall be elected.
Section 3. Subordinate Officers. The Board may elect, and may empower the
President to appoint, such other officers as the business of the Corporation may
require, each of whom shall hold office for such period, have such authority,
and perform such duties as are provided in these Bylaws or as the Board may from
time to time determine.
Section 4. Removal and Resignation. Any officer may be removed, either
with or without cause, by the Board of Directors at any time, or, except in the
case of an officer chosen by the Board, by any officer upon whom such power of
removal may be conferred by the Board. Any such removal shall be without
prejudice to the rights, if any, of the officer under any contract of employment
of the officer.
Any officer may resign at any time by giving written notice to the
Corporation, but without prejudice to the rights, if any, of the Corporation
under any contract to which the officer is a party. Any such resignation shall
take effect at the date of the receipt of such notice or at any later time
specified therein; and, unless otherwise specified therein, the acceptance of
such resignation shall not be necessary to make it effective.
Section 5. Vacancies. A vacancy in any office because of death,
resignation, removal, disqualification, or any other cause shall be filled in
the manner prescribed in these Bylaws for regular election or appointment to
such office.
Section 6. Chairman of the Board. The Chairman of the Board, if there
shall be such an officer, shall, if present, preside at all meetings of the
Board of Directors, and at all meetings of the shareholders, and exercise and
perform such other powers and duties as may be from time to time assigned to him
by the Board of Directors or prescribed by the Bylaws. In the absence of the
Chairman, the First Vice Chairman, and in his absence, the Second Vice Chairman,
of the Board of Directors shall preside at all meetings of the shareholders. The
Chairman of the Board shall be an ex-officio member of all the standing
committees.
Section 7. President. Subject to such powers, if any, as may be given
by the Board to the Chairman of the Board, if there be such an officer, the
President is the general manager and chief executive officer of the
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Corporation and has, subject to the control of the Board, general supervision,
direction, and control of the business and officers of the Corporation. The
President has the general powers and duties of management usually vested in the
office of president and general manager of a corporation and such other powers
and duties as may be prescribed by the Board.
Section 8. Vice Presidents. In the absence or disability of the President,
the Vice Presidents in order of their rank as fixed by the Board, or, if not
ranked, the Vice President designated by the Board, shall perform all the duties
of the President, and when so acting shall have all the powers of, and be
subject to all the restrictions upon, the President. The Vice Presidents shall
have such other powers and perform such other duties as from time to time may be
prescribed for them respectively by the Board.
Section 9. Secretary. The Secretary shall keep or cause to be kept, at the
principal executive office and such other place as the Board may order, a book
of minutes of all meetings of shareholders, the Board of Directors, and its
committees, with the time and place of holding, whether regular or special, and,
if special, how authorized, the notice thereof given, the names of those present
at Board and committee meetings, the number of shares present or represented at
shareholders' meetings, and the proceedings thereof. The Secretary shall keep,
or cause to be kept, a copy of the Bylaws of the corporation at the principal
executive office or business office in accordance with Section 213 of the
California General Corporation Law.
The Secretary shall keep, or cause to be kept, at the principal office or
at the office of the Corporation's transfer agent or registrar, if one be
appointed, a share register, or a duplicate share register, showing the names of
the shareholders and their addresses, the number and classes of shares held by
each, the number and date of certificates issued for the same, and the number
and date of cancellation of every certificate surrendered for cancellation.
The Secretary shall give, or cause to be given, notice of all the meetings
of the shareholders and of the Board and of any committees thereof required by
these Bylaws or by law to be given, and shall keep the seal of the corporation
in safe custody, and shall have such other powers and perform such other duties
as may be prescribed by the Board.
Section 10. Chief Financial Officer. The chief financial officer of the
Corporation shall keep and maintain, or cause to be kept and maintained,
adequate and correct accounts of the properties and business transactions of the
Corporation, and shall send of cause to be sent to the shareholders of the
Corporation such financial statements and reports as are by law or these Bylaws
required to be sent to them, and shall render to the President and directors,
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whenever they request it, an account of the financial condition of the
Corporation, and shall have such other powers and perform such other duties as
may be prescribed by the Board. The books of accounts shall at all times be open
to inspection by any director.
Section 11. Treasurer. The Treasurer shall deposit all moneys and other
valuables in the name and to the credit of the Corporation with such
depositaries as may be designated by the Board. The Treasurer shall disburse the
funds of the Corporation as may be ordered by the Board, shall render to the
President and Directors, whenever they request it, an account of all
transactions as Treasurer, and shall have such other powers and perform such
other duties as may be prescribed by the Board.
ARTICLE V
---------
INDEMNIFICATION
---------------
The Corporation shall, to the maximum extent permitted by law, have the
power to indemnify each of its agents against expenses, judgments, fines,
settlements and other amounts actually and reasonably incurred in connection
with any proceeding arising by reason of the fact any such person is or was an
agent of the Corporation. For purposes of this Section, an "agent" of the
Corporation includes any person who is or was a director, officer, employee, or
other agent of the Corporation, or is or was serving at the request of the
Corporation as a director, officer, employee, or agent of another corporation,
partnership, joint venture, trust or other enterprise, or was a director,
officer, employee, or agent of a Corporation which was a predecessor corporation
of the Corporation or of another enterprise at the request of such predecessor
corporation.
ARTICLE VI
----------
OTHER PROVISIONS
----------------
Section 1. Principal Office. The principal executive
office for the transaction of the business of the corporation is
hereby fixed and located at:
5200 Sheila Street
Commerce, California 90040
The Board of Directors is hereby granted full power and authority to change said
principal office from one location to another within or outside the State of
California. Any such change shall be noted on the Bylaws by the Secretary,
opposite this Section, or this Section may be amended to state the new location.
Section 2. Other Offices. Branch or subordinate offices may at any time
be established by the Board of Directors at any place or places where the
Corporation is qualified to do business.
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Section 3. Inspection of Bylaws. The Corporation shall keep in its
principal executive office the original or a copy of these Bylaws as amended to
date which shall be open to inspection by shareholders at all reasonable times
during office hours.
Section 4. Annual Report to Shareholders. The Board of Directors shall
cause an annual report to be sent to the shareholders not later than 120 days
after the close of the fiscal year adopted by the Corporation. This report shall
be sent at least 15 days before the annual meeting of shareholders to be held
during the next fiscal year and in the manner specified in Section 5 of Article
II of these Bylaws for giving notice to shareholders of the Corporation. The
annual report shall contain a balance sheet as of the end of the fiscal year and
an income statement and statement of changes in financial position for the
fiscal year, accompanied by any report of independent accountants or, if there
is no such report, the certificate of an authorized officer of the Corporation
that the statements were prepared without audit from the books and records of
the Corporation.
Section 5. Corporate Contracts and Instruments; How Executed. The Board of
Directors, except as otherwise provided in these Bylaws, may authorize any
officer or officers, agent or agents, to enter into any contract or execute any
instrument in the name of and on behalf of the corporation and this authority
may be general or confined to specific instances; and, unless so authorized or
ratified by the Board of Directors no officer, agent, or employee shall have any
power or authority to bind the corporation by any contract or engagement or to
pledge its credit or to render it liable for any purpose or for any amount.
Section 6. Certificates of Stock.
(a) Form and Execution of Certificates. The certificates of shares of
stock of the company shall be in such form as shall be signed by the President,
or a Vice President, and also by the Secretary, or Assistant Secretary, or be
authenticated by the facsimile of the signature of the President and the written
signature of the Secretary or Assistant Secretary.
(b) Shares and certificates for shares may be issued prior to full payment
under such restrictions and for such purposes as the Board of Directors or the
Bylaws may provide.
(c) Certificates to be Entered. All certificates shall be consecutively
numbered and the names of the owners, all the number of shares and the date of
issue shall be entered in the company's books.
(d) Transfer of Shares. The issued Class A Shares and Class B Shares of
the Corporation shall be transferable only as provided by Article I of these
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Bylaws. New Class A Shares and Class B Shares shall be issued only to qualified
applicants in accordance with Article I of these Bylaws.
Section 7. Representation of Shares of Other Corporations. The Chairman of
the Board, the President, or any vice President, or any other person authorized
by resolution of the Board of Directors or by any of the foregoing designated
officers, is authorized to vote on behalf of the Corporation any and all shares
of any other corporation or corporations, foreign or domestic, standing in the
name of the Corporation. The authority granted to these officers to vote or
represent on behalf of the Corporation any and all shares held by the
Corporation in any other corporation or corporations may be exercised by any of
these officers in person or by any person authorized to do so by a proxy duly
executed by these officers.
Section 8. Construction and Definitions. Unless the context otherwise
requires, the general provisions, rules of construction, and definitions
contained in the General California Corporation Law shall govern the
construction of these Bylaws.
Section 9. Seal. The Board of Directors shall provide a suitable seal
containing the name of the Company and the words "Incorporated - March, 1925",
or other appropriate words, which seal shall be in the charge of the Secretary
to be used as required by law and the Bylaws of the Company.
ARTICLE VII
-----------
PATRONAGE DIVIDENDS
-------------------
The net earnings of the Corporation from business transacted by the
Corporation with its member-patrons and associate-patrons, except such amounts
as may be required for reserves for normal business requirements, as dictated by
good accounting practice, shall be distributed on a patronage basis to the
member-patrons and associate-patrons of the Corporation based in amount upon the
volume of business transacted by Divisions of the Corporation with each of such
patrons. Said distributions may be made in money or part in money and the
balance in written notices of allocation, as defined in Section 1388 of the
United States Internal Revenue Code, as determined by the Board of Directors.
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ARTICLE VIII
------------
CONSENT OF MEMBERS
------------------
Section 1. Each applicant who hereafter applies for and is accepted to
membership in Certified Grocers of California, Ltd. and each member of Certified
Grocers of California, Ltd. who continues as a member after the adoption of this
Bylaw shall, by such act alone, consent that the amount of any patronage
dividend payments made to such member which are made in written notices of
allocation (as defined in Section 1388 of the United States Internal Revenue
Code) will be taken into account by said member at their stated dollar amounts
in the manner provided in Section 1385(a) of the United States Internal Revenue
Code in the taxable year in which such notices of allocation are received by
said member.
Section 2. Each person who hereafter applies for and is accepted to
membership in Certified Grocers of California, Ltd. (Certified) and each member
of Certified on the date of adoption of this Bylaw who continues as a member
after such date shall, by such act alone, consent that the amount of any
distributions with respect to his patronage occurring after the adoption of this
Bylaw which are made in written notices of allocation (as defined in 26 U.S.
Code 1388) and which are received by him from Certified, will be taken into
account by him at their stated dollar amounts in the manner provided in 26 U.S.
Code 1385 (a) in the taxable year in which such written notices of allocation
are received by him. As used herein, "person" includes persons, partnerships,
associations and corporations; the masculine includes the feminine and neuter;
and the singular includes the plural.
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ARTICLE IX
----------
AMENDMENTS
----------
These Bylaws may be repealed or amended or new Bylaws may be adopted at a
meeting by the vote of shareholders entitled to exercise a majority of the
voting power or by the written assent of such shareholders. Subject to the right
of shareholders to adopt, amend or repeal Bylaws, these Bylaws, other than a
Bylaw or amendment thereof changing the authorized number of Directors, or a
Bylaw or any amendment thereof providing for the payment of patronage dividends
to the shareholders of the Corporation, may be adopted, amended or repealed by
the Board of Directors. The power of the shareholders to adopt, repeal or amend
Bylaws fixing the number of Directors, or the Bylaws providing for the payment
of patronage dividends to its shareholders, may not be delegated to the
Directors. Whenever any amendment or any Bylaw is adopted, it must be copied in
the book of Bylaws with the original Bylaws and immediately after them. If any
Bylaw is repealed, the fact of repeal, with the date of the meeting at which the
repeal was enacted, or written assent was filed, must be stated in said book.
26
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<PAGE>
Exhibit 4.1
-----------
GUARANTEE
This Guarantee, dated as of September 29, 1999, is made by Unified
Western Grocers, Inc., a California corporation (the "Guarantor"), to and in
favor of State Street Bank and Trust Company, a Massachusetts trust company, in
its capacity as successor trustee (the "Trustee") under the Indenture (as
defined below), for the benefit of the Trustee and the registered holders of the
Securities (as defined below) (collectively, the "Holders").
WHEREAS the Guarantor is the owner of all the issued and outstanding
capital stock of United Grocers, Inc., an Oregon corporation (the "Company");
and
WHEREAS the Company has issued, and may issue from time to time,
debt securities (collectively, whether now outstanding or hereafter issued, the
"Securities") pursuant to that certain Indenture, dated as of February 1, 1978,
by and between the Company and United States National Bank of Oregon as original
trustee, with respect to which the Trustee now serves as successor trustee (such
Indenture collectively with the supplemental indentures entered into subsequent
to and thereunder, the "Indenture");
NOW, THEREFORE, in consideration of the foregoing premises, and
other good and valuable consideration given by the Holders and the Company to
the Guarantor, the receipt and sufficiency of which are hereby acknowledged, the
Guarantor hereby agrees as follows:
1. Guarantee. The Guarantor hereby, irrevocably and unconditionally
guarantees (as a guarantor and not as a surety) to the Trustee and to the
holders of the Securities the due and punctual payment of the principal of,
premium, if any, and interest on such Securities, and amounts otherwise owing
and payable by the Company under the Indenture, in each case when and as the
same shall become due and payable, whether at maturity, upon redemption or
otherwise, according to the terms of the Indenture, in each case whether now
existing or hereafter arising (the obligations set forth in this Section 1 being
the "Guaranteed Obligations").
2. Remedies. The guarantee set forth in Section 1 constitutes a
present and continuing guarantee of payment and performance and not of
collection. The Guarantor agrees that its obligations hereunder shall be joint
and several with any and all other guarantees given in connection with the
Guaranteed Obligations from time to time. The Guarantor agrees that neither the
Trustee nor the Holders shall be bound to exhaust their recourse against the
Company or any other person or to make demand upon the Company or to realize on
-1-
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<PAGE>
any security they may hold in respect of the Guaranteed Obligations before being
entitled to payment or performance hereunder. The Guarantor hereby waives the
right to require the Trustee or the Holders to join the Company in any action
brought hereunder or to commence any action against or obtain any judgment
against the Company or to pursue any other remedy or enforce any other right.
The Guarantor further agrees that nothing contained herein or otherwise shall
prevent the Trustee or the Holders from pursuing concurrently or successively
all rights and remedies available to them at law or in equity or under the
Indenture, and the exercise of any of their rights or the completion of any of
their remedies shall not constitute a discharge of any of Guarantor's
obligations hereunder.
3. Payment on Demand. The Guarantor shall make payment of the amount
of the Guaranteed Obligations and all other amounts payable by it to the Trustee
or the Holders hereunder after demand is made in writing to it, and such demand
shall be deemed to have been effectively made when an envelope containing such
demand, addressed to Unified Western Grocers, Inc., 5200 Sheila Street,
Commerce, CA 90040, Attention: President, is delivered to such address
personally or by certified mail.
4. Subrogation. Upon receipt by the Trustee or the Holders of any
payment or payments under this Guarantee, the Guarantor shall not be entitled to
claim repayment against the Company until the claims of the Holders against the
Company in respect of the Guaranteed Obligations have been paid in full; and in
the case of the liquidation, winding-up or bankruptcy of the Company (whether
voluntary or compulsory) or in the event that the Company shall make a bulk sale
of any of the Company's assets within the provisions of any bulk sales
legislation or makes an assignment for the benefit of creditors or the assets of
the Company are distributed to creditors for any other reason, the Holders shall
have the right to rank in priority to the Guarantor for their full claims in
respect of the Guaranteed Obligations and receive all distributions and other
payments in respect thereof until their claims in respect of the Guaranteed
Obligations have been paid in full, and the Guarantor shall continue to be
liable, less any payments made by or on behalf of the Guarantor, for any balance
which may be owing to the Holders by the Company. If any amount shall be paid to
the Guarantor on account of any subrogation rights at any time when all the
Guaranteed Obligations shall not have been paid in full, such amount shall be
held in trust for the benefit of the Trustee and the Holders and shall forthwith
be paid to the Trustee or such Holders.
5. Suspension of Guarantor Rights. The Guarantor agrees that so long
as any obligations remain outstanding hereunder, whether present or future,
direct or indirect, absolute or contingent, matured or not, the Guarantor shall
-2-
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<PAGE>
not exercise any rights which the Guarantor may at any time have by reason of
the performance of any of its obligations hereunder:
(i) to be indemnified by the Company;
(ii) to claim contribution from any other guarantor of
the debts, liabilities or obligations of the Company; or
(iii) to take the benefit (in whole or in part and whether
by way of subrogation or otherwise) of any rights of the Trustee or
the Holders under the Indenture.
6. Waivers. The Guarantor hereby waives, to the extent permitted by
applicable law, (i) notice of acceptance of this Guarantee by the Trustee or the
Holders and any and all notices and demands of every kind which may be required
to be given by any statute, rule or law, (ii) any defense, right of set-off or
other claim which the Guarantor may have against the Company, (iii) presentment
for payment, demand for payment, notice of nonpayment or dishonor, protest and
notice of protest, diligence in collection and any and all formalities which
otherwise might be legally required to charge the Guarantor with liability,
except for demands or notices expressly provided for herein, and (iv) any
failure by the Holders or the Trustee to inform the Guarantor of any facts the
Holders or the Trustee may now or hereafter know about the Company, the
Securities or the transactions contemplated by the Indenture, it being
understood and agreed that the Holders or the Trustee have no duty to so inform
and that the Guarantor is fully responsible for being and remaining informed by
the Company of all circumstances bearing on the existence or creation, or the
risk of nonpayment or nonperformance of the Guaranteed Obligations. No
modification or waiver of any of the provisions of this Guarantee shall be
binding upon the Holders except as expressly set forth in a writing duly signed
and delivered by the Trustee or, with respect to any particular Holder, by such
Holder.
7. Continuing Guarantee. The guarantee set forth herein shall be a
continuing guarantee and shall extend to all present and future Guaranteed
Obligations and shall be binding as a continuing obligation of the Guarantor
until the date on which the Company or the Guarantor shall have performed and
satisfied in full the Guaranteed Obligations. This Guarantee shall continue to
be effective or be reinstated, as the case may be, if at any time any payment of
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<PAGE>
any of the Guaranteed Obligations is rescinded or must otherwise be refunded by
the Holders upon the insolvency, bankruptcy or reorganization of the Company or
otherwise, regardless of whether the Holders contested the order requiring the
return of such payment, all as though such payment had not been made.
8. Successors of the Company. Any change or changes in the name of
the Company or reorganization (whether by way of reconstruction, consolidation,
amalgamation, merger, transfer, sale, lease or otherwise) of the Company or its
business shall not affect or in any way limit or lessen the liability of the
Guarantor hereunder and this Guarantee shall extend to any person, firm or
company acquiring or from time to time carrying on the business of the Company.
9. Payment of Taxes. Any and all payments by the Guarantor hereunder
shall be made and shall be free and clear of and without set-off or counterclaim
and without deduction for or on account of, or withholding for, any and all
present or future income or other taxes, levies, imposts, dues, charges, fees,
deductions, withholdings or restrictions or conditions of any nature whatever
now or hereafter imposed, levied, collected or withheld or assessed by the
United States or any state or political subdivision or taxing authority thereof
or therein, and all liabilities with respect thereto (all such taxes, levies,
imposts, duties, charges, fees, deductions, withholdings and liabilities being
hereinafter referred to as "Taxes"), unless such Taxes are required by law or
the administration thereof to be deducted or withheld.
10. Governing Law. This Guarantee shall be governed by and construed
in accordance with the laws of the State of California applicable thereto
(without regard to any applicable conflicts of law) and shall be treated in all
respects as a California contract.
11. Headings. The division of this Guarantee into sections and the
insertion of headings are for convenience of reference only and shall not affect
the interpretation hereof.
12. Severability. Any provision of this Guarantee which is invalid
or not enforceable shall not affect any other provision and shall be deemed to
be severable.
13. Successors and Assigns. This Guarantee shall extend to and inure
to the benefit of the Trustee and the Holders and their respective successors
and assigns and shall be binding upon the Guarantor and its successors and
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assigns. This Guarantee is assignable by the Holders to the extent and in the
same proportion that any underlying interest in the Securities and applicable
Indenture has been assigned and is assignable by the Trustee to any successor
Trustee under the Indenture.
IN WITNESS WHEREOF, the Guarantor has duly executed this Guarantee
and affixed its corporate seal under the hand of its proper officer duly
authorized in that behalf as of the day and year first above written.
Accepted and Agreed to as of "Guarantor"
September 29, 1999
UNIFIED WESTERN GROCERS, INC.
STATE STREET BANK AND TRUST
COMPANY, as Trustee By: /s/ Alfred A. Plamann
-------------------------------
Alfred A. Plamann,
By: /s/ Jacqueline A. Bonhomme President and Chief Executive Officer
------------------------------
Jacqueline A. Bonhomme
Assistant Vice President
-5-
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<PAGE>
Exhibit 10.1
------------
- --------------------------------------------------------------------------------
UNIFIED WESTERN GROCERS, INC.
$80,000,000 IN AGGREGATE PRINCIPAL AMOUNT
OF
SENIOR SECURED NOTES DUE 2008
and
$40,000,000 IN AGGREGATE PRINCIPAL AMOUNT
OF
SENIOR SECURED NOTES DUE 2009
-----------------------------------------
NOTE PURCHASE AGREEMENT
-----------------------------------------
Dated as of September 29, 1999
- --------------------------------------------------------------------------------
Page 50 of 287
<PAGE>
SECTION 1.ISSUANCE OF NOTES..................................................1
Section 1.1. Authorization of the Notes................................1
Section 1.2. Maturity of and Interest on the Notes.....................1
Section 1.3. Purchase and Sale of the Notes............................1
Section 1.4. Use of Proceeds...........................................2
Section 1.5. Terms and Conditions of the Notes.........................2
Section 1.6. Application of Payments...................................4
Section 1.7. Security for the Notes....................................4
Section 1.8. No Set-off or Counterclaim................................6
Section 1.9. Taxes.....................................................6
Section 1.10. Definitions, etc..........................................7
SECTION 2.CONDITIONS TO CLOSING..............................................8
Section 2.1. Representations and Warranties............................8
Section 2.2. Performance; No Default...................................8
Section 2.3. Compliance Certificates...................................8
Section 2.4. Opinions of Counsel.......................................9
Section 2.5. Purchase Permitted By Applicable Law, etc.................9
Section 2.6. Exchange of Prior Notes; Sale of Tranche B Notes..........9
Section 2.7. Debt Documents; Other Agreements.........................10
Section 2.8. Security Filings.........................................10
Section 2.9. Tax Lien and Judgment Lien Searches......................10
Section 2.10. No Liens on the Property.................................10
Section 2.11. Title Insurance..........................................10
Section 2.12. Payment of Special Counsel Fees..........................11
Section 2.13. Private Placement Number.................................11
Section 2.14. Changes in Corporate Structure...........................11
Section 2.15. Changes in Indebtedness..................................11
Section 2.16. Insurance................................................11
Section 2.17. Environmental Questionnaires.............................12
Section 2.18. Proceedings and Documents................................12
Section 2.19. Merger...................................................12
Section 2.20. Revolving Debt Financing.................................12
Section 2.21. Financial Statements; Projections........................12
Section 2.22. No Material Adverse Change...............................13
SECTION 3.REPRESENTATIONS AND WARRANTIES OF THE COMPANY.....................13
Section 3.1. Organization; Power and Authority........................13
Section 3.2. Authorization, etc.......................................13
Section 3.3. Disclosure...............................................13
Section 3.4. Organization and Ownership of Shares of
Subsidiaries; Affiliates.................................14
Section 3.5. Financial Statements.....................................15
Section 3.6. Compliance with Laws, Other Instruments, etc.............15
Section 3.7. Governmental Authorizations, etc.........................16
Section 3.8. Litigation; Observance of Agreements,
Statutes and Orders......................................16
Section 3.9. Taxes....................................................16
Section 3.10. Title to Property; Leases................................17
Page 51 of 287
<PAGE>
Section 3.11. Licenses, Permits, etc...................................17
Section 3.12. Compliance with ERISA; Multiemployer Plans...............18
Section 3.13. Private Offering by the Company..........................19
Section 3.14. Use of Proceeds; Margin Regulations......................19
Section 3.15. Existing Indebtedness; Future Liens......................19
Section 3.16. Foreign Assets Control Regulations, etc..................19
Section 3.17. Status under Certain Statutes............................20
Section 3.18. Environmental Matters....................................20
Section 3.19. Event of Default.........................................20
Section 3.20. Solvency.................................................21
Section 3.21. Address..................................................21
Section 3.22. Insurance................................................22
Section 3.23. Representations and Warranties in Related Documents......22
Section 3.24. Other Names..............................................22
Section 3.25. Flood Hazard Area........................................22
Section 3.26. No Condemnations.........................................22
Section 3.27. Improvements Constructed in Compliance with Law..........22
Section 3.28. Certificates of Occupancy; Condition of Improvements.....23
Section 3.29. Water Sources............................................23
Section 3.30. Sewage Connections.......................................23
Section 3.31. Utilities Connections....................................23
Section 3.32. Drains in Compliance.....................................23
Section 3.33. Trash Collection.........................................24
Section 3.34. No Nuisance..............................................24
Section 3.35. Easements and Utility Services...........................24
Section 3.36. Year 2000 Issues.........................................24
Section 3.37. Patronage Dividend Certificates..........................24
SECTION 4.REPRESENTATIONS OF THE PURCHASERS.................................24
Section 4.1. Purchase for Investment..................................24
Section 4.2. Source of Funds..........................................24
SECTION 5.INFORMATION AS TO THE COMPANY.....................................25
Section 5.1. Financial and Business Information.......................25
Section 5.2. Officer's Certificate....................................30
Section 5.3. Accountants' Certificates................................30
Section 5.4. Inspection...............................................31
SECTION 6.PREPAYMENT OF THE NOTES...........................................31
Section 6.1. Required Prepayments.....................................32
Section 6.2. Optional Prepayments with Make-Whole Amount..............33
Section 6.3. Allocation of Partial Prepayments........................33
Section 6.4. Maturity; Surrender, etc.................................33
Section 6.5. Purchase of Notes........................................33
Section 6.6. Make-Whole Amount........................................33
Section 6.7. Restrictions on Prepayment...............................35
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<PAGE>
SECTION 7.AFFIRMATIVE COVENANTS.............................................35
Section 7.1. Compliance with Law......................................35
Section 7.2. Insurance................................................36
Section 7.3. Maintenance of Properties................................39
Section 7.4. Payment of Taxes and Claims..............................41
Section 7.5. Corporate Existence, Designation of Subsidiaries, etc....42
Section 7.6. Keeping of Records and Books of Account..................42
Section 7.7. ERISA....................................................42
Section 7.8. Additional Subsidiary Guarantors.........................43
Section 7.9. Maintenance of Office....................................43
Section 7.10. Change in Name...........................................43
Section 7.11. Indemnification..........................................45
Section 7.12. Post Closing Items.......................................46
Section 7.13. Year 2000 Issues.........................................46
SECTION 8.NEGATIVE COVENANTS................................................46
Section 8.1. Transactions with Affiliates..............................46
Section 8.2. Consolidation and Merger..................................46
Section 8.3. Disposal of Ownership of a Subsidiary.....................47
Section 8.4. Sale of Assets, Etc.......................................47
Section 8.5. Liens.....................................................49
Section 8.6. Financial Covenants.......................................50
Section 8.7. Maintenance of Business...................................53
Section 8.8. Tax Consolidation.........................................53
SECTION 9.EVENTS OF DEFAULT.................................................53
SECTION 10.REMEDIES ON DEFAULT, ETC.........................................56
Section 10.1. Acceleration.............................................56
Section 10.2. Remedies Upon an Event of Default........................57
Section 10.3. Waiver of Appraisement, Valuation, etc...................58
Section 10.4. Waiver of Marshaling and Other Defenses..................59
Section 10.5. Rescission of Acceleration...............................59
Section 10.6. Remedies Cumulative......................................60
Section 10.7. Discontinuance of Proceedings............................60
Section 10.8. Costs and Expenses, Attorneys' Fees, etc.
of the Noteholders.......................................60
Section 10.9. No Waiver, etc...........................................61
Section 10.10.Compromise of Actions, etc...............................61
Section 10.11.Right of the Noteholders to Perform the Company's
Covenants, etc...........................................61
SECTION 11.REGISTRATION; EXCHANGE; SUBSTITUTION OF NOTES....................62
Section 11.1. Registration of Notes....................................62
Section 11.2. Transfer and Exchange of Notes...........................62
Section 11.3. Replacement of Notes.....................................63
Section 11.4. Effect of Transfer or Exchange...........................63
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<PAGE>
SECTION 12.PAYMENTS ON NOTES................................................63
Section 12.1. Place of Payment.........................................63
Section 12.2. Home Office Payment......................................64
Section 12.3. Set Off..................................................64
Section 12.4. Sharing of Payments......................................64
SECTION 13.EXPENSES; INDEMNITY..............................................65
Section 13.1. Transaction Expenses.....................................65
Section 13.2. Indemnity For Funds Availability At Closing..............66
Section 13.3.Survival..................................................66
SECTION 14.SURVIVAL OF REPRESENTATIONS; ENTIRE AGREEMENT....................66
SECTION 15.AMENDMENT AND WAIVER.............................................66
Section 15.1. Requirements.............................................66
Section 15.2. Solicitation of Holders of Notes.........................67
Section 15.3. Binding Effect, etc......................................67
Section 15.4. Notes held by Company....................................67
SECTION 16.NOTICES..........................................................68
SECTION 17.REPRODUCTION OF DOCUMENTS........................................68
SECTION 18.CONFIDENTIAL INFORMATION.........................................69
SECTION 19.SUBSTITUTION OF PURCHASER........................................70
SECTION 20.INTERPRETATION OF AGREEMENT......................................70
Section 20.1. Definitions..............................................70
Section 20.2. Directly or Indirectly...................................70
Section 20.3. Accounting Terms.........................................71
Section 20.4. Independence of Covenants................................71
Section 20.5. Headings.................................................71
SECTION 21.MISCELLANEOUS....................................................71
Section 21.1. Successors and Assigns...................................71
Section 21.2. Payments Due on Non-Business Days........................71
Section 21.3. No Partnership...........................................71
Section 21.4. Severability.............................................71
Section 21.5. Construction.............................................72
Section 21.6. Counterparts.............................................72
Section 21.7. Additional Security......................................72
Section 21.8. Integration..............................................72
Section 21.9. Governing Law............................................72
Section 21.10.Consent to Jurisdiction and Service of Process...........73
Section 21.11.Waiver of Trial by Jury..................................73
Page 54 of 287
<PAGE>
SCHEDULE I Purchasers of the Notes
SCHEDULE II Information to be Furnished to the Purchasers
SCHEDULE III Addresses of Subsidiary Guarantors
SCHEDULE IV [Reserved]
SCHEDULE V Description of Unified Real Property
SCHEDULE VI [Reserved]
SCHEDULE VII Description of United Real Property
EXHIBIT A Form of Notes
EXHIBIT B Form of Security Agreements
EXHIBIT C Form of Unified Deeds of Trust
EXHIBIT D Form of United Deed of Trust
EXHIBIT E Form of Environmental Indemnity Agreement
EXHIBIT F Form of Collateral Agency Agreement
EXHIBIT G Form of Surveyor's Certificate
EXHIBIT H Forms of Opinions
EXHIBIT I Form of Subsidiary Guaranty
EXHIBIT J Form of Environmental Questionnaire
GLOSSARY
Page 55 of 287
<PAGE>
UNIFIED WESTERN GROCERS, INC.
5200 Sheila Street
Commerce, CA 90040
Telephone: (323) 264-5200
Telecopy: (323) 266-4051
NOTE PURCHASE AGREEMENT
Dated as of September 29, 1999
To each of the Purchasers Listed
in Schedule I Hereto (the "Purchasers")
Ladies and Gentlemen:
The undersigned, Unified Western Grocers, Inc. (formerly
known as Certified Grocers of California, Ltd.), a California
corporation (the "Company"), hereby agrees with you as follows:
SECTION 1. ISSUANCE OF NOTES
Section 1.1. Authorization of the Notes. The Company has
duly authorized (a) the issuance of $80,000,000 in aggregate
principal amount of its Senior Secured Notes due 2008 (the "Tranche
A Notes") to be issued under, and substantially in the form set
forth in Exhibit A-1 to, this Agreement, in exchange for the Prior
Notes, and (b) the issuance and sale of $40,000,000 in aggregate
principal amount of its Senior Secured Notes due 2009 (the "Tranche
B Notes" and, together with the Tranche A Notes, the "Notes") to be
issued under, and substantially in the form set forth in Exhibit A-
2 to, this Agreement.
Section 1.2. Maturity of and Interest on the Notes. Each
Tranche A Note shall have a stated maturity date of April 1, 2008
(the "Tranche A Maturity Date") and each Tranche B Note shall have
a stated maturity date of October 1, 2009 (the "Tranche B Maturity
Date"). Each Note shall bear interest and otherwise be in the form
and payable as set forth in this Agreement.
Section 1.3. Purchase and Sale of the Notes.
(a) The Company agrees to exchange the Prior Notes for
the Tranche A Notes and to sell to you the Tranche B Notes, and
upon and subject to the terms and conditions hereof and in reliance
upon the representations and warranties of the Company contained
herein, you agree to exchange the Prior Notes for the Tranche A
Notes and purchase the Tranche B Notes from the Company. The sale
and purchase of the Notes shall be held at the offices of Orrick,
Herrington & Sutcliffe LLP ("Purchasers' Counsel"), 400 Sansome
Street, Old Federal Reserve Bank Building, San Francisco,
California 94111, at 10:00 a.m., P.S.T., at a closing (the
"Closing") on September 29, 1999, or on such other Business Day
thereafter on or prior to October 15, 1999, as may be agreed upon
by the Company and the Purchasers.
1
Page 56 of 287
<PAGE>
(b) On the Closing Date, the Company will issue and
deliver to you one or more Notes registered in your name or the
name of your nominee and in the aggregate principal amount or
amounts specified for the applicable Notes opposite your name in
Schedule I hereto, duly executed by the manual signature of one of
its authorized officers and dated the applicable Closing Date. The
delivery of the Tranche A Notes to you shall be made in exchange
for the Prior Notes and no additional consideration shall be
payable by you in connection with the delivery thereof. On the
Closing Date, each of the Purchasers shall deliver to the Company
the original Prior Note(s) registered in its name for cancellation
and shall execute any documents reasonably requested by the Company
to evidence the termination of the Prior Note Purchase Agreement
and the documents executed in connection therewith. The delivery of
the Tranche B Notes to you shall be made against payment by wire
transfer in immediately available funds to an escrow established
for such purpose with a title company acceptable to the Purchasers.
(c) If on the Closing Date the Company shall fail to
tender any of the Notes to you as provided above in this Section
1.3, or any of the conditions specified in Section 2 shall not have
been fulfilled to your satisfaction, at your election you shall be
relieved of all obligations under this Agreement without thereby
waiving any other rights you may have by reason of such failure or
such nonfulfillment.
Section 1.4. Use of Proceeds. The proceeds of the sale of
the Tranche B Notes shall be used by the Company to repay
outstanding Indebtedness of United Grocers, Inc. ("United"), an
Oregon corporation, and to pay other transaction expenses incurred
in connection with the merger of a wholly owned subsidiary of the
Company with and into United (the "Merger"), in each case as set
forth on Item 1.4 of Schedule II.
Section 1.5. Terms and Conditions of the Notes.
(a) Each Tranche A Note issued hereunder shall be
substantially in the form annexed hereto as Exhibit A-1, and shall
be due on the Tranche A Maturity Date. Each Tranche B Note issued
hereunder shall be substantially in the form annexed hereto as
Exhibit A-2 and shall be due on the Tranche B Maturity Date. Each
of the Notes shall bear interest from the Closing Date until such
Note shall become due and payable in accordance with the terms
thereof or hereof (whether at maturity, by acceleration or
otherwise).
(b) From the Closing Date to the Tranche A Maturity
Date, the Tranche A Notes shall bear interest at the fixed rate of
7.72% per annum; provided, however, that, if the Company satisfies
each of the terms and conditions set forth in Section 1.7(b) below,
the Tranche A Notes shall bear interest at the fixed rate of 7.22%
per annum from the Release Date (as defined in Section 1.7(b)
2
Page 57 of 287
<PAGE>
below) to the Tranche A Maturity Date. From the Closing Date to the
Tranche B Maturity Date, the Tranche B Notes shall bear interest at
the fixed rate of 8.71% per annum; provided, however, that, if the
Company satisfies each of the terms and conditions set forth in
Section 1.7(b) below and the Company requests that the Tranche B
Notes be subordinated pursuant to Section 1.7(c) below, the Tranche
B Notes shall bear interest from the Release Date to the Tranche B
Maturity Date at the fixed rate mutually agreed upon by the
Noteholders and the Company pursuant to Section 1.7(c) below.
Interest on the Notes shall be computed on the basis of a 360-day
year of twelve 30-day months. If the Company shall have paid or
agreed to pay any interest or premium on any of the Notes in excess
of that permitted by law, then it is the express intent of the
Company and the holder thereof that all excess amounts previously
paid or to be paid by the Company be applied to reduce the
principal balance of such Note and that the provisions of such Note
immediately be deemed reformed and the amounts thereafter
collectable thereunder reduced, without the necessity of the
execution of any new document, so as to comply with the then
applicable law but also so as to permit the recovery of the fullest
amount otherwise called for thereunder.
(c) Payment of principal and interest on the Notes shall
be as follows:
(i) Accrued interest on the Notes shall be due
and payable on the first Business Day of each month (each, an
"Installment Date"), commencing on November 1, 1999. Except for
required prepayments of principal of the Tranche A Notes pursuant
to Section 6.1(a), the aggregate outstanding principal balance of
the Tranche A Notes shall be due on the Tranche A Maturity Date and
the aggregate outstanding principal balance of the Tranche B Notes
shall be due on the Tranche B Maturity Date.
(ii) Notwithstanding anything to the contrary
contained herein or in the Notes, however, the final payment due
under the Notes (whether at maturity, by acceleration or otherwise)
shall be in an amount sufficient to pay in full all outstanding
principal, together with all accrued interest and Make-Whole Amount
due thereon.
(d) In the event any payment of principal, Make-Whole
Amount, interest or any other sum to be paid by the Company to the
Noteholders is not paid when such payment is due, a late charge
shall accrue in the amount of two percent (2%) of such overdue sum
and shall be due and payable immediately. If the Company shall fail
to pay any sum under any of the Notes when such sum is due, whether
upon acceleration, maturity or otherwise, such sum shall bear
interest at a rate (the "Overdue Rate") equal to the lesser of (i)
the maximum interest rate permitted by law and (ii) an interest
rate equal to 2% per annum in excess of the interest rate then
applicable to such Note.
3
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Section 1.6. Application of Payments. Each payment on a
Note shall be applied, first, to sums other than principal,
interest and Make-Whole Amount, due from the Company to the holder
of the Note under the Debt Documents, second, to the payment of
accrued interest on such Note to the date of such payment, and
third, to the payment of any principal of and Make-Whole Amount, if
any, on such Note then due thereunder.
Section 1.7. Security for the Notes.
(a) Subject to the terms of Section 1.7(b) below, the
Obligations will be unconditionally secured by the following: (i)
Liens on the Unified Personal Property pursuant to the Security
Agreement substantially in the form annexed hereto as Exhibit B-1
(the "Unified Security Agreement"), (ii) Liens on the real property
owned by the Company described on Schedule V (the "Unified Real
Property") pursuant to the Unified Deeds of Trust substantially in
the forms attached hereto as Exhibits C-1 and C-2, and (iii)
pursuant to the Unified Deeds of Trust, an absolute assignment of
the rents and profits from the Unified Real Property. Each
Subsidiary Guarantor will unconditionally, absolutely and
irrevocably guarantee to the Noteholders the full, prompt and
complete payment and performance when due (whether by stated
maturity, by acceleration or otherwise) of the Obligations pursuant
to the form of Subsidiary Guaranty annexed hereto as Exhibit I. The
Subsidiary Guaranty executed by United will be secured by the
following: (i) Liens on the United Personal Property pursuant to
the Security Agreement substantially in the form annexed hereto as
Exhibit B-2 (the "United Security Agreement"), (ii) Liens on the
real property described on Schedule VII (the "United Real Property"
and, together with the Unified Real Property, the "Real Property")
pursuant to the United Deed of Trust substantially in the form
attached hereto as Exhibit D (the Unified Deeds of Trust and the
United Deed of Trust are collectively referred to herein as the
"Deeds of Trust"), and (iii) pursuant to the United Deed of Trust,
an assignment of the rents and profits from the United Real
Property. Each of the other Subsidiary Guaranties will be secured
by Liens on the Subsidiary Personal Property pursuant to the
Security Agreement in the form attached hereto as Exhibit B-3
(each, a "Subsidiary Security Agreement" and, together with the
United Security Agreement and the Unified Security Agreement, the
"Security Agreements"). The Personal Property and the Real Property
are collectively referred to herein as the "Property". The Deeds of
Trust and the Security Agreements run in favor of the Collateral
Agent, as collateral agent for the Noteholders pursuant to the
Collateral Agency Agreement substantially in the form attached
hereto as Exhibit F. The Security Agreements, the Deeds of Trust
and the Collateral Agency Agreement, are collectively referred to
herein as the "Security Documents". All Notes at any time
Outstanding shall be equally and ratably secured by the Security
Documents and the Liens created thereunder, without preference,
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priority or distinction on account of the date or dates or the
actual time or times of the issue or maturity of such Notes.
(b) The Company may request the Collateral Agent to, and
the Collateral Agent shall, on behalf of the Noteholders, (i)
release the Personal Property from the Lien of the Security
Agreements, (ii) cause the trustee under each of the Deeds of Trust
to reconvey (with a statement that the debt secured thereby has not
been paid) to the Company or United, as applicable, without
warranty, the Real Property subject to the Deeds of Trust, and
(iii) release the Company and United from all obligations under the
Security Documents and terminate the rights of the Collateral
Agent, the Noteholders, Beneficiary and Secured Party thereunder,
as of a date selected by the Company (the "Release Date") upon not
less than thirty (30) days' prior written notice to the Collateral
Agent (the "Release Notice"), if each of the following conditions
are true and correct as of the Release Date:
(i) The Notes have received a senior secured debt
rating from Moody's of Baa2 or higher, a rating from Standard &
Poor's of BBB or higher or a similar rating from another nationally
recognized rating agency reasonably acceptable to the Collateral
Agent, in each case which rating has been confirmed by the
Securities Valuation Office of the NAIC, and the Company has
maintained such rating for a period of not less than one Fiscal
Year, commencing from the Fiscal Year ending upon which the rating
agency based such rating;
(ii) The representations and warranties contained
in Section 3 hereof shall be true and correct in all Material
respects on and as of the Release Date with the same effect as
though such representations and warranties had been made on and as
of the Release Date (except for such representations and warranties
which by their terms speak as of a specified date);
(iii) There shall exist on the Release Date no
Event of Default or Default; no Default or Event of Default shall
occur as a result of the Company's exercise of its rights under
this Section 1.7(b); and the Noteholders shall have received an
Officer's Certificate of the Company, dated as of the Release Date,
to such effect; and
(iv) The Collateral Agent shall have received
evidence reasonably satisfactory to it that the lenders under the
Operating Line of Credit have unconditionally agreed to release the
Liens securing the Indebtedness then outstanding under the
Operating Line of Credit.
(c) If the Company has satisfied each of the conditions
set forth in Section 1.7(b) above, it may in addition request that
the Noteholders subordinate the outstanding Obligations under the
Tranche B Notes to such Indebtedness of the Company (other than the
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Patronage Dividend Certificates, the Patronage Dividend Deposit
Accounts and the United Investment Notes) and upon such proposed
terms as shall be set forth in the Release Notice. Upon receipt of
such request, the Noteholders agree to negotiate in good faith with
the Company as to (i) the senior Indebtedness covered by such
subordination, (ii) the terms and conditions of such subordination,
and (iii) a modification of the interest rate applicable to the
Tranche B Notes to reflect the then current market rate for
Indebtedness subordinated on terms similar to those mutually agreed
upon by the Company and the Noteholders pursuant to this Section
1.7(c). Any exchange of the Tranche B Notes for the substituted
subordinated notes (if mutually agreed upon by the Company and the
Noteholders) shall not be deemed a prepayment of the Tranche B
Notes for purposes of Section 6.2.
Section 1.8. No Set-off or Counterclaim. Each Noteholder
shall be entitled to the principal of and Make-Whole Amount, if
any, and interest on any of its Notes free from all equities or
rights of set-off or counterclaims of the Company or any prior
Noteholder and all Persons may act accordingly. The receipt by such
Noteholder of any payment of principal, Make-Whole Amount or
interest shall be a good discharge to the Company for the same, and
the Company shall not be bound to inquire into the title of any
such Noteholder.
Section 1.9. Taxes.
(a) The Company shall make any and all payments
hereunder or under the Notes free and clear of, and without
deduction or withholding for or on account of, any present or
future taxes, assessments, levies, imposts, duties, fees,
deductions, charges or withholdings, and all liabilities with
respect thereto, excluding, in the case of any Noteholder, business
or franchise taxes, federal or state income taxes, business and
occupation taxes payable in lieu of state income taxes or other
taxes that are measured by and imposed upon the Noteholder's net
income or receipts (all such non-excluded taxes, levies, imposts,
duties, fees, deductions, charges, withholdings and liabilities on
any and all payments hereunder or under the Notes being hereinafter
referred to as "Taxes"). The Company understands that the
transactions contemplated by this Agreement and the Security
Documents may not be the Purchasers' only connections with the
states where the Property is located. If the Company shall be
required by law to deduct any Taxes from or in respect of any sum
payable hereunder or under any Note to any Noteholder, (i) the sum
payable shall be increased to the extent necessary so that after
making all required deductions (including deductions applicable to
additional sums payable under this Section 1.9) such Noteholder
receives an amount equal to the sum it would have received had no
such deductions been made, (ii) the Company shall make such
deductions and (iii) the Company shall pay the full amount deducted
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to the relevant taxation authority or other authority in accordance
with applicable law.
(b) In addition, the Company agrees to pay any present
or future stamp or documentary taxes or intangible recording taxes
or any other excise or property taxes, charges or similar levies
which arise from any payment made hereunder or under the Notes or
from the execution or delivery or otherwise with respect to this
Agreement (including, without limitation, in respect of a transfer
of the Notes resulting from a change of the Company's office
pursuant to Section 7.9), the Notes or any of the other Debt
Documents (hereinafter referred to as "Other Taxes").
(c) The Company will indemnify each Noteholder for the
full amount of Taxes or Other Taxes (including, without limitation,
any Taxes or Other Taxes imposed by any jurisdiction on amounts
payable under this Section 1.9) paid by any Noteholder, as the case
may be, or any liability (including penalties, additions to tax,
interest and expenses) arising therefrom or with respect thereto,
whether or not such Taxes or Other Taxes were correctly or legally
asserted. The Company shall pay the amount of any such Taxes or
Other Taxes to such Noteholder within thirty (30) days from the
date such Noteholder makes written demand therefor.
(d) If a written claim for payment is made by any taxing
authority against a Noteholder for any Taxes or Other Taxes with
respect to which the Company may be liable for indemnity under this
Section 1.9 (a "Tax Claim"), such Noteholder shall give the Company
written notice of such Tax Claim as soon as practicable and furnish
the Company with copies of such Tax Claim and all other writings
received from the taxing authority relating to such Tax Claim,
provided, however, that failure so to notify the Company shall not
relieve the Company of any obligation to indemnify such Noteholder
under this Section 1.9 except for Taxes or Other Taxes that would
not otherwise have been imposed and the contest of which was
effectively precluded as a result of such failure to notify.
(e) Within thirty (30) days after the date of any
payment of Taxes by the Company, the Company will furnish to the
Noteholders the original or a certified copy of a receipt
evidencing payment thereof. The Company shall compensate each
Noteholder for all reasonable losses and expenses sustained by such
Noteholder as a result of any failure by the Company so to furnish
such copy of such receipt.
(f) The agreements and obligations of the Company
contained in this Section 1.9 shall survive the termination of this
Agreement and/or the Security Documents and the payment in full of
the Notes and all other amounts payable hereunder.
Section 1.10. Definitions, etc. Certain terms used in this
Agreement are defined in the Glossary attached hereto. References
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to a "Schedule" or "Exhibit" are, unless otherwise specified, to
the Schedules and Exhibits attached to this Agreement, as the same
may be supplemented from time to time. All of the Glossary, the
Schedules and Exhibits attached to this Agreement are hereby
incorporated by reference herein in their entirety. References
herein to "you" and "your" in any context applicable after the
Closing Date shall be deemed to be references to the "Noteholders"
and the "Noteholders'," respectively.
SECTION 2. CONDITIONS TO CLOSING
Your obligation to exchange the Prior Notes for the
Tranche A Notes and your obligation to purchase and pay for the
Tranche B 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:
Section 2.1. Representations and Warranties. The
representations and warranties of the Company in this Agreement and
each of the other Debt Documents shall be correct when made and at
the time of the Closing.
Section 2.2. 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 1.4), no Default or
Event of Default shall have occurred and be continuing. Except as
disclosed in Item 2.2 of Schedule II, since the Report Date,
neither the Company nor any Subsidiary shall have entered into any
transaction that would have been prohibited by Section 8 had such
Section applied since such date.
Section 2.3. 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 2.1, 2.2 and
2.14 have been fulfilled.
(b) Secretary's Certificate. The Company and each
Subsidiary Guarantor 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 Debt Documents to which it is a party, (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 Debt Documents to which it is a party.
(c) Corporate Documents of the Company and the
Subsidiary Guarantors. You shall have received (a) a copy of the
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articles of incorporation and any amendments thereto of the
Company, certified by the Secretary of State of the State of
California, dated as of a date not more than ten (10) days prior to
the Closing Date, (b) a certificate issued by the California
Secretary of State or other appropriate Governmental Authority as
to the good standing and qualification to do business of the
Company and each Subsidiary Guarantor other than United, (c) a
certificate of the California Franchise Tax Board or other
appropriate Governmental Authority as to the tax status of the
Company and each Subsidiary Guarantor other than United, and (d)
certificates of the appropriate Governmental Authority in the State
of Oregon as to the valid existence and qualification to do
business of United, and its tax status, in such state.
Section 2.4. 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
H-1 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), (b) Purchasers' Counsel, substantially in the form
set forth in Exhibit H-2 and covering such other matters incident
to such transactions as you may reasonably request and (c) from
Preston Gates & Ellis LLP your special counsel in the State of
Oregon in connection with such transactions ("Local Counsel"),
substantially in the form set forth in Exhibit H-3 and covering
such other matters incident to such transactions as you may
reasonably request.
Section 2.5. 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 resort to any so-called "basket clause" of any
such law, (b) not violate any applicable law or regulation
(including, without limitation, Regulation T, U 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.
Section 2.6. Exchange of Prior Notes; Sale of Tranche B
Notes. Contemporaneously with the Closing, the Company shall
exchange each of the Prior Notes for the Tranche A Notes and sell
to each Purchaser, and such Purchaser shall purchase, the Tranche
B Notes to be purchased by it at the Closing, in each case as
specified in Schedule I.
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Section 2.7. Debt Documents; Other Agreements. You shall
have received (a) from the Company, fully executed originals of the
Unified Security Agreements, the Unified Deeds of Trust, the
Environmental Indemnity Agreement, the Collateral Agency Agreement
and any other Debt Documents to which the Company is a party, (b)
from United, fully executed originals of the United Deed of Trust,
the United Security Agreement, Subsidiary Guaranty, Environmental
Indemnity Agreement and any other Debt Documents to which United is
a party, and (c) from each Subsidiary Guarantor (other than
United), fully executed originals of a Subsidiary Guaranty and
Subsidiary Security Agreement.
Section 2.8. Security Filings. You shall have received
evidence, in form and substance satisfactory to you and Purchaser's
Counsel, that the Financing Statements shall have been duly filed
in respect of the security interests intended to be created by the
Security Documents with such Governmental Authority as the
Collateral Agent may reasonably require, and all filing fees in
respect thereof shall have been paid. As of the Closing Date, the
Collateral Agent for the benefit of the Purchasers shall hold a
valid perfected first priority security interest in the Personal
Property, and valid first priority Liens on the Real Property,
subject in each case only to Permitted Encumbrances.
Section 2.9. Tax Lien and Judgment Lien Searches. You shall
have received the results of searches regarding the Company and
United conducted in the tax lien and judgment lien filing records
in each appropriate jurisdiction (including without limitation, the
California Secretary of State, the Secretary of State of Oregon and
the various county recorders of the counties where the Real
Property is located), in each case reasonably satisfactory to you.
Section 2.10. No Liens on the Property. You shall have
received copies of lien waivers, releases, termination statements,
reconveyances with respect to each of the Liens set forth in Item
3.10(b) of Schedule II.
Section 2.11. Title Insurance. With respect to the Deeds of
Trust, you shall have received one or more lender's Form 1970
A.L.T.A. extended coverage policy of title insurance with Form 1
coverage, together with CLTA Endorsement Forms 100, 100.2, 100.23,
103.7, 116, 116.1, 116.4, 116.7, 123.2 and such other endorsements
as you and Purchaser's Counsel may reasonably require
(collectively, the "Title Policies"), in the amount of $120,000,000
and issued by a title insurance company and in form and substance
reasonably satisfactory to you and Purchasers' Counsel, insuring
that the Company is the owner of the Unified Real Property in fee
simple, that United is the owner of the United Real Property in fee
simple, and that the Deeds of Trust are valid first Liens on the
Real Property in favor of the Collateral Agent on behalf of the
Purchasers, free and clear of all Liens, encumbrances and
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exceptions to title whatsoever, other than Permitted Encumbrances.
Each Title Policy shall effect full coverage against losses arising
out of encroachments on boundary or setback lines, against losses
from existing mechanics' or materialmen's liens and subsequent
mechanics' and materialmen's liens which may gain priority over the
applicable Deed of Trust and such other losses with respect to
which you and Purchasers' Counsel may reasonably request coverage,
and shall be issued without any creditors' rights exception (or any
other exception relating to fraudulent transfers or conveyances),
general survey exception, any exception for environmental liens or
any general exception as to rights of parties in possession.
Section 2.12. Payment of Special Counsel Fees. Without
limiting the provisions of Section 13.1, the Company shall have
paid on or before the Closing the fees, charges and disbursements
of Purchasers' Counsel and Local Counsel to the extent reflected in
a statement from each of such counsel rendered to the Company at
least one (1) Business Day prior to the Closing (with the
understanding that supplemental statements for reasonable fees and
disbursements subsequently posted is to be rendered at a later
date).
Section 2.13. Private Placement Number. A Private Placement
number issued by Standard & Poor's CUSIP Service Bureau (in
cooperation with the Securities Valuation Office of the NAIC) shall
have been obtained for the Notes.
Section 2.14. Changes in Corporate Structure. Except as
specified in Item 2.14 of Schedule II, the Company shall not have
changed its jurisdiction of incorporation or been a party to any
merger or consolidation and shall not have succeeded to all or any
substantial part of the liabilities of any other entity, at any
time following the Report Date.
Section 2.15. Changes in Indebtedness. Since the Report
Date, there has been no Material change in the principal amounts
(other than as a result of scheduled amortization payments),
interest rates (other than as a result of "grid pricing"
provisions), sinking funds, installment payments or maturities of
the Indebtedness of the Company or its Subsidiaries.
Section 2.16. Insurance. The Company shall have furnished to
you (a) a certificate of an insurance broker, dated the Closing
Date, which certificate shall be reasonably satisfactory in
substance to you and Purchasers' Counsel, and shall certify that
the Company is in compliance with the requirements of Section 7.2,
and (b) originals, manually signed by an authorized agent for the
issuer, of all certificates of insurance required under Section
7.2(b)(iv).
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Section 2.17. Environmental Questionnaires. You shall have
received a completed Environmental Questionnaire, in the form
attached hereto as Exhibit J, with respect to each of the parcels
comprising the Real Property, each in form and substance reasonably
satisfactory to you and Purchasers' Counsel.
Section 2.18. Proceedings and Documents. All corporate and
other proceedings in connection with the transactions contemplated
by this Agreement, each of the other Debt Documents and all
documents and instruments incident to the transactions contemplated
hereby and thereby shall be reasonably satisfactory to you and
Purchasers' Counsel, and you and Purchasers' Counsel shall have
received all such counterpart originals or certified or other
copies of such documents as you or they may reasonably request.
Section 2.19. Merger. You shall have received an Officer's
Certificate from the Company to the effect that (a) all conditions
to closing of the Agreement and Plan of Merger have been satisfied
other than the conditions relating to the closing of the
transactions contemplated by this Agreement and the Operating Line
of Credit and (b) the Merger shall become effective concurrently
with the closing of the transactions contemplated hereby. You shall
have also received the unaudited pro forma financial statements of
the Company taking into effect the Merger and consolidated to
include the results of operations, assets and liabilities of
United.
Section 2.20. Revolving Debt Financing. You shall have
received an Officer's Certificate from the Company to the effect
that all conditions to closing of the Rabobank Revolving Credit
Agreement have been satisfied other than the conditions relating to
the closing of the transactions contemplated by this Agreement.
Section 2.21. Financial Statements; Projections. The
Collateral Agent shall have received (i) audited consolidated
financial statements of the Company and its consolidated
Subsidiaries dated as of August 29, 1998, showing financial results
substantially in conformance with those presented to the
Noteholders previously, (ii) Company-prepared consolidated
financial statements of the Company and its consolidated
Subsidiaries for the Fiscal Quarter ended May 29, 1999, and (iii)
Company-prepared financial projections for the Company and its
consolidated Subsidiaries (including United and its Subsidiaries)
for the next five (5) Fiscal Years ending after the Closing Date,
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 Noteholders;
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Section 2.22. No Material Adverse Change. There shall have
occurred no Material Adverse Change, as reasonably determined by
the Noteholders, since May 29, 1999.
SECTION 3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Section 3.1. 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
or validly existing, as applicable, 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, the Notes and the other Debt Documents and
to perform the provisions hereof and thereof.
Section 3.2. Authorization, etc. This Agreement, the Notes
and the other Debt Documents have been duly authorized by all
necessary corporate action on the part of the Company, and this
Agreement constitutes a legal, valid and binding obligation of the
Company enforceable against the Company in accordance with its
terms. Upon receipt by the Company of payment for the Notes, the
Notes will have been duly issued by the Company, will be entitled
to the benefits and security of the Security Agreements, the Deeds
of Trust and the other Security Documents, and will each constitute
the legal, valid and binding obligation of the Company, enforceable
against the Company in accordance with its terms. The other Debt
Documents, when executed and delivered by the Company, will each
constitute the legal, valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms.
Representations as to enforcement in this Section 3.2 are subject
in each case to (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).
Section 3.3. Disclosure. Except as disclosed in Item 3.3 of
Schedule II, the Debt Documents, the documents, certificates or
other writings delivered to you by or on behalf of the Company in
connection with the transactions contemplated thereby and the
Financial Statements, 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 Item 3.3 of Schedule II, or in any of the documents,
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certificates or other writings identified therein, or in the most
recent Financial Statements, since the date of the most recent
Financial Statements (the "Report Date"), 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 (a "Material Adverse Change").
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 in this Agreement or the other Debt Documents 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 or thereby.
Section 3.4. Organization and Ownership of Shares of
Subsidiaries; Affiliates.
(a) Item 3.4 of Schedule II contains complete and
correct lists of (i) 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) the Company's Affiliates,
other than Subsidiaries, and (iii) 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 Item 3.4 of
Schedule II 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 Item 3.4 of Schedule II).
(c) Each Subsidiary identified in Item 3.4 of Schedule
II 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 or validly existing, as
applicable, 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. 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 Item 3.4 of Schedule II and customary
limitations imposed by corporate law statutes and, in the case of
the Insurance Subsidiaries, restrictions imposed by insurance law
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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.
Section 3.5. Financial Statements. The Company has
heretofore furnished to you copies of: (a) audited consolidated
financial statements of the Company and its Subsidiaries for the
Fiscal Years ended August 29, 1998, and August 30, 1997, including
audited consolidated balance sheets of the Company and its
Subsidiaries as of the end of each such Fiscal Year and
consolidated statements of income, retained earnings, changes in
shareholders' equity and cash flows of the Company and its
Subsidiaries for each such Fiscal Year, together with the opinion
thereon of Deloitte & Touche LLP, independent certified public
accountants; and (b) unaudited consolidated financial statements of
the Company and its Subsidiaries for the third Fiscal Quarter
period ended May 29, 1999, including unaudited balance sheets as of
the end of such period and a statement of operations for such
period (the financial statements referred to in clauses (a) and (b)
of this Section 3.5 being collectively referred to as the
"Financial Statements"). All of the 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 of such
Financial Statements 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 and (in the case of unaudited statements) as permitted by
Form 10-QSB of the SEC and except that unaudited Financial
Statements may not contain footnotes and are subject to normal and
recurring year-end audit adjustments. The financial projections
contained in the Confidential Information Booklet dated September
1999, a copy of which has been delivered to the Collateral Agent,
have been prepared on a basis consistent with the Financial
Statements, except as described therein, and are based on the good
faith estimates and assumptions of management of the Company, and
the Company has no reason to believe that such estimates and
assumptions are not reasonable.
Section 3.6. Compliance with Laws, Other Instruments, etc.
The execution, delivery and performance by the Company of this
Agreement, the Notes and the other Debt Documents will not (a)
except as set forth in Item 3.6 of Schedule II, 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
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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.
Section 3.7. 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, the Notes or the other Debt Documents.
Section 3.8. Litigation; Observance of Agreements, Statutes
and Orders.
(a) Except as disclosed in the Financial Statements or
as disclosed in Item 3.8 of Schedule II, there are no actions,
suits or proceedings pending or, to the knowledge 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.
Section 3.9. 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
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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 1991.
Section 3.10. Title to Property; Leases.
(a) The Company has good and valid fee title to the
Unified Real Property and, the Company has good and valid title to
the Unified Personal Property. Except for Permitted Liens, there
are no Liens on any of the Property.
(b) Item 3.10(b) of Schedule II accurately lists (i)
each financing statement, deed of trust or other security agreement
or instrument which is currently filed, recorded or registered
pursuant to any United States or federal, state or local law or
regulation that names the Company or any Subsidiary Guarantor as
debtor or lessee or as the grantor or the transferor of the
interest created thereby, and (ii) as to each such financing
statement, deed, agreement or other instrument, the names of the
debtor, lessee, grantor or transferor and the secured party,
lessor, grantee or transferee and the name of the jurisdiction in
which such financing statement, deed, agreement or other instrument
has been filed, recorded or registered. Except as disclosed in Item
3.10(b) of Schedule II, no Liens exist against the Property and no
person has any right, interest or claim against the Property or any
revenues or proceeds generated by the Property other than Permitted
Encumbrances.
(c) 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 Company's most recent audited balance sheet 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.
Section 3.11. Licenses, Permits, etc. Except as disclosed in
Item 3.11 of Schedule II,
(a) 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;
(b) 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,
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service mark, trademark, trade name or other right owned by any
other Person; and
(c) 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.
Section 3.12. 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 execution and delivery of the other Debt
Documents by the Company, (v) the application by the Company of the
proceeds of the sale of the Notes nor (vi) the consummation of any
of the other transactions contemplated by the Debt Documents
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 4.1. Item 3.12 of Schedule II 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 29, 1998, 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
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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 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 29,
1998.
Section 3.13. 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.
Section 3.14. Use of Proceeds; Margin Regulations. The
Company will apply the proceeds of the sale of the Tranche B Notes
for the purposes set forth on Item 1.4 of Schedule II. None of the
transactions contemplated by this Agreement (including, without
limitation, the direct or indirect use of the proceeds from the
sale of the Notes) will violate or result in a violation of Section
7 of the Exchange Act or any regulations issued pursuant thereto,
including, without limitation, Regulation T (12 C.F.R., Part 220),
as amended, Regulation U (12 C.F.R., Part 221), as amended and
Regulation X (12 C.F.R., Part 224), as amended, of the Board of
Governors of the Federal Reserve System. The proceeds from the sale
of the Notes by the Company will not be used to purchase or carry
any "margin securities" within the meaning of such Regulation U,
and the Company has no present intention of acquiring any such
margin securities.
Section 3.15. Existing Indebtedness; Future Liens.
(a) Except as described therein, Item 3.15 of Schedule
II 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
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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.
(b) Except as disclosed in Item 3.15 of Schedule II,
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 other than Permitted Liens.
Section 3.16. 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 C.F.R., Subtitle B,
Chapter V, as amended) or any enabling legislation or executive
order relating thereto.
Section 3.17. Status under Certain Statutes. Neither the
Company nor any Subsidiary is, and the ownership of the Property by
the Company or United does not cause the Company or United to be,
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.
Section 3.18. Environmental Matters. Except as disclosed in
Item 3.18 of Schedule II:
(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;
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(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.
Section 3.19. Event of Default. No event has occurred and is
continuing, and no condition exists, that, if the Notes had been
issued and were Outstanding on the date hereof, would constitute a
Default or an Event of Default.
Section 3.20. 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 the Debt
Documents and the consummation of the transactions contemplated by
the Agreement and Plan of Merger will not be, insolvent as defined
under any applicable federal or state law. For purposes of this
Section 3.20, "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 3.20, 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
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seller from an interested buyer who is willing to purchase under
ordinary selling conditions.
Section 3.21. Address. The address of the principal place of
business and chief executive office of the Company is the same as
the address for notices to the Company provided in Section 16.
Section 3.22. Insurance. The Company and its Subsidiaries
have obtained insurance, with respect to their respective
properties and businesses, with financially sound and responsible
insurers, of such a nature, with such terms and in such amounts as
a prudent person would maintain with respect to similar properties
and a similar business and which otherwise satisfies the
requirements of Section 7.2.
Section 3.23. Representations and Warranties in Related
Documents. The representations with respect to the Company or its
Subsidiaries contained in the Debt Documents and the Merger
Agreement, and in any document, certificate or instrument delivered
pursuant thereto, are true and correct in all Material respects,
and you shall be entitled to rely on such representations as if
they were made to you in this Agreement as of the Closing Date.
Section 3.24. Other Names. The businesses conducted by the
Company and United prior to the date hereof have not been conducted
under any corporate, trade or fictitious name except as set forth
in Item 3.24 of Schedule II.
Section 3.25. Flood Hazard Area. No portion of the Real
Property lies within a designated flood plain or flood hazard area
unless such portion is covered by adequate flood insurance in
accordance with Section 7.2.
Section 3.26. No Condemnations. There is no proceeding
pending or, to the best knowledge of the Company, threatened which
would involve the taking of any portion of the Real Property by
exercise of the power of eminent domain.
Section 3.27. Improvements Constructed in Compliance with
Law. The Improvements as constructed comply in all Material
respects with all applicable laws, rules, governmental regulations
and restrictive covenants, including, without limitation, zoning
laws, building codes, platting and subdivision regulations,
handicap legislation, environmental matters and directions, rules
and regulations of the fire marshal, health officer, building
inspector and any other officers or any government or agency having
jurisdiction, and the uses to which the Company or United, as
applicable, is putting the Property complies in all Material
respects with such laws, rules and governmental regulations. The
Company or United, as applicable, has obtained all necessary
approvals necessary to comply in all Material respects with such
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laws, rules and governmental requirements, and any appeal periods
applicable to such approvals have expired.
Section 3.28. Certificates of Occupancy; Condition of
Improvements. All Local Governments have issued all necessary
certificates of occupancy for the structures comprising the
Improvements. The Improvements are currently in good condition and
repair (reasonable wear and tear excepted), undamaged by fire or
other casualty.
Section 3.29. Water Sources. For so long as the Company or
United, as applicable, has owned the Real Property, water has not
been appropriated from any natural surface or subsurface source but
rather has been and is currently supplied by the applicable Local
Government or by another source approved by the appropriate state
agency, and any connection to the applicable Local Government's
water lines has been approved by such Local Government and all
necessary deposits and initial charges for such connection have
been paid in full.
Section 3.30. Sewage Connections. For so long as the Company
or United, as applicable, has owned the Real Property, sewage from
the Improvements has been at all times disposed of via connection
to the applicable Local Government sanitary sewer system, which
connection and all connecting lines have been approved and
permitted by the applicable Local Governments to the extent
required by applicable law; no sewage treatment facility has been
or shall be operated on such Property; all bonds, deposits and
initial charges for connecting to such sanitary sewer system have
been properly paid; and all necessary sampling wells have been
provided.
Section 3.31. Utilities Connections. All utility and
municipal services required for the occupancy and operation of the
Real Property, including, but not limited to, gas, electric and
telephone facilities, are currently available to and in use at the
Property.
Section 3.32. Drains in Compliance. All parking lot or other
drains on the Real Property have been constructed in accordance
with all applicable permit, deposit or initial charge requirements
and have been properly connected to the applicable Local Government
storm or sanitary sewer lines with the approval of the applicable
Local Government, the State Department of Highways and Public
Transportation or other state department, as applicable.
Section 3.33. Trash Collection. All garbage, trash or other
solid waste from or relating to the Improvements and the Real
Property is being collected and removed from the Property on a
regular basis.
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Section 3.34. No Nuisance. There is no public or private
nuisance condition currently existing on any part of the Real
Property.
Section 3.35. Easements and Utility Services. The Company or
United, as applicable, has all easements or other rights necessary
or appropriate to the proper operation, repair, maintenance,
occupancy or use of the Improvements and the Real Property as
presently being and proposed to be used, including those for use,
maintenance, repair and replacement of and access to structures,
facilities or space for support, mechanical systems, roads,
utilities (including water and sewer disposal) and any other
private or municipal improvements, services and facilities.
Section 3.36. Year 2000 Issues. The Company and each of its
Subsidiaries have implemented a Year 2000 Plan which adequately
addresses the Year 2000 Problem and as a result of the
implementation of the Year 2000 Plan, the Year 2000 Problem does
not present a reasonable likelihood of resulting in a Material
Adverse Effect.
Section 3.37. 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 Company evidenced by this Agreement and the
other Debt Documents on terms no less favorable to the holders of
"Senior Indebtedness" under and as defined in the Indenture between
the Company and First Interstate Bank of California, as Trustee,
relating to $3,000,000 Subordinated Patronage Dividend Certificates
Due December 15, 2002 (the "Indenture").
SECTION 4. REPRESENTATIONS OF THE PURCHASERS
Section 4.1. 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
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.
Section 4.2. Source of Funds. You represent and warrant
that, with respect to each source of funds to be used by you to
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purchase the Tranche B 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.
SECTION 5. INFORMATION AS TO THE COMPANY
Section 5.1. Financial and Business Information. The
Company shall deliver to each holder of Notes that is an
Institutional Investor:
(a) Quarterly Statements -- within forty five (45) days
after the end of each Fiscal Quarter (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
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(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 year end 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 5.1(a);
(b) Annual Statements -- within ninety (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 generally accepted
auditing standards, and that such audit provides a reasonable basis
for such opinion in the circumstances, such opinion shall not
contain a disclaimer of opinion, shall not express doubts about the
ability of the Company 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
Company's and its consolidated Subsidiaries' records, or otherwise
be subject to a qualification which the Required Noteholders
reasonably determine is material and adverse, and
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(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 5.1(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 9(g), 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
five (5) days after a Responsible Officer's becoming aware of any
of the following that could result in the imposition of a tax or
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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 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 thirty (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 five (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 five (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 Financial Subsidiaries and
Insurance Subsidiaries -- promptly, and in any event within thirty
(30) days of receipt thereof, copies of the financial statements
(balance sheet, statement of income and statement of cash flows) of
the Financial Subsidiaries 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) Material Litigation -- promptly upon and, in any
event, within thirty (30) days after, any Responsible Officer of
the Company having knowledge thereof, notice of the institution of
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any suit, action or proceeding against the Company, any of its
Subsidiaries or any shareholder thereof which has a reasonable
possibility of being determined adversely to the Company and, if so
determined, could have a Material Adverse Effect;
(m) Events Relating to the Property -- until the Release
Date, promptly upon and, in any event, within five (5) days after,
any Responsible Officer of the Company having knowledge thereof,
notice of (i) any default or event of default under any Material
agreement relating to all or a Material portion of the Property to
which the Company or any of its Subsidiaries is a party, (ii) any
claim exceeding $500,000 made by the Company under any insurance
policy with respect to all or a portion of the Property, or (iii)
the institution of any suit, action or proceeding affecting all or
a Material portion of the Property, in which the amount involved
exceeds $500,000 or in which injunctive or similar relief is
sought;
(n) Amendment of Charter Documents -- any proposed
amendment, modification or supplement to the articles of
incorporation or bylaws of the Company that Materially affects the
interests of the Noteholders at least five (5) business days prior
to the proposed effective date thereof;
(o) 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;
(p) Material Adverse Change - promptly upon and, in any
event, within five (5) days after, any Responsible Officer of the
Company having knowledge thereof, notice of any material adverse
change in the business, operations or financial or other condition
of the Company since the date hereof;
(q) 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;
(r) Financial Forecasts -- No later than seventy-five
(75) days following the close of each Fiscal Year, a consolidated
projected income statement and any other projections prepared in
the ordinary course of the Company'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
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consolidated projected income statement or other projections in
form and detail reasonably satisfactory to the Noteholders; and
(s) Auditors' Letters -- Promptly upon receipt thereof,
copies of all material reports submitted to the Company by their
independent public accountants in connection with each annual,
interim or special audit of the financial statements of the Company
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.
Section 5.2. Officer's Certificate. Each set of financial
statements delivered to a holder of Notes pursuant to Section
5.1(b) hereof shall be accompanied by a certificate of a Senior
Financial Officer setting forth:
(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 8.4 through 8.6, 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.
Section 5.3. Accountants' Certificates. Each set of
financial statements delivered pursuant to Section 5.1(b) shall be
accompanied by a report of the independent certified public
accountants who shall have reported on such financial statements
stating that such accountants have read this Agreement insofar as
is necessary for such report and that, in making the examination
necessary to express an opinion on such financial statements, such
accountants have obtained no knowledge of any condition or event
pertaining to accounting or financial matters, or the financial
condition of the Company, that then constitutes a Default or an
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Event of Default, or, if any Default or Event of Default then
exists, specifying the nature and period of existence thereof.
Section 5.4. 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.
SECTION 6. PREPAYMENT OF THE NOTES
Section 6.1. Required Prepayments.
(a) Generally. On June 1, 2000, and on the first
Business Day of each month thereafter to and including the month
immediately preceding the Tranche A Maturity Date, the Company will
pay equal monthly installments of principal of and accrued interest
on the Tranche A Notes in the aggregate amount of $853,727.34
without payment of the Make-Whole Amount or any premium (the
"Amortization Payment"). Notwithstanding the foregoing, in the
event that the Company satisfies each of the terms set forth in
Section 1.7(b) hereof, the Amortization Payment shall be reduced to
take into account the reduction of the interest rate on the Tranche
A Notes from a fixed rate of 7.72% per annum to a fixed rate of
7.22% per annum effective as of the Release Date. The adjusted
Amortization Payment shall be a level monthly payment of principal
of and accrued interest on the Tranche A Notes in an amount
sufficient to pay in full the principal outstanding as of the
Release Date and accrued interest (at the fixed rate of 7.22% per
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annum) on the Assumed Tranche A Maturity Date (the "Adjusted
Amortization Payment"). The Assumed Tranche A Maturity Date shall
mean June 1, 2012. The Collateral Agent shall deliver to the
Company a calculation of the Adjusted Amortization Payment at least
five (5) Business Days prior to the Release Date and such
calculation shall be binding and conclusive absent manifest error.
Notwithstanding anything to the contrary contained herein or in any
Tranche A Note, however, the final payment due under each Tranche
A 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 Tranche A Notes pursuant to Section 6.2 or
purchase of the Tranche A Notes permitted by Section 6.5, the
principal amount of each required payment of principal of and
accrued interest on Tranche A Notes becoming due under this Section
6.1 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 Tranche A Notes is reduced as a result of such
prepayment or purchase.
(c) Prepayment of Interest. The Company will prepay on
the Closing Date (i) interest accrued on the Prior Notes from
September 1, 1999 to the day preceding the Closing Date, and (ii)
interest to accrue on the Notes from the Closing Date to September
30, 1999.
Section 6.2. 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
6.2 not less than thirty (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
6.3), 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,
which calculation shall be subject to the approval of the
Noteholders. Two Business Days prior to such prepayment, the
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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. The exchange on
the Closing Date of the Prior Notes for the Tranche A Notes
pursuant to Section 1.3(a) shall not be construed as a prepayment
of the Prior Notes.
Section 6.3. 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.
Section 6.4. Maturity; Surrender, etc. In the case of each
prepayment of Notes pursuant to this Section 6, 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.
Section 6.5. 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.
Section 6.6. 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
6.2 or has become or is declared to be immediately due and payable
pursuant to Section 10.1, as the context requires.
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"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, (i) with respect to the
Called Principal of any Tranche A Note, 0.25%, in the case of
Called Principal payable prior to April 14, 2003, and 0.75%, in the
case of Called Principal payable after April 14, 2003, and (ii)
with respect to the Called Principal of any Tranche B Note, 0.50%,
in each case over the yield to maturity implied by (x) 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 Principal as of such Settlement Date,
or (y) 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.
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"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,
however, 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 this Section 6 or Section 10.1; provided, further, that
for purposes of calculating the Remaining Scheduled Payments with
respect to the Tranche A Notes, the calculation of the remaining
interest payments on the Tranche A Notes shall be based on a fixed
interest rate of 7.22% regardless of whether the interest rate on
the Tranche A Notes has been reduced to such rate pursuant to
Section 1.5(b) prior to the Settlement Date.
"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 6.2 or has become or is declared
to be immediately due and payable pursuant to Section 10.1, as the
context requires.
Section 6.7. Restrictions on Prepayment. Except as
otherwise provided in this Section 6, there shall be no prepayment,
in whole or in part, of the principal of all or any of the Notes.
The Company waives any right to prepay the Notes except under the
terms and conditions as set forth in this Section 6 and agrees that
if the Notes are prepaid pursuant to Section 6.2, the Company will
pay the Make-Whole Amount. The Company hereby acknowledges that the
inclusion of this waiver of prepayment rights and agreement to pay
the Make-Whole Amount upon prepayment of the Notes pursuant to
Section 6.2 was separately negotiated with the Purchasers, that the
economic value of the various elements of this waiver and agreement
was discussed, that the consideration given by the Company for the
Notes was adjusted to reflect the specific waiver and agreement
negotiated between the Company and the Purchasers and contained
herein, and that this waiver is intended to comply with state laws
comparable to California Civil Code Section 2954.10.
The Company's Initials______
SECTION 7. AFFIRMATIVE COVENANTS
The Company covenants that so long as any of the Notes
are outstanding:
Section 7.1. 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
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will obtain and maintain in effect all licenses, certificates,
permits, franchises, patents, trademarks, service marks, trade
names, copyrights, design patents 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.
Section 7.2. Insurance.
(a) The Company will, from and after the Release Date,
and, at all times during the term hereof, 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.
(b) Until the Release Date, the Company will maintain,
or cause to be maintained, in full force and effect, with such
insurers, amounts, coverages and forms reasonably satisfactory to
and approved by the Noteholders, insurance as follows:
(i) Required Insurance Coverages and Limits. The
Company agrees that it will at its own cost and expense and at all
times during the term carry and maintain or cause to be carried and
maintained:
(A) Casualty Insurance -- "all risk"
property insurance on the Property in an amount not less than the
full replacement cost of the Property (without regard to
depreciation), which coverage shall include, without limitation,
flood insurance (for any Real Property located in a flood plain)
and earthquake insurance, but (in either case) only to the extent
that such coverage is generally available at commercially
practicable rates;
(B) Liability Insurance -- comprehensive
general liability insurance (including, without limitation, blanket
contractual, personal injury, XCU hazards, products/completed
operations, independent contractors, and broad form property
damage) applicable to the Property in such amounts as from time to
time are usually carried by organizations similar to the Company
owning or leasing and operating similar properties in similar
locations; provided, however, that the Company shall be required to
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carry and maintain liability insurance applicable to the Real
Property in a minimum amount equal to $50,000,000
aggregate/$1,000,000 per occurrence;
(C) Business Interruption Insurance --
business interruption insurance covering actual losses sustained,
including, without limitation, extra and continuing expenses, and
in any event in an amount not less than the debt service due under
the Notes for any period of at least three (3) consecutive years,
and covering the corresponding hazards under the "all risk"
insurance described in clause (i) above;
(D) Worker's Compensation - worker's
compensation insurance with respect to employees of the Company
sufficient to meet the statutory requirements of all states where
the Real Property is located; and
(E) Other Insurance -- such other
insurance with respect to the Company's property and business of
such a nature, with such terms and in such amounts, as a prudent
person with the Company's financial resources would maintain with
respect to similar properties and a similar business, and, in any
event, insurance on all its property of a character usually insured
by corporations engaged in the same or a similar business similarly
situated against loss or damage of the kinds and in the amounts
customarily insured against and for by such corporations.
(ii) Insurance Terms. All the insurance policies
required pursuant to Section 7.2(b) above shall be subject to such
deductible amounts and retentions as are usual and customary for
entities similar to the Company owning or leasing and operating
similar properties, but in no event greater than reasonably
acceptable to the Noteholders. In addition, the Company shall
require worker's compensation and liability coverage by contractors
and major subcontractors at all times that any of the foregoing
shall be performing services with respect to a material repair or
modification of all or any portion of the Property.
(iii) Additional Insureds; Loss Payees. The terms
and conditions of this Section 7.2(b) shall be of no further force
and effect from and after the Release Date. All insurance hereunder
shall name the Noteholders and such other parties (with an
insurable interest) as the Noteholders may designate as additional
insureds as their respective interests may appear (in the case of
insurance required by clauses (b)(i)(D) and (b)(i)(E), to the
extent permitted under applicable law and available from the
respective insurers). All insurance referred to in clauses
(b)(i)(A) and (b)(i)(C) above shall name the Collateral Agent as
loss payee. The Company agrees to effect all insurance provided for
in this Section 7.2 with financially sound and responsible
insurance companies legally qualified to issue insurance in all
states where the Property is located and reasonably acceptable to
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the Noteholders. All such policies referred to in clauses (a) and
(b) and such other policies as to which the Noteholders are named
as an additional insured or loss payee, as the case may be, shall
(i) provide that the same shall not be cancelled, materially
modified or terminated without at least thirty (30) days' (or
twenty (20) days' in the case of nonpayment of premium) prior
written notice to each insured and each loss payee named therein,
(ii) provide for at least thirty (30) days' prior written notice to
each insured and each loss payee named therein of the date on which
such policies shall terminate by lapse of time if not renewed,
(iii) contain a breach-of-warranty clause providing that the
respective interests of the Noteholders or any other additional
insured or loss payee shall not be invalidated by any action or
inaction of the Company or any other Person, (iv) insure the
Noteholders and any other additional insured or loss payee
regardless of any breach or violation by the Company or any other
Person of any warranties, declarations, or conditions contained in
the policies related to such insurance, (v) except for the
insurance referred to in clause (b)(i)(D) above, provide that the
insurer thereunder waives all right of subrogation against the
Noteholders and waives any right of set-off or counterclaim and any
other right of deduction whether by attachment or otherwise, (vi)
be primary without right of contribution from any other insurance
carried by or on behalf of any Noteholder with respect to any
interest in the Property, (vii) provide that no person other than
the Company shall have any liability for any premiums with respect
thereto and (viii) provide that inasmuch as the policies are
written to cover more than one insured, all terms and conditions,
insuring agreements and endorsements, with the exception of limits
of liability, shall operate in the same manner as if there were a
separate policy covering each insured. No Noteholder shall, by
reason of accepting, rejecting, approving or obtaining insurance
incur any liability for the existence, nonexistence, form or legal
sufficiency thereof, the solvency of any insurer, or the payment of
any losses.
(iv) Certificate. On or prior to the Closing
Date, and not less than five (5) days prior to the expiration dates
of the expiring policies required pursuant to this Section 7.2, the
Company shall deliver to you certificates of insurance issued by
the insurers thereunder or by an insurance broker authorized to
bind such insurers evidencing the insurance maintained pursuant to
this Section 7.2.
(v) Performance by Noteholders. In the event
that the Company fails to maintain insurance as herein provided,
the Noteholders may at their option, but without obligation,
provide such insurance and, in such event, the Company shall, upon
demand from time to time, reimburse the Noteholders for the cost
thereof, together with interest on such cost from the date of
payment of such cost to the date of reimbursement.
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(vi) Proceeds. Until the Release Date, the amount
collected under any such insurance policies maintained pursuant to
this Section 7.2 shall be distributed or applied in accordance with
the terms and provisions of this Agreement, the Security Agreements
or the Deeds of Trust, as applicable.
(vii) Separate Insurance. Nothing in this Section
7.2 shall be construed to prohibit any Noteholder from insuring at
its own expense its interest therein, and any insurance so
maintained shall not provide for or result in a reduction of the
coverage or the amounts payable under any of the insurance required
to be maintained by the Company under this Section 7.2.
Section 7.3. Maintenance of Properties.
(a) Generally. 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 7.3 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.
(b) Maintenance of the Property. With respect to the
Property specifically, until the Release Date, the Company
covenants and shall cause United, as applicable:
(i) to keep the Property in good condition and
repair (reasonable wear and tear excepted);
(ii) subject to Section 8.4, not to remove or
demolish the Property or any part thereof;
(iii) to complete or restore promptly and in good
and workmanlike manner the Property or any part thereof which may
be damaged or destroyed (provided, that, in the case of an insured
loss, any insurance proceeds are made available by the Collateral
Agent in accordance with the terms and conditions of the applicable
Deed of Trust) unless the part thereof so damaged or destroyed is
obsolete or no longer used by the Company in the operation of its
business and the failure to complete or restore such part of the
Property will not result in a Material reduction in the value of
the Property;
(iv) except as are being contested under Section
8.5, to pay when due all claims for work performed and for
materials furnished on or to the Real Property, and to pay any and
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all Liens arising out of or resulting from work performed or
materials supplied on or to the Real Property;
(v) to comply in all Material respects with and
not suffer any Material violations of (A) any and all laws,
ordinances, regulations and standards, including, but not limited
to, all Environmental Laws, (B) any and all covenants, conditions,
restrictions and equitable servitudes, whether public or private,
of every kind and character, and (C) all requirements of insurance
companies and any bureau or agency which establishes standards of
insurability, which laws, covenants or requirements affect the
Property and pertain to acts committed or conditions existing
thereon, including, without limitation, such work of alteration,
improvement or demolition as such laws, covenants or requirements
mandate;
(vi) not to commit or permit waste of the Property
or any material part thereof;
(vii) to do all other acts which from the character
or use of the Property may be reasonably necessary to maintain and
preserve its value unless the reduction in the value of the
Property results from generally prevailing market conditions;
(viii) to perform in all Material respects all
obligations required to be performed in any leases, conditional
sales contracts or like agreements affecting all or any portion of
the Property or the operation, occupation or use thereof; and
(ix) to make no further assignment of rents of the
Property.
(c) Until the Release Date, the Company will, and shall
cause United to, execute and, where appropriate, acknowledge and
deliver such further instruments as the Noteholders reasonably deem
necessary or appropriate to preserve, continue, perfect and enjoy
the security provided by the Security Documents.
(d) Until the Release Date, (i) the Company shall not,
and shall cause United not to, seek, make or consent to any
agreements, restrictions or change in the zoning or conditions of
use of the Property that would be binding on the successors or
assigns of the Company or United, as applicable, or that would
affect the ability of the Company or United, as applicable, to
continue to use the Property for substantially the same purposes as
presently used without the prior written consent of the
Noteholders, which consent shall not be unreasonably withheld or
delayed if such agreements, restrictions and changes do not affect
the priority or materially impair the value of the Noteholders'
security under the Security Documents; (ii) the Company or United,
as applicable, shall comply, in all Material respects, with and
make all payments required under the provisions of any covenants,
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conditions or restrictions affecting the Property; and (iii) the
Company or United, as applicable, shall comply with all existing
and future requirements of all governmental authorities having
jurisdiction over all or any portion of the Property unless the
requirement is being properly contested or failure to comply will
not have a Material Adverse Effect.
Section 7.4. Payment of Taxes and Claims.
(a) 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.
(b) The Company will pay and discharge promptly after
notice and prior to delinquency, all taxes, assessments, levies,
imposts, duties, fees and charges imposed by any federal, state or
Local Government authority upon any Noteholder by reason of its
interest in the Property created hereby, under any of the Security
Documents or by reason of any payment, or portion thereof, made to
any Noteholder hereunder; provided, however, that the Company shall
not have any obligation to pay or discharge any Noteholder's
business or franchise taxes, federal or state income taxes,
business and occupation taxes payable in lieu of state income taxes
or other taxes that are measured by and imposed upon the
Noteholder's net income or receipts.
(c) Until the Release Date, the Company will, and shall
cause United to, pay and discharge promptly all lawful claims of
materialmen, mechanics, carriers, warehousemen, landlords and other
similar Persons for labor, materials, supplies and rentals that, if
unpaid, might by law become a Lien upon all or a portion of the
Property or any of its other property; provided, however, that none
of the foregoing need be paid while the same is being contested in
good faith by appropriate proceedings diligently conducted in
accordance with the conditions of Section 8.5.
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Section 7.5. Corporate Existence, Designation of
Subsidiaries, etc. Subject to Section 8.2, (a) the Company will,
and shall cause United to, take and fulfill, or cause to be taken
and fulfilled, all actions and conditions necessary to preserve and
keep in full force and effect its existence, rights and privileges
as a corporation and will not liquidate or dissolve, and it will
take and fulfill, or cause to be taken and fulfilled, all actions
and conditions necessary to qualify, and to preserve and keep in
full force and effect its qualification, to do business as a
foreign corporation in the jurisdictions in which the conduct of
its business or the ownership or leasing of its properties requires
such qualification and the failure so to qualify would have a
Material Adverse Effect; provided, however, that, upon fifteen (15)
Business Days prior written notice to the Collateral Agent, the
Company may merge United with and into the Company, and (b) the
Company will at all times preserve and keep in full force and
effect 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.
Section 7.6. 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 5.1 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. The Company shall
keep, and cause each of its Subsidiaries to set aside on its books
from its earnings for each Fiscal Year, in amounts deemed adequate
in the reasonable opinion of the Company, all proper accruals and
reserves that, in accordance with GAAP, should be set aside from
such earnings in connection with its business, including reserves
for depreciation, obsolescence and/or amortization, third party
insurance payment and claims and accruals for taxes based on or
measured by income or profits and for all other taxes.
Section 7.7. 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
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deficiency could reasonably be expected to have a Material Adverse
Effect.
Section 7.8. 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 (except for the Financial Subsidiaries
and the Insurance Subsidiaries) to execute a Subsidiary Guaranty.
Section 7.9. Maintenance of Office. The Company will
maintain at the office located at the address for notices to the
Company provided in Section 16 an office where notices,
presentations and demands in respect of this Agreement, the Notes
and the other Debt Documents may be given to and made upon them;
provided, however, that the Company may, upon fifteen (15) Business
Days' prior written notice to the Noteholders, move such office to
any other location within the State of California.
Section 7.10. Change in Name. Until the Release Date, the
Company shall not, and shall cause United not to, change its name
unless and until it has (a) delivered written notice of such name
change to the Noteholders not less than fifteen (15) Business Days
before such name change is to take effect and (b) in connection
with any such name change, caused to be completed and executed by
the Company such instruments and documents as may be requested by
the Noteholders and as are deemed by the Noteholders to be
necessary or desirable to perfect, preserve or protect the
mortgages, Liens, security interests and assignments created or
intended to be created by the Security Documents, or to obtain for
the Noteholders the full benefit of the specific rights and powers
herein and therein granted, including, without limitation, the
execution and delivery of Uniform Commercial Code financing
statements, continuation statements or amendments with respect
thereto, or similar instruments relating to the perfection of the
mortgages, Liens, security interests or assignments created or
intended to be created by the Security Documents. All fees, costs
and expenses in connection with the foregoing shall be the sole
responsibility of the Company.
Section 7.11. Indemnification.
(a) Except as provided in subsection (c) below and until
the Release Date, the Company will defend, protect, indemnify and
hold harmless each Noteholder, its directors, officers, employees
and agents and each Person, if any, who controls such Noteholder
within the meaning of the Securities Act or the Exchange Act (any
and all of whom are referred to as the "Indemnified Party")
against, and will protect, save and hold harmless each Indemnified
Party from and against, any and all claims, demands, loss, damage,
liability (joint or several), expense or cost (including all legal
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fees or other expenses reasonably incurred by such Indemnified
Party in connection with the preparation for or defense of any
pending or threatened claim, action or proceeding, whether or not
resulting in any liability) imposed on, incurred by or asserted
against such Indemnified Party (whether or not such Indemnified
Party is a party thereto) under any applicable federal or state law
or otherwise caused by or arising out of, or allegedly caused by or
arising out of (i) the Property or any part thereof, (ii) this
Agreement and any amendments, modifications, consents or
supplements hereto or any transaction contemplated hereby, other
than losses, claims, damages or liabilities resulting from any
misrepresentation made by such Noteholder in Section 4, (iii) the
other Debt Documents and any amendments, modifications, consents or
supplements to any thereof, or any action or inaction by the
Company in connection with any thereof, (iv) the enforcement of any
agreement, restriction or legal requirement affecting the Property
or any part thereof, (v) any Default or Event of Default, or (vi)
the design, construction, financing, mortgaging, construction,
purchase, sale, acceptance, rejection, ownership, acquisition,
delivery, non-delivery, shipment, lease, sublease, rental,
preparation, possession, use, non-use, operation, condition,
maintenance, repair, restoration, modification, storage,
transportation, transfer of title, abandonment, return, or any
application, disposition or transfer of all or any part of the
Property or the imposition of any Lien (or incurrence of any
liability to refund or pay over any amount as a result of such
Lien) on the Property or any interest therein.
(b) The matters covered by the indemnification provided
for in subsection (a) above shall include, without limitation, any
claim or penalty arising from (i) violations of laws, or in tort
(by application of the doctrine of strict liability or otherwise),
(ii) the active or passive negligence of any Indemnified Party,
(iii) latent or other defects, whether or not discoverable by such
Indemnified Party, the Company or any other Person, (iv) loss of or
damage to any property or the environment, (v) violation of any
Environmental Law or the presence of any Hazardous Material or
other waste on all or any portion of the Property, (vi) death of or
injury to any person and (vii) any claim for patent, trademark or
copyright infringement. In addition, each Indemnified Party shall
be entitled to indemnity hereunder whether such indemnity arises
because of an act or omission by such Indemnified Party (subject to
subsection (c) below) or otherwise, whether or not the claims
giving rise to indemnity hereunder are also indemnified against by
any other Person under any other document, and whether or not the
transactions contemplated hereby are consummated.
(c) Notwithstanding any of the indemnities set forth
above, the Company shall not be required to indemnify any
Indemnified Party for any loss, damage, liability, cost or expense
arising from (i) the willful misconduct or gross negligence of such
Indemnified Party or (ii) such Indemnified Party's business or
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franchise taxes, federal or state income taxes, business and
occupation taxes payable in lieu of state income taxes or other
taxes that are measured by and imposed upon such Indemnified
Party's net income or receipts; and
(d) Promptly after receipt by an Indemnified Party of
notice of any claim, action or proceeding with respect to which an
Indemnified Party is entitled to indemnity hereunder, such
Indemnified Party will notify the Company of such claim or the
commencement of such action or proceeding; provided, however, that
the failure of an Indemnified Party to give notice as provided
herein shall not relieve the Company of its obligations under this
Section 7.11 with respect to such Indemnified Party, except to the
extent that the Company is actually prejudiced by such failure. The
Company will assume the defense of such claim, action or proceeding
and will employ counsel satisfactory to the Indemnified Party and
will pay the fees and expenses of such counsel. Notwithstanding the
preceding sentence, the Indemnified Party will be entitled, at the
expense of the Company, to employ counsel separate from counsel for
the Company and for any other party in such action if the
Indemnified Party reasonably determines that a conflict of interest
or other reasonable basis exists which makes representation by
counsel chosen by the Company not advisable. In the event an
Indemnified Party (or any of its officers, directors or employees)
appears as a witness in any action or proceeding brought against
the Company in which an Indemnified Party is not named as a
defendant, the Company agrees to reimburse such Indemnified Party
for all out-of-pocket expenses incurred by it (including fees and
expenses of counsel) in connection with its appearing as a witness.
The obligations of the Company under this Section 7.11 shall
survive the payment or prepayment of the Notes, the termination of
this Agreement, and the reconveyance of the Deeds of Trust.
Section 7.12. Post Closing Items.
(a) Within sixty (60) days after the Closing Date, the
Company shall deliver to Purchasers' Counsel, at the Company's sole
cost and expense, ALTA Boundary and Improvements Surveys of the
Real Property by a licensed surveyor reasonably satisfactory to the
Noteholders, in form and substance satisfactory to the Noteholders,
and accompanied by a certificate from such surveyor in the form of
Exhibit G hereto (the "Surveys"). The Company shall, at its
expense, cause the Title Policies to be amended to remove any
survey exceptions relating to such facilities and to include a
116.1 endorsement regarding the Surveys. The Company shall, at its
expense, promptly remedy any encroachment or other matter not
reasonably acceptable to the Noteholders that is disclosed by the
Surveys. None of the encumbrances, rights, agreements, actions or
instruments referenced in the Pro Forma Title Policies issued by
Chicago Title Company could have a Material Adverse Effect.
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(b) Within thirty (30) days after the Closing Date, the
Company shall deliver to Purchasers' Counsel, at the Company's sole
cost and expense, results of a search of the Federal and state
environmental record sources specified in ASTM Standard E 1527 97
Section 7.2.1.1 with respect to each of the parcels comprising the
Real Property. The Company, at its expense, shall take all
commercially reasonable steps to, as reasonably as practicable
after the Closing Date, remedy any violation of Environmental Laws
or other matters not reasonably acceptable to the Noteholders
disclosed by such record searches.
(c) The Company shall use its best efforts to cause Joe
Notrica, Inc. ("Notrica") to execute and deliver to the Collateral
Agent the Estoppel Certificate in substantially the form attached
hereto as Exhibit K, and to cause each of Notrica and Preferred
Public Storage, Inc. to execute and deliver to the Collateral Agent
the Agreement of Subordination, Non-Disturbance and Attornment in
substantially the form attached hereto as Exhibit L, in each case
as soon as reasonably practicable after the Closing Date.
Section 7.13. Year 2000 Issues. Take all action reasonably
necessary and appropriate to implement the Year 2000 Plan to insure
that (a) the Company and each of its Subsidiaries are Year 2000
Compliant in all of their material systems by September 30, 1999,
except to the extent that the failure to be Year 2000 Compliant as
of such date would not result in a Material Adverse Effect, and (b)
the Year 2000 Problem shall not result in a Material Adverse
Effect.
SECTION 8. NEGATIVE COVENANTS
The Company covenants that so long as any of the Notes
are outstanding:
Section 8.1. 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 of the Company or a Subsidiary that is reasonably
comparable to the Affiliate transaction, based on the totality of
the applicable circumstances.
Section 8.2. Consolidation and Merger. The Company will not
(a) change its form of organization or the nature of its business,
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or (b) merge into or consolidate with any other Person or permit
any other Person to merge into or consolidate with it unless (i)
the Company is the surviving entity, (ii) no Default or Event of
Default shall have occurred and be continuing at the time of such
merger and (iii) such merger shall not otherwise cause or result in
a Default or Event of Default.
Section 8.3. 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
8.4 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
Company gives the Noteholders 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.
Section 8.4. Sale of Assets, Etc. The Company will not, and
will not permit any of its Subsidiaries to, make any Transfer
except
(a) with respect to the Property and until the Release
Date, a Transfer (i) to replace assets and other Personal Property
with Property having a fair market value, condition and utility at
least equal to that of the Property replaced if the Noteholders
will have a first priority security interest in the replacement
Property, and (ii) of Personal Property that is obsolete or no
longer required in the operation of the business of the Company or
any of its Subsidiaries provided that the business of the Company
or its Subsidiary, applicable, is being conducted in the ordinary
course consistent with past practice.
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(b) with respect to assets not constituting Property and
from and after the Release Date with respect to any assets
including the Property,
(i) as permitted under Sections 8.2 and 8.3;
(ii) 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;
(iii) 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;
(iv) 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";
(v) any transfer of an investment made by a
Financing Subsidiary, a Retailing Subsidiary or an Insurance
Subsidiary in the ordinary course of business;
(vi) 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;
(vii) a 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;
(viii) any Transfer if
(A) 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;
(B) 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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(C) 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 Report Date;
(ix) 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; and
(x) any sale of all or any portion of the assets
or capital stock of Sav Max if (a) in the good faith opinion of the
Company, such sale 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, and (b) before and
immediately after the consummation of such sale and immediately
after giving effect thereto, no Default or Event of Default would
exist.
Section 8.5. Liens.
(a) Until the Release Date, the Company will not,
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 all or any portion of the Property, 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 Permitted Liens. The Company shall pay,
at or prior to maturity, all obligations secured by Liens which
shall now or hereafter encumber the Property or any part thereof or
interest therein, whether senior or subordinate hereto, including,
without limitation, all claims for work or labor performed, or
materials or suppliers furnished, in connection with any work of
demolition, alteration, improvement of or construction upon all or
any portion of the Property. The Company shall have the right to
contest in good faith any such obligation or claim provided such
contest shall be prosecuted diligently and in a manner not
prejudicial to the Noteholders, and if a final judgment adverse to
the Company is obtained, such judgment shall be fully paid or
discharged within ten (10) days after the entry of such judgment.
(b) The following Section 8.5(b) shall be of no further
force and effect from and after the Release Date. Upon demand by
the Noteholders, the Company shall defend, indemnify and hold the
Noteholders harmless against any obligation or claim described in
Section 8.5(a) above so contested by the Company, and upon demand
by the Noteholders, the Company shall make suitable provision by
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payment to the Noteholders or by posting a bond or other security
satisfactory to the Noteholders for the possibility that the
contest will be unsuccessful, including, if the Noteholders
request, a bond equal to one and one half times the amount of such
mechanics' or materialmen's liens. Such provision shall be made
within ten (10) days after demand therefor and, if made by payment
of funds to the Noteholders, the amount so deposited, with all
earnings thereon, shall be disbursed in accordance with the
resolution of the contest either to the Company or the adverse
claimant. If the Company fails to post a suitable bond or other
acceptable security as provided, the Noteholders may remove or pay
such Lien at the expense of the Company. Notwithstanding anything
in the foregoing to the contrary, if the Lien to be contested is
senior to the Lien of any Deed of Trust, the Company shall, within
ten (10) days after the Noteholders' demand, remove or pay such
Lien, and, if the Company shall fail to do so, the Noteholders may
do so at the expense of the Company, and any amount so advanced by
the Noteholders will be secured by the Security Documents.
(c) 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 (excluding the Property
prior to the Release Date but 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
Permitted Liens.
Section 8.6. 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,
(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 prior to the end of Fiscal Year 2003 to
exceed 65%, and at any time after the end of Fiscal Year 2003 to
exceed 60%, of the sum of Consolidated Funded Indebtedness and
Consolidated Tangible Net Worth. For the purposes of this Section
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8.6(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 any
of the Financing Subsidiaries at any time in an aggregate amount
not to exceed $20,000,000 and (iii) other Current Indebtedness if
the aggregate principal amount of the Current Indebtedness under
this clause (iii) would not exceed $40,000,000.
(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 8.6(f)(iv).
(d) Fixed Charge Coverage. The Company will not permit
as of the end of any Fiscal Quarter the ratio of (i) Consolidated
Income Available for Fixed Charges to (ii) Fixed Charges to be less
than 1.80 to 1.00 for the period consisting of the consecutive four
Fiscal Quarters then ended.
(e) 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,
(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, and (v) the one-time Restricted Payments to be made by
the Company and United in connection with the Merger set forth in
Item 8.6(f) of Schedule II. 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
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Permitted Redemptions, the 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.
(f) 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.
(g) 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 $50,000,000 in the
next calendar year.
(h) 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
the Financing Subsidiaries, including, without limitation, the
Operating Line of Credit, at any time to have a maximum borrowing
limit in the aggregate greater than $200,000,000.
(i) Restricted Investments. The Company will not, and
will not permit any of its Subsidiaries to, make any Investments in
any Financing Subsidiary 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 or Investments in any other Financing
Subsidiary to the extent necessary to comply with a keep-well
agreement similar to the Operating Agreement that has been approved
by the Required Noteholders; provided, however, that, in each case,
the Company assigns to the Noteholders a note evidencing such
Investment, which assignment shall secure the Notes on a pari passu
basis with any Indebtedness outstanding under the Operating Line of
Credit or similar agreement with respect to any other Financing
Subsidiary 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;
provided, however, that the Company 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 Company and its consolidated Subsidiaries would fail
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to comply with any of the other financial covenants set forth in
this Section 8.6.
(j) Mandatory Maintenance and Capital Expenditures. The
Company shall make Maintenance and Capital Expenditures for the
Property in each Fiscal Year in an amount not less than
$10,000,000.
Section 8.7. 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.
Section 8.8. 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.
SECTION 9. EVENTS OF DEFAULT
Section 9.1. 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 Sections 5.1(e), 5.1(m),
5.1(n), 7.3(b), 7.5(a), 7.7, 7.9 or 8; or
(d) except as specifically permitted by this Agreement,
the Security Agreements or the Deeds of Trust, there shall be any
Transfer of all or any part of the Property; or
(e) the Company or any of its Subsidiaries, as
applicable, defaults in the performance of or compliance with any
term contained in the Debt Documents (other than those referred to
in paragraphs (a), (b), (c) or (d) of this Section 9) and such
default is not remedied within thirty (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
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identified as a "notice of default" and to refer specifically to
this paragraph (d) of Section 9), or within ninety (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
(f) any representation or warranty made in writing by or
on behalf of the Company or any of its Subsidiaries or by any
officer of the Company or any of its Subsidiaries in this
Agreement, the other Debt Documents 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
(g) (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
(h) 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 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
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(i) 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 sixty
(60) days; or
(j) there shall be a money judgment, writ or warrant of
attachment or similar process entered or filed against the Company
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 Company and any of its Subsidiaries exceeds
in the aggregate $2,500,000; or
(k) any non-monetary judgment, order or decree shall be
rendered against the Company or any of its Subsidiaries 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
(l) any material provision of the Debt Documents, for
any reason other than the satisfaction in full of the Obligations
thereunder, shall cease to be, or shall be asserted by the Company
or any of its Subsidiaries not to be, a legal, valid and binding
obligation of the Company or its applicable Subsidiaries,
enforceable in accordance with its terms, and such occurrence has
not been cured to Required Noteholders' satisfaction within five
(5) Business Days after the Company shall have received notice of
such failure from the Collateral Agent or any Noteholder or within
thirty (30) days of when a Responsible Officer shall have become
aware thereof (whichever period is less); or
(m) 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
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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; or
(n) there shall occur any Change of Control; or
(o) if the Company 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 Company or such Subsidiary
for a period of more than sixty (60) consecutive days, which
suspension in the good faith judgment of the Noteholders would with
reasonable likelihood be expected to have a Material Adverse
Effect; or
(p) 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 Required
Noteholders.
(As used in Section 9(k), the terms "employee benefit plan" and
"employee welfare benefit plan" shall have the respective meanings
assigned to such terms in Section 3 of ERISA.)
SECTION 10. REMEDIES ON DEFAULT, ETC.
Section 10.1. Acceleration.
(a) If an Event of Default with respect to the Company
described in paragraph (h) or (i) of Section 9 (other than an Event
of Default described in clause (i) of paragraph (h) or described in
clause (vi) of paragraph (h) by virtue of the fact that such clause
encompasses clause (i) of paragraph (h)) has occurred, all the
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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),
(b), (c) or (d) of Section 9 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 10.1,
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. A final
determination of the Make-Whole Amount payable on a prepayment
pursuant to any acceleration of the Notes pursuant to this Section
10.1 shall be made by the Noteholders as of the Settlement Date.
The Company hereby acknowledges that its agreement to pay the Make-
Whole Amount if the Notes are accelerated under this Section 10.1
was separately negotiated with the Purchasers, that the economic
value of the various elements of this waiver and agreement was
discussed, that the consideration given by the Company for the
Notes was adjusted to reflect the specific waiver and agreement
negotiated between the Company and the Purchasers and contained
herein, and that this waiver is intended to comply state laws
comparable to California Civil Code Section 2954.10.
The Company's Initials_____
Section 10.2. Remedies Upon an Event of Default. Upon the
occurrence of an Event of Default hereunder and the acceleration of
the Notes pursuant to Section 10.1, the Noteholders may, at their
option, either on their own behalf or, until the Release Date,
through the Collateral Agent, and in addition to all other rights
and remedies available to the Noteholders, without further notice
to the Company, do any one or more of the following:
(a) proceed to protect and enforce the rights,
privileges and remedies granted to it by this Agreement, the Notes,
the Environmental Indemnity Agreement and, until the Release Date,
the Security Documents by such judicial proceedings as the
Noteholders shall deem necessary or appropriate, either at law, in
equity, in bankruptcy or otherwise, whether for specific
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enforcement of any covenant or agreement contained in the Notes,
this Agreement, the Environmental Indemnity Agreement and, until
the Release Date, the Security Documents or in aid of the exercise
of any right, power, privilege or remedy therein or herein granted;
(b) Until the Release Date, foreclose or otherwise
enforce the Collateral Agent's security interest in any manner
permitted by law, or provided for in this Agreement, and exercise
at any time all rights and remedies of a secured party under the
Uniform Commercial Code in effect in the states where the
respective Property is located, or for any foreclosure of the
Property provided under the Security Documents and sale under any
judgment or decree in any judicial proceeding, or to enforce any
other legal or equitable right or remedy granted or otherwise
available to the Noteholders hereunder or under the other Debt
Documents;
(c) Until the Release Date, enter onto property where
any Personal Property is located and take peaceful possession
thereof with or without judicial action;
(d) Until the Release Date, prior to the disposition of
the Property, store, process, repair or recondition it or otherwise
prepare it for disposition in any manner and to the extent the
Noteholders deem appropriate and in connection with such
preparation and disposition, without charge, use any copyright,
patent, technical process, permit, approval, license, consent or
governmental approval used or held by the Company;
(e) Until the Release Date, demand, sue for, collect or
receive any money or property at any time payable to or receivable
by the Company on account of or in exchange for any part of the
Property;
(f) Until the Release Date, secure the appointment of a
receiver in accordance with applicable law;
(g) Until the Release Date, sell, lease, or otherwise
dispose of any Property in accordance with the applicable Security
Document; and
(h) Until the Release Date, take any other action and
seek any other remedy available to a secured party under the law.
Section 10.3. Waiver of Appraisement, Valuation, etc. Until
the Release Date and to the full extent it may lawfully do so, the
Company, for itself and for any other Person who may claim through
or under it, hereby (a) agrees that neither it nor any such Person
will set up, plead, claim or in any manner whatsoever take
advantage of, any appraisal, valuation, stay, moratorium, extension
or redemption laws, now or hereafter in force, or any rights of
marshalling in the event of any sale of the Property or any part
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thereof or any interest therein, (b) waives all benefit or
advantage of any such laws and waives and releases any and all such
rights and covenants not to hinder, delay or impede the exercise of
any right or remedy permitted herein, in the Security Agreements or
in the Deeds of Trust but to suffer and permit every such right or
remedy as though no such laws were in effect, (c) consents and
agrees that the Property may be sold by the Noteholders as an
entirety or in parts and (d) agrees that it will neither claim,
demand or otherwise be entitled to any credit against or deduction
from the principal of or Make-Whole Amount, if any, or interest on
the Notes or any other sums which may become payable under the
terms of this Agreement or any other Debt Documents by reason of
the payment of any tax, assessment or other municipal or
governmental charge or imposition on or relating to the Property or
any part thereof, nor claim or otherwise be entitled to any
deduction from the taxable or assessed value of the Property or any
part thereof by reason of this Agreement or any other Debt
Document.
Section 10.4. Waiver of Marshaling and Other Defenses. Until
the Release Date, the Company hereby (a) waives any and all rights
of marshaling and specifically agrees that in the event of
foreclosure, whether by action or advertisement, all of the
Property and all interests in the Property may, at the option of
the Noteholders, be sold together, in a single sale, and (b) agrees
that the Lien of the Security Documents as to the interests of the
Company will not be released, impaired or subordinated by any
amendment to or termination of any Debt Document, any extension of
time or waiver of right or remedy under any Debt Document, or any
other act, inaction or thing (except only a written amendment or
termination of a Debt Document signed by all parties thereto that
expressly releases, impairs or subordinates such Lien) which, but
for this provision, would so release, impair or subordinate.
Section 10.5. Rescission of Acceleration. If (a) the
outstanding principal amount of the Notes shall have become
immediately due and payable, (b) no judgment or decree for any
amounts so becoming due and payable shall have been entered, (c)
all amounts of principal, Make-Whole Amount, if any, interest which
shall have become due and payable in respect of all of the Notes
otherwise than pursuant to any acceleration shall have been paid in
full, including interest on all overdue principal, Make-Whole
Amount, if any, and (to the extent permitted by applicable law)
interest at the applicable rate or rates provided for in the Notes,
(d) the Noteholders shall have been paid an amount sufficient to
cover all costs and expenses of collection incurred by or on behalf
of the Noteholders (including, without limitation, reasonable
counsel fees and expenses), (e) all other Obligations then due and
owing shall have been paid in full, and (f) every other Event of
Default shall have been remedied or waived to the satisfaction of
the Noteholders, then the Required Noteholders may, by written
notice or notices to the Company, rescind and annul any
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acceleration of the Notes and its consequences, but no such
rescission and annulment shall extend to or affect any subsequent
Default or Event of Default or impair any right consequent thereon,
or shall require any Noteholder to repay any interest, principal or
Make-Whole Amount actually paid as a result of such acceleration.
Section 10.6. Remedies Cumulative. Each and every right,
power and remedy herein or, until the Release Date, in the Security
Documents specifically given to the Noteholders or otherwise in
this Agreement shall be cumulative and shall be in addition to
every other right, power and remedy herein or, until the Release
Date, in the Security Documents specifically given or now or
hereafter existing at law, in equity or by statute or otherwise,
and each and every right, power and remedy whether specifically
herein given or otherwise existing may be exercised from time to
time and as often and in such order as may be deemed expedient by
the Noteholders, and the exercise or the beginning of the exercise
of any right, power or remedy shall not be construed to be a waiver
of the right to exercise at the same time or thereafter any other
right, power or remedy. No delay or omission by the Noteholders in
the exercise of any right, power or remedy or in the pursuance of
any remedy shall impair any such right, power or remedy or be
construed to be a waiver of any default on the part of the Company
or to be an acquiescence therein.
Section 10.7. Discontinuance of Proceedings. Until the
Release Date, if the Noteholders shall have proceeded to enforce
any right, power or remedy under the Security Documents by
foreclosure, entry or otherwise, and such proceedings shall have
been discontinued or abandoned for any reason or shall have been
determined adversely to the Noteholders, then, and in every such
case, the Company and the Noteholders shall be restored to their
former positions and rights hereunder and under the Security
Documents with respect to the Property, and all rights, powers and
remedies of the Noteholders shall continue as if no such
proceedings had been taken.
Section 10.8. Costs and Expenses, Attorneys' Fees, etc. of
the Noteholders. The Company shall pay all reasonable costs, fees
and expenses of the Noteholders, their agents and counsel in
connection with the enforcement of their rights hereunder and under
the other Debt Documents, including, without limitation, (a) all
such reasonable costs, fees and expenses incurred in connection
with any "workout" or restructuring affecting the Debt Documents or
any bankruptcy or similar proceeding involving the Company, and (b)
the reasonable cost of any trustee's sale guaranty or other title
insurance coverage ordered in connection with any foreclosure
proceedings hereunder, and shall pay all Taxes or other
governmental charges or impositions imposed on the Noteholders by
reason of their interest in the Notes, this Agreement, the Security
Documents or the Property. The Company shall pay to the Noteholders
on demand any reasonable costs and expenses, including reasonable
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attorneys fees and expenses, paid or incurred by the Noteholders in
connection with the collection of any amount payable by the Company
to the Noteholders hereunder, whether or not any legal proceeding
is commenced hereunder and whether or not any Default or Event of
Default shall have occurred and is continuing, together with
interest thereon at the Overdue Rate from the date of payment or
incurring by the Noteholders until paid by the Company.
Section 10.9. No Waiver, etc. No failure by the Noteholders
to insist upon the strict performance of any term hereof or, until
the Release Date, under the Security Documents or any other Debt
Document, or to exercise any right, power or remedy consequent upon
a breach hereof or thereof, shall constitute a waiver of any such
term or of any such breach. No waiver of any breach shall affect or
alter this Agreement or the Security Documents which, except for
the Security Documents from and after the Release Date, shall
continue in full force and effect with respect to any other then
existing or subsequent breach. No waiver by the Noteholders of any
Default or Event of Default shall be deemed to be a waiver of any
other or similar, previous or subsequent Default or Event of
Default. By accepting payment of any amount secured by the Security
Documents after its due date, the Noteholders shall not be deemed
to waive their right either to require prompt payment when due of
all other amounts payable hereunder or, until the Release Date,
under the Security Documents or any other Debt Document or to
declare a default for failure to effect such prompt payment.
Section 10.10. Compromise of Actions, etc. Any action,
suit or proceeding brought by the Noteholders (either directly or
through the Collateral Agent) pursuant to any of the terms of this
Agreement, the Security Documents or otherwise, and any claim made
by the Noteholders hereunder or thereunder, may be compromised,
withdrawn or otherwise dealt with by the Noteholders (either
directly or through the Collateral Agent) upon notice to, but
without approval of, the Company.
Section 10.11. Right of the Noteholders to Perform the
Company's Covenants, etc. If (a) the Company shall fail to make
any payment or perform any act required to be made or performed by
the Company hereunder or under the Notes or, until the Release
Date, the Security Documents or the other Debt Documents which
failure would constitute an Default or Event of Default, or (b)
until the Release Date, any action or proceeding is commenced that
has or could have a materially adverse effect on the Noteholders'
interest in all or a portion of the Property or any part thereof,
the Noteholders (either directly or, until the Release Date,
through the Collateral Agent) with notice to, but without demand
upon, the Company, and without waiving or releasing any Obligation,
Default or Event of Default, may at any time thereafter make such
appearances or such payment or perform such act for the account and
at the expense of the Company, and, until the Release Date, may
enter upon the Property for such purpose, and take all such action
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thereon as, in the Noteholders' opinion, may be necessary or
appropriate therefor, including, without limitation, until the
Release Date, payment, purchase, contest or compromise of any Lien
that in the judgment of the Noteholders appears to be prior or
superior to the Lien of the Security Documents. Until the Release
Date, no such entry and no such action shall be deemed an eviction
of any lessee of the Property or any part thereof. All sums so paid
by the Noteholders and all reasonable costs and expenses,
(including, without limitation, reasonable attorneys' fees and
expenses) so incurred, together with interest thereon at the
Overdue Rate from the date of payment or incurring, shall, until
the Release Date, constitute additional Obligations secured by the
Security Documents and shall be paid by the Company to the
Noteholders on demand.
SECTION 11. REGISTRATION; EXCHANGE; SUBSTITUTION OF NOTES
Section 11.1. 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.
Section 11.2. 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 A. Each such new Note
shall be dated and bear interest from the date to which interest
shall have been paid on the 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
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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 4.2.
Section 11.3. 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.
Section 11.4. Effect of Transfer or Exchange. All Notes
issued upon any registration of transfer or exchange of Notes shall
be the valid obligations of the Company evidencing the same
respective obligations, and entitled to the same security and
benefits under the Security Documents, as the Notes surrendered
upon such registration of transfer or exchange. The Company shall
not be required to register the transfer of or exchange any
surrendered Note as above provided during the ten-day period
preceding the due date of any payment of principal of or interest
on such Note.
SECTION 12. PAYMENTS ON NOTES
Section 12.1. Place of Payment. Subject to Section 12.2,
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.
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Section 12.2. Home Office Payment. So long as you or your
nominee shall be the holder of any Note, and notwithstanding
anything contained in Section 12.1 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 I, 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 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 12.1. 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 11.2. The Company will
afford the benefits of this Section 12 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
12.2.
Section 12.3. 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.
Section 12.4. 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
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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 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.
SECTION 13. EXPENSES; INDEMNITY
Section 13.1. 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).
Section 13.2. 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 1.3 to exchange the Prior Notes for the
Tranche A Notes and to purchase the Tranche B Notes), the Closing
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does not occur as scheduled under Section 1.3, 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 1.3, 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 13 shall survive the payment or
prepayment of the Notes and the termination of this Agreement.
Section 13.3. Survival. The obligations of the Company under
this Section 13 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.
SECTION 14. 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 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.
SECTION 15. AMENDMENT AND WAIVER
Section 15.1. 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 or 19 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 10 relating to acceleration or rescission and Section 1
relating to modifications of the interest rates on the Notes upon
satisfaction of the conditions set forth in Section 1.8, change the
amount or time of any prepayment or payment of principal of, or
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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 6, 9(a), 9(b), 10, 12.3,
12.4, 15 or 18.
Section 15.2. 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 15 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 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.
Section 15.3. Binding Effect, etc. Any amendment or waiver
consented to as provided in this Section 15 applies equally to all
holders of Notes and is binding upon them and upon each future
holder of any Note 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.
Section 15.4. 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
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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.
SECTION 16. NOTICES
All notices and communications provided for hereunder or
under any Subsidiary Guaranty 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:
(a) if to you or your nominee, to you or it at the
address specified for such communications in Schedule I, or at such
other address as you or it shall have specified to the Company in
writing,
(b) 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,
(c) 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 Noteholders in writing; or
(d) if to any Subsidiary Guarantor, to such Subsidiary
Guarantor at its address set forth on Schedule III, or at such
other address as such Subsidiary Guarantor shall have specified to
the Noteholders in writing.
Notices under this Section 16 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.
SECTION 17. 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 by you at the Closing (except the Notes themselves), and
(c) financial statements, certificates and other information
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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 17 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.
SECTION 18. CONFIDENTIAL INFORMATION
For the purposes of this Section 18, "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 5.1 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 18, (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 18), (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 18), (vi) any federal or state regulatory authority
having jurisdiction over you, (vii) the National Association of
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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 be bound by
and to be entitled to the benefits of this Section 18 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 18.
SECTION 19. 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 4. Upon
receipt of such notice, wherever the word "you" is used in this
Agreement (other than in this Section 19), 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 19), 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.
SECTION 20. INTERPRETATION OF AGREEMENT
Section 20.1. Definitions. Except as the context shall
otherwise require, the terms in the Glossary attached hereto shall
have the meanings set forth therein for all purposes of this
Agreement.
Section 20.2. Directly or Indirectly. Any provision in this
Agreement referring to action to be taken by any Person, or that
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such Person is prohibited from taking, shall be applicable whether
such action is taken directly or indirectly by such Person.
Section 20.3. Accounting Terms. All accounting terms used
herein that are not otherwise expressly defined shall have the
respective meanings given to them in accordance with GAAP at the
particular time.
Section 20.4. Independence of Covenants. Each covenant made
by the Company herein is independent of each other covenant so
made. The fact that the operation of any such covenant permits a
particular action to be taken or condition to exist does not mean
that such action or condition is not prohibited, restricted or
conditioned by the operation of the provisions of any other
covenant herein.
Section 20.5. Headings. The headings of the Sections and
other subdivisions of this Agreement have been inserted for
convenience of reference only and shall not be deemed to constitute
a part thereof.
SECTION 21. MISCELLANEOUS
Section 21.1. 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.
Section 21.2. 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.
Section 21.3. 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.
Section 21.4. Severability. Any provision of this Agreement
that is prohibited or unenforceable in any jurisdiction shall, as
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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.
Section 21.5. 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.
Section 21.6. 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.
Section 21.7. Additional Security. Without notice to or
consent of the Company, and without impairment of the Lien and
rights created by the Security Documents, the Noteholders may
accept from the Company or from any other Person additional
security for the obligations secured hereby. Neither the execution
of the Security Documents nor the acceptance of any such additional
security shall prevent the Noteholders from resorting first to such
additional security, or first to the security created by the
Security Documents, or concurrently, to both, in any case without
affecting the Noteholders' Lien and rights under the Security
Documents.
Section 21.8. Integration. This Agreement together with all
exhibits and schedules hereto, the Security Documents, the Notes
and the other Debt Documents constitute the entire agreement among
the parties hereto pertaining to the subject matter hereof and
supersedes all prior agreements, understandings, negotiations and
discussions, whether oral or written, of the parties.
Section 21.9. 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 LAWS OF THE
STATE OF CALIFORNIA, WITHOUT REGARD TO CONFLICTS OF LAWS
PRINCIPLES. THIS AGREEMENT HAS BEEN NEGOTIATED WITH REFERENCE TO
THE LAWS OF, AND IS BEING MADE AND DELIVERED IN, THE STATE OF
CALIFORNIA.
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Section 21.10. 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 A COURT OF
RECORD IN THE STATE OF CALIFORNIA OR IN THE COURTS OF THE UNITED
STATES OF AMERICA LOCATED IN SUCH STATE. 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;
(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 16;
(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; AND
(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.
Section 21.11. 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 21.11 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.
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If the foregoing is satisfactory to you, please sign the
form of acceptance on the enclosed counterparts hereof and return
the same to the Company, whereupon this Agreement, as so accepted,
shall become a binding contract among you and each of the
undersigned.
Very truly yours,
UNIFIED WESTERN GROCERS, INC.,
a California corporation
By: /s/ David A. Woodward
---------------------------------
David A. Woodward
Treasurer
[Signatures of Purchasers follow on separate pages]
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[Signature page to Agreement for John Hancock Mutual Life
Insurance Company]
JOHN HANCOCK MUTUAL LIFE INSURANCE COMPANY
By: /s/ Dwayne Bertrand
-------------------------------
Dwayne Bertrand
Investment Officer
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[Signature page to Agreement for John Hancock Variable Life
Insurance Company]
JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY
By: /s/ Dwayne Bertrand
-------------------------------
Dwayne Bertrand
Authorized Signatory
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[Signature page to Agreement for Signature 3 Limited]
SIGNATURE 3 LIMITED
By: John Hancock Mutual Life Insurance Company,
as Portfolio Advisor
By: /s/ Dwayne Bertrand
-------------------------
Dwayne Bertrand
Investment Officer
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[Signature page to Agreement for Mellon Bank, N.A., as Trustee
under The Long-Term Investment Trust]
MELLON BANK, N.A., solely in its
capacity as Trustee for The Long-Term
Investment Trust (as directed by John
Hancock Mutual Life Insurance Company),
and not in its individual capacity
By: /s/ Bernadette Rist
-----------------------------------
Bernadette Rist
Authorized Signatory
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<PAGE>
[Signature page to Agreement for The Northern Trust Company, as
Trustee of the Lucent Technologies Inc. Master Pension Trust]
THE NORTHERN TRUST COMPANY,
as Trustee of the Lucent Technologies, Inc.
Master Pension Trust
By: John Hancock Mutual Life Insurance Company,
as Investment Manager
By: /s/ Dwayne Bertrand
----------------------------------
Dwayne Bertrand
Investment Officer
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<PAGE>
[Signature page to Agreement for Mellon Bank, N.A., as Trustee
under the Bell Atlantic Master Pension Trust]
MELLON BANK, N.A., solely in its
capacity as Trustee for the Bell Atlantic
Master Pension Trust (as directed by John
Hancock Mutual Life Insurance Company),
and not in its individual capacity
By: /s/ Bernadette Rist
-----------------------------------
Bernadette Rist
Authorized Signatory
Page 135 of 287
<PAGE>
[Signature page to Agreement for Commonwealth of Pennsylvania
State Employees' Retirement System]
COMMONWEALTH OF PENNSYLVANIA
STATE EMPLOYES' RETIREMENT SYSTEM
By: John Hancock Mutual Life Insurance
Company, its Investment Advisor
By: /s/ Dwayne Bertrand
------------------------------
Dwayne Bertrand
Investment Officer
Page 136 of 287
<PAGE>
[Signature page to Agreement for John Hancock Reassurance Company
Ltd.]
JOHN HANCOCK REASSURANCE COMPANY LTD.
By: /s/ Dwayne Bertrand
--------------------------------
Dwayne Bertrand
Authorized Signatory
Page 137 of 287
<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 and shall be deemed to
include United as of the Closing Date notwithstanding that the
Merger shall not become effective until immediately after the
Closing.
"Applicable Law" has the meaning set forth in Section
4.7 of the Deeds of Trust.
"Business Day" means (a) for the purposes of Section 6.6
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
Page 138 of 287
<PAGE>
which commercial banks in Los Angeles, California, or New York, New
York, are required or authorized to be closed.
"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, 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.
"Change of Control" means the occurrence after the
Closing Date of: (i) any 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), directly or indirectly, of securities
of the Company (or other securities convertible into such
securities) representing greater than forty percent (40.0%) of
the combined voting power of all securities of the Company
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 Company (or other
securities convertible into such securities) representing greater
than forty percent (40.0%) of the combined voting power of all
securities of the Company entitled to vote in the election of
directors.
"Closing" is defined in Section 1.3 of this Agreement.
"Closing Date" means the date of the Closing.
"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.
"Collateral Agency Agreement" means the Collateral
Agency Agreement dated as of the date hereof among the
Noteholders and the Collateral Agent, substantially in the form
of Exhibit F to this Agreement.
Page 139 of 287
<PAGE>
"Collateral Agent" means John Hancock Mutual Life
Insurance Company, as collateral agent for itself and the other
Noteholders under the Collateral Agency Agreement.
"Company" means Unified Western Grocers, Inc. (formerly
known as Certified Grocers of California, Ltd.), a California
corporation.
"Confidential Information" is defined in Section 18 of
this Agreement.
"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 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 (a) all amounts deducted in the computation
thereof on account of (i) all depreciation and amortization
allowances and other non-cash expenses, (ii) Interest Charges,
(iii) all extraordinary and/or non-recurring expenses incurred in
connection with the Merger ("Merger Expenses"), including (A) any
prepayment premiums or penalties associated with the prepayment of
Indebtedness in connection therewith, (B) any severance payments to
employees related thereto, (C) any costs in connection with closure
or re-design of facilities related thereto, (D) all transactional
costs of the Company and United in connection therewith, and
(E) any other reasonable transitional costs related thereto;
provided, however, that the Merger Expenses shall not exceed
$20,600,000, and (iv) taxes imposed on or measured by income or
excess profits and (b) 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
Page 140 of 287
<PAGE>
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.
"Consolidated Net Tangible Assets" means the Tangible
Assets less the Current Indebtedness of the Company and its
Subsidiaries.
"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; plus
(h) the value of goodwill associated with the
consolidation of Sav Max in an amount not to exceed $25,000,000.
"Current Indebtedness" mean, with respect to any Person,
all Indebtedness of such Person which by its terms or by the terms
Page 141 of 287
<PAGE>
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.
"Debt Documents" means collectively, the Notes, the Note
Purchase Agreement, the Deeds of Trust, the Security Agreements,
the Collateral Agency Agreement, the Environmental Indemnity
Agreement, the Subsidiary Guaranties and all other instruments,
agreements and documents executed in connection with the foregoing.
"Deeds of Trust" means collectively the Unified Deeds
of Trust and the United Deed of Trust.
"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.
"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.
Page 142 of 287
<PAGE>
"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.
"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.
"Environmental Indemnity Agreement" means the
Environmental Indemnity Agreement dated as of the date hereof
from the Company and United to the Noteholders substantially in
the form of Exhibit E to this Agreement.
"Environmental Laws" has the meaning set forth in the
Environmental Indemnity Agreement.
"ERISA" means the Employee Retirement Income Security Act
of 1974, as amended from time to time. Reference to a specific
section of 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 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
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<PAGE>
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 9.1 of this
Agreement.
"Exchange Act" means the Securities Exchange Act of
1934, as amended from time to time.
"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).
"Financial Statements" has the meaning set forth in
Section 3.5 of this Agreement.
"Fiscal Quarter" means a fiscal quarter of the Company,
as the same may be adjusted from time to time to coincide with
changes in the Company's Fiscal Year.
"Fiscal Year" means (a) the Fiscal Year of the Company
consisting of a 52 week fiscal period ending August 28, 1999, (b)
the Fiscal Year of the Company consisting of a 57 week fiscal
period ending on September 30, 2000, and (c) the Fiscal Years of
the Company thereafter consisting of a 52 or 53 week fiscal
period ending on the Saturday nearest to September 30.
"Financing Statements" means the UCC-1 financing
statements and fixture filings duly executed by the Company and
each Subsidiary Guarantor, as the case may be, as debtor, in
favor of the Collateral Agent, for the benefit of itself and the
other Noteholders, as secured party, and caused to be filed
concurrently with the Closing, in the jurisdictions requested by
the Collateral Agent.
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<PAGE>
"Financial Subsidiaries" means (a) GCC and its
Subsidiaries and (b) United Resources, Inc. and its Subsidiaries.
"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
(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 any Financing Subsidiary, and (iii) any
Guaranty by any Financing Subsidiary of Funded Indebtedness of any
Person that is not an Affiliate of the Company.
"GAAP" means, as of the date of any determination with
respect thereto, generally accepted accounting principles as used
by the Financial Accounting Standards Board and/or the American
Institute of Certified Public Accountants, consistently applied and
maintained throughout the periods indicated.
"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
Page 145 of 287
<PAGE>
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.
"Hazardous Material" has the meaning set forth in the
Environmental Indemnity Agreement.
"Hereof", "herein", "hereunder" and other words of
similar import shall be construed to refer to the agreement as a
whole in which such terms and other words are contained and not
to any particular Section or other subdivision.
"Improvements" has the meaning as defined in the Deeds
of Trust with respect to the Property covered by the Deeds of
Trust.
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<PAGE>
"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 8.6(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.
"Indebtedness for Money Borrowed," with respect to any
Person, means and includes the aggregate amount of, without
duplication: (a) all obligations of such Person for borrowed
money; (b) all obligations of such Person evidenced by bonds,
debentures, notes, or other similar instruments, and all
reimbursement or other obligations of such Person in respect of
letters of credit or banker's acceptances; (c) all obligations of
such Person to pay the deferred purchase price of assets or
services; (d) all Capitalized Lease Obligations of such Person;
(e) all obligations or liabilities of others secured by a Lien on
any asset owned by such Person, irrespective of whether such
obligation or liability is assumed, to the extent of the lesser
of such obligation or liability or the fair market value of such
asset; and (f) any Guarantees of such Person of any Indebtedness
for Money Borrowed of another Person.
"Institutional Investor" means (a) any original purchaser
of a Note, (b) any holder of a Note holding more than 5% of the
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<PAGE>
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.
"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.
"knowledge" means actual knowledge and any knowledge that
could have been discovered after Due Inquiry.
"Lien" means any interest in property securing an
obligation owed to, or a claim by, any Person other than the
owner of the property, whether such interest shall be based on
the common law, civil law, statute, civil code or contract,
whether or not such interest shall be recorded or perfected and
whether or not such interest shall be contingent upon the
occurrence of some future event or events or the existence of
some future circumstance or circumstances, and including the
lien, privilege, security interest or other encumbrance arising
from a mortgage, deed of trust, hypothecation, cession, transfer,
assignment, pledge, adverse claim or charge, conditional sale or
trust receipt, or from a lease, consignment or bailment for
security purposes. "Lien" shall also include reservations,
exceptions, encroachments, easements, rights-of-way, covenants,
conditions, restrictions, leases and other title exceptions and
encumbrances affecting property. A Person shall be deemed to be
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<PAGE>
the owner of any property that such Person has acquired or shall
hold subject to a conditional sale agreement or other arrangement
(including a leasing arrangement) pursuant to which title to the
property has been retained by or vested in some other Person for
security purposes.
"Local Government" means a municipal or county
government.
"Maintenance and Capital Expenditures" means all
expenditures for the maintenance, improvement or acquisition of
fixed or capital assets whether such expenditures are expenses or
capitalized under GAAP.
"Make-Whole Amount" is defined in Section 6.6.
"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, the Notes and the other Debt
Documents, or (c) the validity or enforceability of this Agreement,
the Notes or the other Debt Documents.
"Moody's" means Moody's Investors Service, a Delaware
corporation, its successors and their assigns, or, if such
corporation shall be dissolved or liquidated or shall no longer
perform the functions of a securities rating agency, any other
nationally recognized securities rating agency approved by the
Noteholders.
"Multi-employer Plan" means any Plan that is a "multi-
employer plan" (as such term is defined in section 4001(a)(3) of
ERISA).
"NAIC" means the National Association of Insurance
Commissioners.
"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.
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<PAGE>
"Noteholder" means any Person in whose name any Note is
registered pursuant to Section 11.1 of this Agreement.
"Note Purchase Agreement" means this Agreement, dated
as of September 29, 1999, among the Company and the Purchasers
(including the annexed Exhibits and Schedules).
"Notes" has the meaning set forth in Section 1.1 of
this Agreement.
"Obligations" means:
(a) all principal of and interest and premium, if any,
due on the Notes from time to time outstanding (including,
without limitation, any Make-Whole Amount), and of all other
items payable under the Debt Documents and any modifications,
extensions or renewals thereof (including, without limitation,
(i) modifications of the required principal, interest and/or
payment dates, deferring or accelerating said payment dates in
whole or in part, and/or (ii) modifications, extensions or
renewals at a different rate of interest, whether or not any such
modification, extension or renewal is evidenced by a new or
additional promissory note or notes);
(b) payment, satisfaction, observance and performance
of all other debts, obligations, covenants, agreements, and
liabilities of the Company to the Noteholders arising out of,
connected with, or related to the Notes and the Debt Documents
and the transactions contemplated thereby (including, without
limitation, all interest, fees, charges, expenses, attorneys'
fees and accountants' fees); and
(c) with respect to each of the foregoing, whether now
existing or hereafter arising, voluntary or involuntary, whether
or not jointly owed with others, direct or indirect, absolute or
contingent, liquidated or unliquidated, and whether or not from
time to time decreased or extinguished and later increased,
created or incurred, and all amendments, revisions or renewals
thereof.
"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
Page 150 of 287
<PAGE>
facility in substitution for such Revolving Credit Agreement that
is approved in advance by the Required Noteholders, such approval
not to be unreasonably withheld, and (c) subject to Section 8.6(i),
any amendment, extension or refinancing thereof.
"Other Taxes" has the meaning set forth in Section
1.9(b) of this Agreement.
"Outstanding," with respect to any of the Notes, means,
as of the date of determination, all Notes theretofore delivered
pursuant to this Agreement, except Notes theretofore cancelled or
delivered for cancellation and Notes in exchange or replacement
for which other Notes have been delivered pursuant to this
Agreement; provided, however, that in determining whether the
holders of the requisite aggregate unpaid principal amount of
Notes outstanding have given any notice or taken any action,
Notes held or owned, directly or indirectly, by the Company or
any Affiliate of the Company shall be disregarded and deemed not
to be outstanding.
"Overdue Rate" has the meaning given to such term in
Section 1.5 of this Agreement.
"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.
"Pension Plan" means any Plan that is an "employee
pension benefit plan" (within the meaning of Section 3(2) of
ERISA).
"Permitted Encumbrances" means the Liens described in
paragraphs (d) through (f) of the definition of "Permitted
Liens."
"Permitted Funded Indebtedness" means (a) the Operating
Line of Credit extended to the Company, (b) a revolving credit
Page 151 of 287
<PAGE>
facility or other working capital credit facility extended to any
Financing Subsidiary, (c) the Guaranty by any Financing Subsidiary
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 Permitted Lien.
"Permitted Liens" means:
(a) Liens securing taxes, assessments, governmental
charges or levies, statutory Liens of landlords and Liens of
carriers, warehousemen, materialmen, mechanics and other like
Persons that are not yet due or the payment of which is not then
required by Section 8.5 of this Agreement; provided, however,
that this paragraph (a) shall not be deemed to permit any Liens
which may be imposed pursuant to Section 4068 of ERISA or Section
412(n) of the Code;
(b) Liens of or resulting from any judgment or award,
the time for the appeal or petition for rehearing of which shall
not have expired, or in respect of which the obligor shall at any
time in good faith be prosecuting an appeal or proceeding for a
review and in respect of which a stay of execution pending such
appeal or proceeding for review has been secured;
(c) Liens incurred or deposits made in the ordinary
course of business (i) in connection with workers' compensation,
unemployment insurance and other types of social security, or
(ii) to secure (or to obtain letters of credit that secure) the
performance of tenders, statutory obligations, surety and appeal
bonds, bids, leases, performance bonds, purchase, construction or
sales contracts and other similar obligations; provided, however,
that (A) any such Lien shall not be created in connection with
and shall not secure Indebtedness for Money Borrowed, (B) any
obligation secured by any such Lien shall not be overdue or, if
overdue, is being contested in good faith by appropriate actions
or proceedings during which there is no right to exercise
remedies and adequate book reserves have been established in
accordance with generally accepted accounting principles, and (C)
all such Liens, pledges and deposits shall not in the aggregate
materially impair the use or value of the properties of the
Company or any Subsidiary in the operation of its respective
businesses; and, provided further, that this clause (c) shall not
be deemed to permit any Liens which may be imposed pursuant to
Section 4068 of ERISA or Section 412(n) of the Code;
(d) (i) the current real property taxes and
assessments not yet delinquent set forth on Schedule B to the
Title Policies, and (ii) after the Closing Date, all current real
property taxes and assessments not yet delinquent or the payment
of which is not then required by Section 8.5 of this Agreement;
and
Page 152 of 287
<PAGE>
(e) (i) the encumbrances, easements or reservations,
or rights of others for rights-of-way, utilities and other
similar purposes, or zoning or other restrictions as to the use
of real property set forth on Schedule B to the Title Policies,
and (ii) if entered into or permitted by the Company in the
ordinary course of business after the Closing Date, minor
encumbrances, easements or reservations, or rights of others for
rights-of-way, utilities and other similar purposes, or zoning or
other restrictions as to the use of real property, which do not
materially affect the use or operation of the property affected
thereby or otherwise materially impair the value thereof
For purposes of Section 8.5(c), "Permitted Liens" shall
also include:
(A) Liens existing on the Closing Date and securing the
Indebtedness of the Company and its Subsidiaries referred to in
Item 8.5 of Schedule II;
(B) 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, (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, and (iii) the aggregate amount of Indebtedness secured by
such Liens does not exceed $10,000,000 at any time;
(C) Liens on any assets of any of the Financing
Subsidiaries or the Insurance Subsidiaries;
(D) purchase money Liens on any property acquired
or held by the Company 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, (iv) the aggregate amount
of Indebtedness secured by such Liens does not exceed $40,000,000
at any time, and (v) 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
Page 153 of 287
<PAGE>
(as determined in good faith by the Board of Directors of the
Company) of such property at the time of such acquisition or
construction;
(E) Liens on Current Assets in connection with the
Operating Line of Credit;
(F) any Lien renewing, extending or refunding any Lien
permitted by paragraphs (A) through (E) above, 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 or, prior to the Release Date, any
portion of the Property, and (iii) immediately after such
extension, renewal or refunding no Default or Event of Default
would exist.
"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.
"Personal Property" means collectively the Unified
Personal Property, the United Personal Property and the
Subsidiary Personal Property.
"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.
"Prior Note Purchase Agreement" means this Agreement,
dated as of March 15, 1998, among the Company and the purchasers
listed in Schedule A thereto.
"Prior Notes" means the $80,000,000 in aggregate
principal amount of Senior Notes issued under the Prior Note
Purchase Agreement.
Page 154 of 287
<PAGE>
"property" or "properties" means, unless otherwise
specifically limited, real or personal property of any kind,
tangible or intangible, choate or inchoate.
"Property" means all of the right, title and interest
of the Company and United in and to all real, personal or mixed,
tangible or intangible property pledged to the Collateral Agent
under the Security Documents, including, without limitation, the
Real Property and the Personal Property.
"Purchaser" means each Person named in Schedule I to this
Agreement.
"Purchasers' Counsel" means Orrick, Herrington &
Sutcliffe LLP.
"Rabobank Revolving Credit Agreement means that certain
Secured Revolving Credit Agreement, dated as of September 29, 1999,
among the Company, Cooperatieve Centrale Raiffeisen --
Boerenleenbank B.A. "Rabobank Nederland", New York Branch, as
Agent, and the lenders party thereto.
"Real Property" means collectively the Leased Real
Property and the Unified Real Property.
"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.
"Release Date" has the meaning set forth in Section
1.7(a) of this Agreement.
"Release Notice" has the meaning set forth in Section
1.7(a) of this Agreement.
"Report Date" has the meaning set forth in Section 3.3
of this Agreement.
"Required Noteholders" means, at any time, holders of
at least 51% in principal amount of the Notes at the time
outstanding (exclusive of Notes 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
Page 155 of 287
<PAGE>
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
(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.
"Retail Subsidiaries" means Crown Grocers, Inc. and its
Subsidiaries (including Sav Max).
"Rule 144A" means Rule 144A under the Securities Act,
as presently in effect and as hereafter amended from time to
time, or any superseding or substituted rule adopted by the
Commission from time to time.
"Sav Max" means Sav Max Foods, Inc., a California
corporation.
"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.
"Security Agreements" means collectively the Unified
Security Agreement, the United Security Agreement and the
Subsidiary Security Agreements.
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<PAGE>
"Security Documents" means collectively the Security
Agreements, the Deeds of Trust and the Collateral Agency
Agreement.
"Senior Financial Officer" means the chief financial
officer, principal accounting officer, treasurer or controller of
the Company.
"Standard & Poor's" means Standard & Poor's Ratings
Services, a division of The McGraw-Hill Companies, Inc., a New
York corporation, its successors and their assigns, or, if such
corporation shall be dissolved or liquidated or shall no longer
perform the functions of a securities rating agency, any other
nationally recognized securities rating agency approved by the
Noteholders.
"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 and shall be deemed to include United as
of the Closing Date notwithstanding that the Merger shall not
become effective until immediately after the Closing.
"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 I, and any
all amendments thereto.
"Subsidiary Guarantors" means all of the Subsidiaries of
the Company other than (a) any Financing Subsidiary, (b) the
Insurance Subsidiaries and (c) any other Subsidiary with total
assets of less than $30,000.
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<PAGE>
"Subsidiary Personal Property" means the collateral
described on Attachment 1 of the Subsidiary Security Agreement.
"Subsidiary Security Agreement" means the Security
Agreements from each Subsidiary Guarantor, as debtor, in favor of
the Collateral Agent, as secured party, each substantially in the
form of Exhibit B-3 to this Agreement.
"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.
"Tangible Assets," with respect to any Person, means,
as of the date of any determination thereof, all assets of such
Person (less depreciation, depletion, obsolescence, amortization
and all other reserves properly established in accordance with
GAAP) except (a) goodwill (whether representing the excess of
cost over book value of assets acquired or otherwise), patents,
trade names, trademarks, copyrights, franchises, research and
development expense, organization expense, unamortized debt
discount and expense, deferred assets other than prepaid
insurance, prepaid taxes and deferred taxes, the excess of cost
of shares acquired over book value of related assets and such
other assets as are properly classified as "intangible assets" in
accordance with GAAP, (b) treasury stock of such Person, (c) cash
set apart and held in any sinking fund or similar or analogous
fund for the purpose of redeeming or otherwise retiring stock of
such Person, and (d) any write-up of the book value of any assets
of such Person resulting from revaluation thereof subsequent to
August 29, 1998.
"Tranche A Maturity Date" has the meaning set forth in
Section 1.2.
"Tranche B Maturity Date" has the meaning set forth in
Section 1.2.
"Tranche A Notes" has the meaning set forth in Section
1.1.
"Tranche B Notes" has the meaning set forth in Section
1.1.
"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.
"Unified Deeds of Trust" means the Deeds of Trust and
Assignments of Rents and Fixture Filings substantially in the
forms of Exhibits C-1 and C-2 to this Agreement.
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<PAGE>
"Unified Personal Property" means the collateral
described in Section 2.2 of the Unified Security Agreement.
"Unified Real Property" means the real property
described on Schedule V to this Agreement, including all
improvements thereon, rights appurtenant thereto, and other
collateral described in Article I of the Unified Deeds of Trust.
"Unified Security Agreement" means the Security
Agreement from the Company, as debtor, in favor of the Collateral
Agent, as secured party, substantially in the form of Exhibit B-1
to this Agreement.
"United Deed of Trust" means the Deed of Trust and
Assignments of Rents and Fixture Filing substantially in the form
of Exhibit D to this Agreement.
"United Investment Notes" means Indebtedness of United in
the aggregate principal amount not to exceed $31,500,000, evidenced
by notes issued pursuant to that certain Indenture, dated as of
February 1, 1978, by and between United and United States National
Bank of Oregon, and subsequent Supplemental Indentures.
"United Personal Property" means the collateral described
in Section 2.2 of the United Security Agreement.
"United Real Property" means the real property
described on Schedule VII to this Agreement, including all
improvements thereon, rights appurtenant thereto, and other
collateral described in Article I of the United Deed of Trust.
"United Security Agreement" means the Security
Agreement from United, as debtor, in favor of the Collateral
Agent, as secured party, substantially in the form of Exhibit B-2
to this Agreement.
"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.
"Year 2000 Compliant" means the state and point in time
when the financial, business and information-processing operations,
systems and technologies of a Person accurately process date and
time data (including calculating, comparing and sequencing) from,
into, in and between the years 1999 and 2000, both when used
Page 159 of 287
<PAGE>
independently and when used in interfacing with the financial,
business and information-processing operations, systems and
technologies of other Persons.
"Year 2000 Plan" means a plan whereby (a) the Company and
each of its Subsidiaries are taking all necessary and appropriate
steps to ascertain the extent of, and to quantify and successfully
address, the business and financial risks facing the Company and
each of its Subsidiaries as a result of the Year 2000 Problem,
including risks resulting from the failure of key vendors and
customers of the Company and its Subsidiaries to successfully
address the Year 2000 Problem, (b) the Company's and its
Subsidiaries' material computer applications will, on a timely
basis, adequately address the Year 2000 Problem in all material
respects, and (c) either (i) the material computer applications of
the key vendors and customers of the Company and each of its
Subsidiaries will, on a timely basis, address the Year 2000 Problem
in all material respects, or (ii) the Company and each of its
Subsidiaries have made, with respect to any key vendor or customer
that does not provide assurances sufficient to satisfy clause (i),
other arrangements to avoid or mitigate the effect of such vendor's
or customer's noncompliance such that the Year 2000 Problem shall
not result in a Material Adverse Effect.
"Year 2000 Problem" means the inability of certain
computer applications to recognize correctly and perform date-
sensitive functions involving certain dates prior to, on and after
Page 160 of 287
<PAGE>
SCHEDULE I
To Note Purchase
Agreement
PURCHASERS OF THE NOTES
-----------------------
Names of Purchasers; Purchase Amount
Name of Purchaser Tranche A Notes Tranche B Notes
----------------- --------------- ---------------
John Hancock
Variable Life $8,500,000 $1,000,000
Insurance Company
John Hancock Mutual
Life Insurance $39,500,000 $18,000,000
Company
John Hancock Mutual
Life Insurance $13,000,000 $12,000,000
Company
John Hancock Mutual
Life Insurance $4,000,000
Company
John Hancock Mutual
Life Insurance $4,000,000 $500,000
Company
Mellon Bank, N.A.,
as Trustee for The $1,915,000 $2,000,000
Long-Term Investment
Trust
Booth & Company $4,085,000
Mellon Bank, N.A.,
as Trustee for the
Bell Atlantic Master $5,000,000
Trust
Commonwealth of
Pennsylvania State
Employes' Retirement $4,000,000
System
John Hancock $1,000,000
Reassurance Company Ltd.
Signature 3 Limited $1,500,000
Total: $80,000,000 $40,000,000
Schedule I-1
Page 161 of 287
<PAGE>
B. Notice to Agent
---------------
John Hancock Mutual Life Insurance Company
200 Clarendon Street
Boston, Massachusetts 02117
Attention: Bond and Corporate Finance Dept., T-57
Fax: (617) 572-1165
with a copy to:
John Hancock Mutual Life Insurance Company
2520 Venture Oaks Way
Suite 120
Sacramento, CA 95833
Attn: Dwayne Bertrand
Fax: (916) 922-4777
C. Schedule of Information for Payments
------------------------------------
1. All payments to any of the Purchasers other than Signature 3
Limited on account of the Notes or other obligations in
accordance with the provisions thereof shall be made by bank
wire transfer of immediately available funds, for credit, not
later than 12:00 o'clock, Chicago time, to:
Bank One, Illinois,
ABA No. 071100269
Account of: John Hancock Collection Account
Account Number: 617423884
John Hancock Mutual Life Insurance Company, Loan Number 163842
Contemporaneously with the above wire transfer, advice setting
forth:
(1) the full name, interest rate and maturity date of the
Notes or other obligations;
(2) allocation of payment between principal and interest and
any special payment; and
(3) name and address of Bank (or Trustee) from which wire
transfer was sent
This information shall be delivered or faxed and mailed to:
Service Center Manager
John Hancock Mutual Life Insurance Company
Schedule I-2
Page 162 of 287
<PAGE>
Agricultural Investment Service Center
201 Knollwood Drive, Suite A
Champaign, IL 61820-7594
Attention: Catherine Schweighart
Phone No.: (217) 356-6464
Fax: (217) 356-1031
2. All payments to Signature 3 Limited on account of the Notes or
other obligations in accordance with the provisions thereof
shall be made by bank wire transfer of immediately available
funds for credit, not later than 12 noon, Boston time, to:
Investors Bank & Trust Company
Boston, Massachusetts 02110
ABA No. 011001438
Account Number: 796509107
for further credit to Signature 3 Limited, Account 99292
On Order of: Unified Western Grocers PPN Nos. 90471* AA5 and
90471* AB3
[Full name, interest rate and maturity date of the Notes or
other obligations]
Contemporaneous with the above wire transfer, advice setting
forth:
(1) the full name, interest rate and maturity date of the
Notes or other obligations;
(2) allocation of payment between principal and interest and
any special payment; and
(3) name and address of Bank (or Trustee) from which wire
transfer was sent shall be delivered or faxed and
mailed to:
This information shall be delivered or faxed and mailed to:
John Hancock Mutual Life Insurance Company
200 Clarendon Street
Boston, MA 02117
Attention: Manager
Investment Accounting Division, B-3
Fax: (617) 572-0628
D. Notices regarding the Issuer
----------------------------
A copy of any notices relating to change in issuer's name,
address or principal place of business or location of
collateral and a copy of any legal opinions shall be delivered
or mailed to John Hancock Mutual Life Insurance Company, 200
Clarendon Street, Boston, MA 02117, Attention: Investment Law
Division, T-50. Fax: (617) 572-1165.
Schedule I-3
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<PAGE>
SCHEDULE OF INFORMATION
-----------------------
JOHN HANCOCK MUTUAL LIFE INSURANCE COMPANY
1. All notices with respect to prepayments, both scheduled and
unscheduled, whether partial or in full, and notice of
maturity shall be delivered or mailed to:
Service Center Manager
John Hancock Mutual Life Insurance Company
Agricultural Investment Service Center
201 Knollwood Drive, Suite A
Champaign, IL 61820-7594
Attention: Catherine Schweighart
Phone No.: (217) 356-6464
Fax: (217) 356-1031
with a copy to:
John Hancock Mutual Life Insurance Company
200 Clarendon Street
Boston, MA 02117
Attention: Bond & Corporate Finance Dept., T-57
Fax: (617) 572-1165
2. All other notices, communications, etc. shall be delivered or
mailed to:
John Hancock Mutual Life Insurance Company
200 Clarendon Street
Boston, MA 02117
Attention: Bond & Corporate Finance Dept., T-57
Fax: (617) 572-1165
with a copy to:
John Hancock Mutual Life Insurance Company
2520 Venture Oaks Way
Suite 120
Sacramento, CA 95833
Attn: Dwayne Bertrand
Fax: (916) 922-4777
3. All securities shall be registered in the name of: John
Hancock Mutual Life Insurance Company.
4. Tax I.D. No. 04-1414660
Schedule I-4
Page 164 of 287
<PAGE>
SCHEDULE OF INFORMATION
-----------------------
JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY
1. All notices with respect to prepayments, both scheduled and
unscheduled, whether partial or in full, and notice of
maturity shall be delivered or mailed to:
Service Center Manager
John Hancock Mutual Life Insurance Company
Agricultural Investment Service Center
201 Knollwood Drive, Suite A
Champaign, IL 61820-7594
Attention: Catherine Schweighart
Phone No.: (217) 356-6464
Fax: (217) 356-1031
with a copy to:
John Hancock Mutual Life Insurance Company
200 Clarendon Street
Boston, MA 02117
Attention: Bond & Corporate Finance Dept., T-57
Fax: (617) 572-1165
2. All other notices, communications, etc. shall be delivered or
mailed to:
John Hancock Mutual Life Insurance Company
200 Clarendon Street
Boston, MA 02117
Attention: Bond & Corporate Finance Dept., T-57
Fax: (617) 572-1165
with a copy to:
John Hancock Mutual Life Insurance Company
2520 Venture Oaks Way
Suite 120
Sacramento, CA 95833
Attn: Dwayne Bertrand
Fax: (916) 922-4777
3. All securities shall be registered in the name of: John
Hancock Variable Life Insurance Company.
4. Tax I.D. No. 04-26640167.
Schedule I-5
Page 165 of 287
<PAGE>
SCHEDULE OF INFORMATION
-----------------------
SIGNATURE 3 LIMITED
1. All notices with respect to prepayments, both scheduled and
unscheduled, whether partial or in full, and notice of
maturity shall be delivered or faxed AND mailed to:
John Hancock Mutual Life Insurance Company
200 Clarendon Street
Boston, MA 02117
Attention: Manager (Investment Accounting) Division, B-3
Fax: (617) 572-0628
2. All other notices, communications, etc. shall be delivered or
mailed to:
John Hancock Mutual Life Insurance Company
200 Clarendon Street
Boston, MA 02117
Attention: Bond and Corporate Finance Group, T-57
Fax: (617) 572-1165
with a copy to:
John Hancock Mutual Life Insurance Company
2520 Venture Oaks Way
Suite 120
Sacramento, CA 95833
Attn: Dwayne Bertrand
Fax: (916) 922-4777
3. Execution documents shall be executed as follows:
Signature 3 Limited
By: John Hancock Mutual Life Insurance Company,
as Portfolio Advisor
By:
[Authorized Officer]
4. All securities shall be registered in the name of: Hare & Co.
5. Tax I.D. No.: Not Applicable.
Schedule I-6
Page 166 of 287
<PAGE>
SCHEDULE OF INFORMATION
-----------------------
MELLON BANK, N.A., AS TRUSTEE FOR
THE LONG-TERM INVESTMENT TRUST
1. All notices with respect to prepayments, both scheduled and
unscheduled, whether partial or in full, and notice of
maturity shall be delivered or faxed AND mailed to:
Mellon Bank, N.A.
Three Mellon Bank Center, Room 153-3610
Pittsburgh, PA 15259-0001
Attention: Principal & Interest Unit
Facsimile: (412) 236-0120
2. All other notices, communications, etc. shall be delivered or
mailed to:
John Hancock Mutual Life Insurance Company
200 Clarendon Street
Boston, MA 02117
Attention: Bond and Corporate Finance Group, T-57
Fax: (617) 572-1165
with a copy to:
Mellon Bank, N.A.
One Mellon Bank Center, Room 151-1935
Pittsburgh, Pennsylvania 15258
Attention: Bernadette T. Rist
Facsimile: (412) 234-0555
3. Execution documents shall be executed as follows:
MELLON BANK, N.A., solely in its capacity as Trustee for
the Long-Term Investment Trust (as directed by John
Hancock Mutual Life Insurance Company), and not in its
individual capacity
By:
Its:
4. All securities shall be registered in the name of: MELLON BANK,
N.A., TRUSTEE UNDER THE LONG-TERM INVESTMENT TRUST DATED
October 1, 1996
5. Federal Tax Identification Number: 13-3187026
Schedule I-7
Page 167 of 287
<PAGE>
SCHEDULE OF INFORMATION
-----------------------
MELLON BANK, N.A., AS TRUSTEE FOR BELL ATLANTIC MASTER TRUST
1. All notices with respect to prepayments, both scheduled and
unscheduled, whether partial or in full, and notice of
maturity shall be delivered or faxed AND mailed to:
Mellon Bank, N.A.
Three Mellon Bank Center, Room 153-3610
Pittsburgh, PA 15259-0001
Attention: Principal & Interest Unit
Facsimile: (412) 236-0120
with a copy to:
Mellon Bank, N.A.
One Mellon Bank Center, Room 3346
Pittsburgh, Pennsylvania 15258
Attention: Fran Walton
Facsimile: (412) 236-4225
2. All other notices, communications, etc. shall be delivered or
mailed to:
John Hancock Mutual Life Insurance Company
200 Clarendon Street
Boston, Massachusetts 02117
Attention: Bond and Corporate Finance Group, T-57
Facsimile: (617) 572-1165
with a copy to:
Mellon Bank, N.A.
One Mellon Bank Center, Room 151-1935
Pittsburgh, Pennsylvania 15258
Attention: Bernadette T. Rist
Facsimile: (412) 234-0555
3. Execution documents shall be executed as follows:
MELLON BANK, N.A., solely in its capacity as Trustee for
the Bell Atlantic Master Trust (as directed by John
Hancock Mutual Life Insurance Company), and not in its
individual capacity
By:
------------------------
Its:
------------------------
Schedule I-8
Page 168 of 287
<PAGE>
4. All securities shall be registered in the name of: MELLON
BANK, N.A., TRUSTEE FOR THE BELL ATLANTIC MASTER TRUST
5. Federal Tax Identification Number: 25-1448208
Schedule I-9
Page 169 of 287
<PAGE>
SCHEDULE OF INFORMATION
-----------------------
JOHN HANCOCK REASSURANCE COMPANY LTD.
1. All notices with respect to prepayments, both scheduled and
unscheduled, whether partial or in full, and notice of
maturity shall be delivered or faxed AND mailed to:
John Hancock Mutual Life Insurance Company
200 Clarendon Street
Boston, Massachusetts 02117
Attention Manager, Investment Accounting Division, B-3
Facsimile: (617) 572-0628
and:
John Hancock Mutual Life Insurance Company
200 Clarendon Street
Boston, Massachusetts 02117
Attention: Investment Law Division, T-50
Facsimile: (617) 572-1165
2. All other notices, communications, etc. shall be delivered or
mailed to:
John Hancock Mutual Life Insurance Company
200 Clarendon Street
Boston, Massachusetts 02117
Attention: Bond and Corporate Finance Group, T-57
Facsimile: (617) 572-1165
3. Execution documents shall be executed as follows:
John Hancock Reassurance Company Ltd.
By:
[authorized officer of John Hancock Reassurance Company
Ltd.]
4. All securities shall be registered in the name of: Embassy &
Co.
5. Federal Tax Identification Number: 04-3126890
Schedule I-10
Page 170 of 287
<PAGE>
SCHEDULE OF INFORMATION
-----------------------
COMMONWEALTH OF PENNSYLVANIA
STATE EMPLOYES' RETIREMENT SYSTEM
1. All notices with respect to prepayments, both scheduled and
unscheduled, whether partial or in full, and notice of
maturity shall be delivered or faxed AND mailed to:
Mellon Bank, N.A.
Three Mellon Bank Center, Room 153-3610
Pittsburgh, PA 15259-0001
Attention: Principal & Interest Unit
Facsimile: (412) 236-0120
2. All other notices, communications, etc. shall be delivered or
mailed to:
John Hancock Mutual Life Insurance Company
200 Clarendon Street
Boston, Massachusetts 02117
Attention: Scott Hartz
Bond and Corporate Finance Group, T-57
Facsimile: (617) 572-1165
3. Execution documents shall be executed as follows:
COMMONWEALTH OF PENNSYLVANIA
STATE EMPLOYES' RETIREMENT SYSTEM
By: John Hancock Mutual Life Insurance Company,
as Investment Advisor
By:
---------------------------------
[authorized John Hancock Officer]
4. All securities shall be registered in the name of SERS & CO.
5. Federal Tax Identification Number: 23-1732438
Schedule I-11
Page 171 of 287
<PAGE>
SCHEDULE OF INFORMATION
-----------------------
THE NORTHERN TRUST COMPANY, AS TRUSTEE OF
THE LUCENT TECHNOLOGIES INC. MASTER PENSION TRUST
1. All notices with respect to prepayments, both scheduled and
unscheduled, whether partial or in full, and notice of
maturity shall be delivered or faxed AND mailed to:
The Northern Trust Company
801 South Canal Street, C-1N
Chicago, Illinois 60607
Attention Greta Johnson
Facsimile: (312) 630-1679
2. All other notices, communications, etc. shall be delivered or
mailed to:
John Hancock Mutual Life Insurance Company
200 Clarendon Street
Boston, Massachusetts 02117
Attention: Scott Hartz
Bond and Corporate Finance Group, T-57
Facsimile: (617) 572-1165
3. Execution documents shall be executed as follows:
The Northern Trust Company, as Trustee of the
Lucent Technologies Inc. Master Pension Trust
By: John Hancock Mutual Life Insurance Company,
as Investment Manager
By:
-------------------------
Its:
-------------------------
4. All securities shall be registered in the name of: Booth &
Co.
5. Federal Tax Identification Number: 22-3463644
Schedule I-12
Page 172 of 287
<PAGE>
Exhibit 10.2
------------
SECURED REVOLVING CREDIT AGREEMENT
DATED AS OF SEPTEMBER 29, 1999
BY AND AMONG
UNIFIED WESTERN GROCERS, INC.,
THE LENDERS NAMED HEREIN
And
COOPERATIEVE CENTRALE RAIFFEISEN-BOERENLEENBANK B.A.,
"RABOBANK NEDERLAND", NEW YORK BRANCH,
As Agent
Page 173 of 287
<PAGE>
TABLE OF CONTENTS
Page
SECTION 1.DEFINITIONS........................................................1
1.1 Defined Terms....................................................1
1.2 Accounting Terms................................................26
1.3 Other Terms.....................................................26
1.4 Performance; Time...............................................27
1.5 Laws............................................................27
1.6 Rounding........................................................27
1.7 Schedules and Exhibits..........................................27
SECTION 2.THE CREDIT - AMOUNT AND TERMS.....................................27
2.1 Amounts and Terms of Commitments................................27
2.1.1 Revolving Credit Facility.................................27
2.1.2 Letter of Credit Subfacility..............................30
2.2 Notes...........................................................34
2.3 Repayment of the Loans..........................................34
2.4 Payment of Interest on the Loans................................34
2.5 Procedure for the Borrowing of Loans............................35
2.6 Conversion and Continuation Elections...........................36
2.7 Voluntary Reduction in Aggregate Commitments....................37
2.8 Fees............................................................38
2.9 Calculation of Interest and Fees................................39
2.10 Payments........................................................39
2.11 Payment on Non-Business Days....................................39
2.12 Application of Payments.........................................40
2.13 Distribution of Payments........................................40
2.14 Agent's Right to Assume Funds Available for Loans...............40
i.
Page 174 of 287
<PAGE>
TABLE OF CONTENTS
(continued)
Page
2.15 Agent's Right to Assume Payments Will be Made by
the Borrower....................................................41
SECTION 3.TAXES, YIELD PROTECTION AND ILLEGALITY............................41
3.1 Taxes...........................................................41
3.2 Illegality......................................................45
3.3 Increased Costs.................................................46
3.4 Inability to Determine Rates....................................46
3.5 Prepayment of LIBOR Loans.......................................47
3.6 Capital Requirements............................................47
3.7 Certificates of Lenders.........................................48
3.8 Removal of a Lender.............................................48
SECTION 4.CONDITIONS PRECEDENT TO LOANS.....................................49
4.1 First Loan......................................................49
4.2 All Loans.......................................................54
SECTION 5.BORROWER'S REPRESENTATIONS AND WARRANTIES.........................55
5.1 Existence and Power.............................................55
5.2 Loan Documents and Notes Authorized; Binding
Obligations.....................................................55
5.3 No Conflict.....................................................55
5.4 Subsidiaries; Capital Structure.................................56
5.5 Financial Condition.............................................56
5.6 Litigation......................................................56
5.7 Consents and Approvals..........................................57
5.8 Solvency........................................................57
5.9 Employment and Labor Agreements.................................57
5.10 Agreements with Affiliates and Other Agreements.................58
ii.
Page 175 of 287
<PAGE>
TABLE OF CONTENTS
(continued)
Page
5.11 ERISA...........................................................58
5.12 Labor Matters...................................................58
5.13 Margin Regulations..............................................59
5.14 Taxes...........................................................59
5.15 Trademarks, Patents, Copyrights and Licenses....................59
5.16 No Brokers......................................................60
5.17 Full Disclosure.................................................60
5.18 Other Regulations...............................................60
5.19 Hazardous Materials.............................................61
5.20 Year 2000 Issues................................................61
5.21 Patronage Dividend Certificates.................................61
5.22 Ownership of Properties.........................................61
SECTION 6.BORROWER'S AFFIRMATIVE COVENANTS..................................61
6.1 Records and Reports.............................................61
6.2 Corporate Rights; Facilities; Conduct of Business...............65
6.3 Insurance.......................................................66
6.4 Taxes and Other Liabilities.....................................66
6.5 Inspection of Books and Records.................................67
6.6 Inspection and Audit of Collateral..............................67
6.7 Location of Collateral..........................................67
6.8 Compliance With Laws............................................67
6.9 Material Agreements.............................................68
6.10 Environmental Condition, Investigations and
Indemnification.................................................68
iii.
Page 176 of 287
<PAGE>
TABLE OF CONTENTS
(continued)
Page
6.11 Year 2000 Issues................................................68
6.12 Additional Guarantors...........................................68
6.13 Further Assurances..............................................69
SECTION 7.BORROWER'S NEGATIVE COVENANTS.....................................69
7.1 Liens; Negative Pledges.........................................69
7.2 Investments.....................................................71
7.3 Limitations on Indebtedness; Contingent
Obligations.....................................................72
7.4 Employee Loans and Executive Compensation.......................73
7.5 Restriction on Fundamental Changes..............................73
7.6 Dividends.......................................................74
7.7 Transactions with Affiliates....................................74
7.8 Maintenance of Business.........................................75
7.9 Events of Default...............................................75
7.10 ERISA...........................................................75
7.11 No Use of any Lender's Name.....................................75
7.12 Negative Pledge Clauses.........................................75
7.13 Prepayment or Modification of Indebtedness......................75
7.14 Capital Expenditures............................................76
SECTION 8.FINANCIAL COVENANTS OF BORROWER...................................76
8.1 Minimum Adjusted Tangible Net Worth.............................76
8.2 Minimum Working Capital.........................................77
8.3 Minimum Fixed Charge Coverage Ratio.............................77
8.4 Maximum Ratio of Total Funded Debt to EBITDAP...................77
iv.
Page 177 of 287
<PAGE>
TABLE OF CONTENTS
(continued)
Page
SECTION 9.EVENTS OF DEFAULT AND REMEDIES....................................77
9.1 Events of Default...............................................77
9.2 Waiver of Default...............................................80
9.3 Remedies........................................................80
9.4 Set-Off.........................................................81
9.5 Sharing of Payments.............................................81
9.6 Rights and Remedies Cumulative..................................82
SECTION 10.RELEASE OF COLLATERAL............................................82
SECTION 11.AGENT............................................................83
11.1 Appointment and Authorization...................................83
11.2 Delegation of Duties............................................83
11.3 Liability of Agent..............................................83
11.4 Reliance by Agent...............................................84
11.5 Notice of Default...............................................84
11.6 Non-Reliance....................................................85
11.7 Indemnification.................................................86
11.8 Agent in Individual Capacity....................................87
11.9 Successor Agent.................................................87
SECTION 12.AMENDMENTS AND WAIVERS; ASSIGNMENTS, PARTICIPATION, ETC..........88
12.1 Amendments and Waivers..........................................88
12.2 Assignments, Participation, Etc.................................89
SECTION 13.MISCELLANEOUS....................................................92
13.1 No Waiver by Agent or Lenders...................................92
13.2 Entire Agreement; Construction..................................92
v.
Page 178 of 287
<PAGE>
13.3 Indemnification.................................................92
13.4 Notices.........................................................93
13.5 Notification of Addresses, Lending Offices, Etc.................94
13.6 Counterparts....................................................94
13.7 Costs and Expenses..............................................94
13.8 Reliance by Lenders.............................................95
13.9 No Set-Offs by Borrower.........................................95
13.10 Successors and Assigns..........................................95
13.11 Headings........................................................95
13.12 Severability....................................................96
13.13 No Third Parties Benefited......................................96
13.14 Relationship of Parties.........................................96
13.15 Time............................................................96
13.16 Waiver of Punitive Damages......................................97
13.17 Governing Law...................................................97
13.18 Personal Jurisdiction...........................................97
13.19 Waiver of Jury Trial............................................97
vi.
Page 179 of 287
<PAGE>
INDEX OF SCHEDULES
Schedule 1.0 - Commitments
Schedule 5.1 - List of States
Schedule 5.4 - Affiliates; Capital Structure
Schedule 5.6 - Litigation
Schedule 5.7 - Required Consents
Schedule 5.9 - Employment and Labor Agreements
Schedule 5.10 - Contracts with Affiliates
Schedule 5.11 - Employee Benefit Plans
Schedule 5.15 - Trademarks, Patents and Copyrights
Schedule 6.7 - Location of Collateral
Schedule 7.1 - Existing Liens
Schedule 7.2(a)- Existing Investments
Schedule 7.3 - Existing Indebtedness
Schedule 7.7 - Transactions with Affiliates
vii.
Page 180 of 287
<PAGE>
INDEX OF EXHIBITS
Exhibit A - Form of Revolving Note
Exhibit B - Form of Security Agreement
Exhibit C - Form of Guaranty
Exhibit D - Form of Borrowing Notice
Exhibit E - Form of Compliance Certificate
Exhibit F - Form of Borrowing Base Certificate
Exhibit G - Form of Conversion/Continuation Notice
Exhibit H - Form of Non-Bank Lender Tax Certificate
Exhibit I - Form of Assignment and Acceptance
viii.
Page 181 of 287
<PAGE>
SECURED REVOLVING CREDIT AGREEMENT
THIS SECURED REVOLVING CREDIT AGREEMENT is entered into as of
September 29, 1999, by and among UNIFIED WESTERN GROCERS, INC., a
California corporation operating primarily on a cooperative basis,
formerly known as Certified Grocers of California, Ltd. (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 Two Hundred
Million Dollars ($200,000,000) 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:
"Account Debtor" means any "account debtor" as such term is
defined in Section 9105(1)(a) of the UCC.
"Accounts" means all "accounts" as such term is defined in
Section 9106 of the UCC, but only to the extent such accounts are
now owned or hereafter received or acquired by or belonging or
owing to the Borrower or any Guarantor and arise out of goods sold
or services rendered by the Borrower or such Guarantor, as the case
may be, in the ordinary course of business.
"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
1.
Page 182 of 287
<PAGE>
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 value of goodwill
associated with the consolidation of Sav Max in an amount not to
exceed $25,000,000, plus (c) the aggregate value of Patron Required
Deposits then on deposit, plus (d) the aggregate book value of the
principal amount of all Patronage Dividend Certificates that are
first payable after the Maturity Date, minus (e) the aggregate
value of all intangible assets of the Borrower and its
Subsidiaries.
"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.
2.
Page 183 of 287
<PAGE>
"Aggregate Commitments" means the combined Commitments of the
Lenders in the aggregate principal amount of Two Hundred Million
Dollars ($200,000,000), as such may be reduced from time to time
pursuant to this Agreement.
"Agreement" means this Secured 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:
===============================================================================
Commitment Fee for
Leverage Ratio Revolving Loans
- --------------------------------------------------------------------------------
Greater than 4.00:1.00 0.30%
- --------------------------------------------------------------------------------
Greater than 3.00:1.00, but less than or equal to 4.00:1.00 0.25%
- --------------------------------------------------------------------------------
Greater than 2.50:1.00, but less than or equal to 3.00:1.00 0.20%
- --------------------------------------------------------------------------------
Less than or equal to 2.50:1.00 0.15%
===============================================================================
From the Closing Date to the day that is forty-five (45) days after
the last day of the Fiscal Quarter ending on or about the last day
of December 1999, the Applicable Margin shall be 0.30%.
Upon each Adjustment Date (after the day that is forty-five (45)
days after the last day of the Fiscal Quarter ending on or about
the last day of December 1999), 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:
3.
Page 184 of 287
<PAGE>
================================================================================
Leverage Ratio Applicable Margin
- --------------------------------------------------------------------------------
Greater than 4.00:1.00 2.00%
- --------------------------------------------------------------------------------
Greater than 3.00:1.00, but less than or equal to 4.00:1.00 1.75%
- --------------------------------------------------------------------------------
Greater than 2.50:1.00, but less than or equal to 3.00:1.00 1.50%
- --------------------------------------------------------------------------------
Less than or equal to 2.50:1.00 1.25%
================================================================================
From the Closing Date to the day that is forty-five (45) days after
the last day of the Fiscal Quarter ending on or about the last day
of December 1999, the Applicable Margin shall be 2.00%.
Upon each Adjustment Date (after the day that is forty-five (45)
days after the last day of the Fiscal Quarter ending on or about
the last day of December 1999), 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 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
4.
Page 185 of 287
<PAGE>
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, 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.
5.
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"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 Base" means an amount equal to the sum of (a)
eighty-five percent (85%) of the value of the Eligible Accounts
plus (b) sixty-five percent (65%) of the value of the Eligible
Inventory as set forth in the most recent Borrowing Base
Certificate.
"Borrowing Base Certificate" means a certificate signed by the
chief financial officer or treasurer of the Borrower, substantially
in the form set forth in EXHIBIT F, completed with appropriate
insertions.
"Borrowing Notice" means a notice given by the Borrower to the
Agent in accordance with Section 2.5, substantially in the form of
EXHIBIT D.
"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
6.
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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 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 forty
percent (40.0%) 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 forty percent (40.0%) 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.
"Collateral" means all Accounts and Inventory and interests in
Accounts and Inventory, and all proceeds thereof, including the
Accounts and Inventory covered by the Security Documents, now
existing or hereafter acquired by the Borrower or the Guarantors,
that may at any time be or become subject to a Lien granted or
created in favor of the Agent, for the benefit of the Lenders, to
secure the full and complete payment and performance of the
7.
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Borrower's Obligations under this Agreement and under the other
Loan Documents and the Guarantors' obligations under the
Guaranties; provided, however, that accounts (as defined in Section
9106 of the UCC) that constitute proceeds (as defined in Section
9306(1) of the UCC) of the John Hancock Collateral shall not
constitute Collateral.
"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
E, 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 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
8.
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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 G, with appropriate insertions.
"Crown Grocers" means Crown Grocers, Inc., a California
corporation, and one hundred percent (100%) Subsidiary of the
Borrower.
"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,
provided that the present value shall be calculated by 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) all non-recurring
charges incurred in connection with the Merger in an aggregate
amount not to exceed $20,600,000, including (i) any prepayment
premiums or penalties associated with the payment of Indebtedness
in connection therewith, (ii) any severance payments to employees
related thereto, (iii) any costs in connection with closure or re-
design of facilities related thereto, (iv) all transactional costs
9.
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of the Borrower and United Grocers in connection therewith, and (v)
any other transitional costs related thereto, each as measured for
such period.
"Eligible Accounts" means Accounts subject to the Agent's
perfected first priority security interest and no other Lien except
a Permitted Lien (other than a Permitted Lien described in
Section 7.1(c) or (d)), and evidenced by an invoice or other
documentary evidence satisfactory to the Agent. Notwithstanding
the foregoing, an Account shall not be an Eligible Account if:
(a) the Account arises out of a sale made by the Borrower to
a Subsidiary or an Affiliate of the Borrower or to a Person
controlled by an Affiliate of any of them; or
(b) the Account remains unpaid more than twenty-nine days
after the original due date; or
(c) the Account Debtor in respect of such Account is also a
creditor or supplier of the Borrower or any Subsidiary, has
disputed liability with respect to such Account, or has made any
claim with respect to any other Account due from such Account
Debtor to the Borrower or any Subsidiary, or the Account otherwise
is or may become subject to any right of setoff by the Account
Debtor; or
(d) the Account Debtor in respect of such Account has
commenced a voluntary Insolvency Proceeding or a decree or order
for relief has been entered by a court having jurisdiction in the
premises in respect of the Account Debtor in an involuntary
Insolvency Proceeding or any other Insolvency Proceeding has been
filed against the Account Debtor, or if the Account Debtor has
failed, suspended business, ceased to be Solvent, or consented to
or suffered a receiver, trustee, liquidator or custodian to be
appointed for it or for all or a significant portion of its assets
or affairs, or the Agent otherwise believes, in its sole judgment,
that collection of such Account is insecure or that payment thereof
is doubtful or will be delayed by reason of the Account Debtor's
financial condition; or
(e) the Account arises from a sale to an Account Debtor
outside the United States, other than Puerto Rico, the U.S. Virgin
Islands and the Territory of Guam, unless the sale is on letter of
credit, guaranty, credit insurance or acceptance terms, in each
case acceptable to the Agent in its sole discretion; or
(f) the Account Debtor in respect of such Account is the
United States of America, or any state, or any department, agency,
instrumentality or subdivision thereof, unless the Borrower assigns
its right to payment of such Account to the Agent, in form and
10.
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substance satisfactory to the Agent, so as to comply with the
Assignment of Claims Act, as amended (31 U.S.C. Section 3727 et
seq.), or the comparable state statute, as the case may be; or
(g) the goods giving rise to such Account have not been
delivered to and accepted by the Account Debtor, or the services
giving rise to such Account have not been performed by the Borrower
or any Guarantor and accepted by the Account Debtor, or the Account
otherwise does not represent a final sale; or
(h) the Borrower or any Guarantor has made any agreement with
the Account Debtor for any deduction therefrom, except for
discounts or allowances which are made in the ordinary course of
business for prompt payment and which discounts or allowances are
reflected in the calculation of the Borrowing Base; or
(i) for any Account Debtor whose Accounts comprise ten
percent (10%) or more of the Borrower and the Guarantors' aggregate
Accounts, the value of Accounts of such Account Debtor in excess of
said ten percent (10%);
(j) in the event twenty-five percent (25%) or more of the
Accounts of any of the ten (10) Account Debtors with the greatest
aggregate value of Accounts shall be deemed ineligible under clause
(b), above, all Accounts of such Account Debtor;
(k) the amount of any discount that has been applied to any
Accounts under the Borrower's internal volume discount programs to
members, and the amount of any funds received by the Borrower or
any Guarantor under any manufacturer promotional program that has
yet to be applied to any Accounts;
(l) all Accounts in which an employee of the Borrower or any
Subsidiary is the Account Debtor;
(m) in the event a patron makes cash deposits in excess of
the applicable Patron Required Deposit, the aggregate value of
Accounts of such patron shall be reduced by the amount of such
excess deposits; and
(n) the Agent in its reasonable discretion shall deem such
Account not to qualify as an Eligible Account.
"Eligible Assignee" means (a) a commercial bank organized
under the laws of the United 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;
11.
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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.
"Eligible Inventory" means such Inventory of the Borrower or
any Guarantor which the Agent, in the exercise of its reasonable
credit judgment, deems to be Eligible Inventory. Without limiting
the generality of the foregoing, no Inventory shall be Eligible
Inventory unless, in the Agent's opinion, it (a) is not perishable,
provided that fresh meat, fresh produce and fresh dairy products
shall be considered perishable, and frozen foods and delicatessen
foods shall be considered not perishable for purposes hereof;
(b) is in good, new (including unused returned goods) and saleable
condition; (c) is not obsolete or unmerchantable, (d) meets all
standards imposed by any Governmental Authority; (e) is at all
times subject to the Agent's duly perfected, first priority
security interest and no other Lien except a Permitted Lien (other
than a Permitted Lien described in Section 7.1(c) or (d)); and (f)
is situated at a location in compliance with Section 6.7 hereof.
Without limiting the generality of the foregoing, (i) any Inventory
located at any premises where it is held on consignment or may be
subject to a warehouseman's or other bailee's lien and (1) the
consignor shall not have timely complied with Section 9114 of the
UCC as to such Inventory and (2) the Agent shall not have received
written acknowledgment from such consignee, warehouseman or bailee
of the Agent's prior Lien, shall not constitute Eligible Inventory,
(ii) any foreign Inventory, cigarette stamp Inventory, consigned
Inventory, and any Inventory that constitutes computers, store
equipment and packaging supplies, shall not constitute Eligible
Inventory, (iii) any Inventory of the Retail Subsidiaries shall not
constitute Eligible Inventory, and (iv) any deferred gains and
member price discounts shall be deducted from the value of Eligible
Inventory.
"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.
12.
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"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.
"Excess Capital Expenditure Availability" has the meaning set
forth in Section 7.14 below.
"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.
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"Financing Statements" means the UCC-1 financing statements
and fixture filings duly executed by the Borrower and each
Guarantor, as the case may be, as debtor, in favor of the Agent,
for the benefit of itself and the Lenders, as secured party, and
caused to be filed concurrently with the Closing, or such later
date pursuant to Section 6.13 hereof, in the jurisdictions
requested by the Agent.
"Financing Subsidiaries" means (a) Grocers Capital Company and
its Subsidiaries and (b) United Resources, Inc. and its
Subsidiaries.
"Fiscal Quarter" means each fiscal quarter of the Borrower
ending on or about the last day of each December, March, June and
September, as may be adjusted from time to time to coincide with
changes in the Borrower's Fiscal Year.
"Fiscal Year" means (a) the Fiscal Year of the Borrower
consisting of a fifty-two (52) week fiscal period ending August 28,
1999, (b) the Fiscal Year of the Borrower consisting of a fifty-
seven (57) week fiscal period ending on September 30, 2000, and (c)
the Fiscal Years of the Borrower thereafter consisting of a fifty-
two (52) or fifty-three (53) week fiscal period ending on the
Saturday nearest September 30 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.
14.
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"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) the
Financing Subsidiaries, (b) the Insurance Subsidiaries, and (c) any
other Subsidiaries with total assets of not greater than $30,000.
"Guaranty" when used in the singular and "Guaranties" when
used in the plural means any and all guaranties dated as of even
date herewith, or such later date pursuant to Section 6.13 hereof,
executed by each of the Guarantors in favor of the Agent and the
Lenders, substantially in the form of EXHIBIT C, 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.
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"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 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
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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.
"Inventory" means any "inventory" as such term is defined in
Section 9109(4) of the UCC, now or hereafter owned or acquired by
the Borrower or any Guarantor and, in any event, shall include all
inventory, merchandise, goods and other personal property which are
held by or on account of the Borrower or any Guarantor for sale or
lease or are furnished or are to be furnished under a contract of
service, and all finished goods.
"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. Section 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 Agreement" means the Note Purchase Agreement
dated as of September 29, 1999, among the Borrower, John Hancock
Mutual Life Insurance Company and certain other Persons.
"John Hancock Collateral" means Property of the Borrower and
the Guarantors other than the Collateral that may at any time be or
become subject to a Lien granted or created to secure the payment
and performance of the John Hancock Debt.
"John Hancock Debt" means the Indebtedness of the Borrower in
an aggregate principal amount not to exceed $120,000,000, evidenced
by Senior Secured Notes due April 1, 2008, and Senior Secured Notes
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due October 1, 2009, issued pursuant to the John Hancock Agreement,
which, among other things, (a) provides that Tranche B thereof has
no principal or sinking fund payments due and payable prior to the
tenth anniversary of the Closing Date, (b) is secured only by Liens
in the John Hancock Collateral, and (c) contains covenants and
events of default no more onerous on the Borrower and the
Guarantors than those set forth in the draft of the John Hancock
Agreement delivered to the Agent prior to the date hereof.
"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 Twenty
Million Dollars ($20,000,000), 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.
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"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 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, the Security Documents, 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
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the Agent or any Lender to enforce any of its legal remedies
pursuant to the Loan Documents.
"Maturity Date" means September 29, 2004, or, if such date is
not a Business Day, the next preceding Business Day.
"Merger" means the merger of a wholly-owned Subsidiary of the
Borrower with and into United Grocers.
"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 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.
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"Overadvance" has the meaning set forth in Section 2.1.1(d).
"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 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.
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"Public Utility Holding Company Act" means the Public Utility
Holding Company Act of 1935, as amended (15 U.S.C. Section 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 T, U and X" means, collectively, Regulations T,
U and X adopted by the Federal Reserve Board (12 C.F.R. Parts 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 (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.
"Retail Subsidiaries" means Crown Grocers and its Subsidiaries
(including Sav Max).
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"Revolving Credit Availability" has the meaning set forth in
Section 2.1.1.
"Revolving Credit Facility" means the Two Hundred Million
Dollar ($200,000,000) 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, 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.
"Sav Max" means Sav Max Foods, Inc., a California corporation.
"SEC" means the Securities and Exchange Commission and any
successor thereto.
"Security Agreement" when used in the singular and "Security
Agreements" when used in the plural means any and all security
agreements dated as of even date herewith, or such later date
pursuant to Section 6.13 hereof, executed by the Borrower and 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.
"Security Documents" means, collectively, the Security
Agreements, the Financing Statements executed by the Borrower and
the Guarantors, and all other agreements, assignments, documents
and instruments from time to time executed and delivered by the
Borrower or the Guarantors granting, assigning or transferring or
otherwise evidencing or relating to any Lien granted, assigned or
transferred to the Agent or any Lender pursuant to or in connection
with the transactions contemplated by this Agreement, and (b) any
amendments, supplements, modifications, renewals, restatements,
replacements, consolidations, substitutions and extensions of any
of the foregoing.
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"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 corporations) is owned
or controlled directly or indirectly by such Person, or a
combination thereof.
"Terminated Debt" has the meaning set forth in Section 4.1(m)
below.
"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 the Financing Subsidiaries), including, without
limitation, the John Hancock Debt, or (b) of any other Person for
and as to which the Borrower or any of its Subsidiaries (other than
the Financing Subsidiaries) is contingently liable, including in
each case, without limitation with respect to the Borrower, any
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such Subsidiary (other than the Financing Subsidiaries) 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 and Patronage Required Deposits.
"UCC" means the Uniform Commercial Code as the same may, from
time to time, be in effect in the State of New York.
"United Capital Investment Notes" means Indebtedness of United
Grocers in the principal amount not to exceed $31,500,000,
evidenced by notes issued pursuant to an Indenture dated as of
February 1, 1978, between United Grocers and First Trust National
Association, and subsequent Supplemental Indentures.
"United Grocers" means United Grocers, Inc., an Oregon
corporation.
"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 Compliant" means the state and point in time when
the financial, business and information-processing operations,
systems and technologies of a Person accurately process date and
time data (including calculating, comparing and sequencing) from,
into, in and between the years 1999 and 2000, both when used
independently and when used in interfacing with the financial,
business and information-processing operations, systems and
technologies of other Persons.
"Year 2000 Plan" means a plan whereby (a) the Borrower and
each of its Subsidiaries are taking all necessary and appropriate
steps to ascertain the extent of, and to quantify and successfully
address, the business and financial risks facing the Borrower and
each of its Subsidiaries as a result of the Year 2000 Problem,
including risks resulting from the failure of key vendors and
customers of the Borrower and its Subsidiaries to successfully
address the Year 2000 Problem, (b) the Borrower's and its
Subsidiaries' material computer applications will, on a timely
basis, adequately address the Year 2000 Problem in all material
respects, and (c) either (i) the material computer applications of
the key vendors and customers of the Borrower and each of its
Subsidiaries will, on a timely basis, address the Year 2000 Problem
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in all material respects, or (ii) the Borrower and each of its
Subsidiaries have made, with respect to any key vendor or customer
that does not provide assurances sufficient to satisfy clause (i),
other arrangements to avoid or mitigate the effect of such vendor's
or customer's noncompliance such that the Year 2000 Problem shall
not result in a Material Adverse Effect.
"Year 2000 Problem" means the inability of certain computer
applications to recognize correctly and perform date-sensitive
functions involving certain dates prior to, on and after December
31, 1999.
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 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.
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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.
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
lesser of (A) the Aggregate Commitments of all the Lenders or (B)
the Borrowing Base minus (ii) the Letter of Credit Undrawn Amount
(the "Revolving Credit Availability").
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(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 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 lesser of (A) the Aggregate Commitments or (B) the
Borrowing Base, 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
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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 lesser of (A) the Aggregate
Commitments or (B) the Borrowing Base.
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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
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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, 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
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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 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
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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 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
33.
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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 of Default and so long as such Event of
Default shall continue, including after acceleration (whether
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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.
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(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 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:
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(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.
(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 in whole or in part by delivering to the Agent written
notice thereof (a "Reduction Notice"). The Reduction Notice shall
(a) specify the date and amount of such reduction, 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, 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
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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.
(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.
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(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 365/366-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.
2.11 Payment on Non-Business Days. Whenever any payment to be
made under this Agreement, the Notes or any of the other Loan
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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
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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
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
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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, 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
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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 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;
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(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 H
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
(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:
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(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.
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
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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.
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
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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
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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 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
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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).
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:
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(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 and their Subsidiaries as the Lenders
reasonably may request.
(b) Loan 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) Security Documents. The Security
Agreements duly executed by the Borrower and each Guarantor for the
benefit of the Agent and the Lenders.
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(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 May 29, 1999,
duly executed and delivered by a Responsible Person, with
appropriate insertions.
(vi) Borrowing Base Certificate. A Borrowing
Base Certificate dated as of September 17, 1999, duly executed and
delivered by the chief financial officer or treasurer of the
Borrower, 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) Financing Statements. Financing Statements
naming the Borrower and each Guarantor as debtor, duly executed by
the Borrower and each Guarantor, as the case may be, including a
description of the Collateral granted or pledged by the Borrower or
such Guarantor to the Agent as security for the Obligations, which
Financing Statements shall be caused to be filed concurrently with
the Closing with such Governmental Authorities as the Agent may
reasonably require.
(e) 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.
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(f) 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.
(g) Financial Statements; Projections. The Agent
shall have received (i) audited consolidated financial statements
of the Borrower and its consolidated Subsidiaries dated as of
August 29, 1998, 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
May 29, 1999, and (iii) company-prepared financial projections for
the Borrower and its consolidated Subsidiaries (including United
Grocers and its Subsidiaries) for the next five (5) Fiscal Years
ending after the Closing Date, 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;
(h) No Material Adverse Change. There shall have
occurred no Material Adverse Change, as reasonably determined by
Lenders, since May 29, 1999.
(i) 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.
(j) 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.
(k) 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
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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..
(l) 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.
(m) 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.
(n) Termination of Existing Debt. The Agent shall
have received a certificate of a Responsible Person, dated as of
the Closing Date, satisfactory to the Lenders in their sole
discretion, to the effect that the Borrower's existing Indebtedness
disclosed on Schedule 7.3 and designated therein as terminated
existing Indebtedness (the "Terminated Existing Debt") has been, or
shall with the proceeds of the first Loan be, terminated and paid
in full, and all Liens securing such Terminated Existing Debt have
been, or upon the making of the first Loan shall be, terminated or
released.
(o) Merger. The Agent shall have received a
certificate from each of a Responsible Person and an authorized
officer of United Grocers, dated as of the Closing Date, to the
effect that (i) all conditions to the closing of the Merger have
been satisfied other than the conditions relating to the closing of
the transactions contemplated by this Agreement and the John
Hancock Debt and (ii) the Merger shall become effective
concurrently with the closing of the transactions contemplated by
this Agreement.
(p) John Hancock Debt. The Agent shall have
received a certificate from a Responsible Person, dated as of the
Closing Date, to the effect that all conditions to the closing of
the John Hancock Debt have been satisfied other than the conditions
relating to the closing of the transactions contemplated by this
Agreement; and the Agent shall have received, or shall receive
promptly after the Closing Date, copies of the fully executed
agreements evidencing the John Hancock Debt.
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(q) Year 2000 Problem. The Agent shall have
received a certificate of a Responsible Person, dated as of the
Closing Date, satisfactory to the Lenders in their sole discretion,
to the effect that the Borrower and its Subsidiaries have
implemented a Year 2000 Plan.
(r) 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) Notice of Borrowing. The Agent shall have
received a Notice of Borrowing with appropriate insertions, duly
executed by a Responsible Person of the Borrower.
(b) 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.
(c) 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.
(d) 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.
(e) 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.
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SECTION 5. BORROWER'S REPRESENTATIONS AND WARRANTIES.
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
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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 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 29, 1998, 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 May 29,
1999, except as described in the Confidential Information Booklet
dated September 1999 (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
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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 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
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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 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
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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 Regulation 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 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
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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 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.
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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 have implemented a Year 2000 Plan which adequately
addresses the Year 2000 Problem and as a result of the
implementation of the Year 2000 Plan, the Year 2000 Problem does
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").
5.22 Ownership of Properties. The Borrower and each Guarantor
owns good merchantable title, to all of its respective Collateral,
free and clear of all Liens except for Permitted Liens.
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
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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 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,
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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) Borrowing Base Certificate. As soon as
practicable and in any event (i) within twenty (20) days after the
Closing Date, a Borrowing Base Certificate dated as of October 1,
1999, and (ii) within twenty (20) days after the end of each Fiscal
Quarter, a Borrowing Base Certificate dated as of the last day of
each Fiscal Quarter, in each case duly executed by the chief
financial officer or treasurer of the Borrower, with appropriate
insertions satisfactory to the Agent;
(f) 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;
(g) Auditors' Letters. Promptly upon receipt
thereof, copies of all material reports submitted to the Borrower
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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;
(h) 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;
(i) 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;
(j) 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
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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;
(k) 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;
(l) 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
(m) Other Information. With reasonable promptness,
such other 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
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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.
All such policies of property insurance shall carry endorsements
naming the Agent as principal loss payee (Form 438 BFU or
equivalent) as to any Collateral owned by the Borrower and any
Guarantor, and all such policies of casualty and public liability
insurance shall carry endorsements naming the Agent and each Lender
as an additional insured, and in each case indicating that (i) any
loss thereunder relating to the Collateral shall be payable to the
Agent or the Lenders, as the case may be, notwithstanding any
action, inaction or breach of representation or warranty by the
Borrower or any Guarantor, as the case may be, (ii) there shall be
no recourse against the Agent or any Lender for payment of premiums
or other amounts with respect thereto, and (iii) at least thirty
(30) days' prior written notice of cancellation, lapse or material
change in coverage shall be given to the Agent by the insurer.
Upon request of the Agent or any Lender, the Borrower shall furnish
the Agent with sufficient copies for each Lender, at reasonable
intervals (but not more than once per calendar year) a certificate
of an insurance broker of the Borrower setting forth the nature and
the extent of all insurance maintained by the Borrower and its
Subsidiaries in accordance with this Section 6.3 or any Security
Document. 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 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.
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6.5 Inspection of Books and Records. From time to time
during normal business hours, without unreasonably interfering with
the Borrower's or any Guarantor's normal business activities, and
upon reasonable notice (except that if an Event of Default or
Potential Event of Default shall have occurred and be continuing,
no such notice is required), 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 the Borrower or any Guarantor and to discuss the
affairs, finances and accounts of the Borrower or any Guarantor
with any of its respective executive officers to the extent any of
the foregoing may be relevant to the Borrower's or such Guarantor'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 or any Guarantor.
6.6 Inspection and Audit of Collateral. From time to time
during normal business hours, without unreasonably interfering with
the Borrower's or any Guarantor's normal business activities, and
upon reasonable notice (except that if an Event of Default or a
Potential Event of Default shall have occurred and be continuing,
no such notice is required), permit the Agent or any agent,
representative or employee thereof, to conduct periodic inspections
and audits of the Collateral. Inspections and audits of the
Collateral pursuant to this Section 6.6 shall be at the Borrower's
expense with respect to two (2) inspections and audits in any
calendar year and with respect to all inspections and audits during
the existence of an Event of Default or Potential Event of Default.
6.7 Location of Collateral. All Collateral, other than
Inventory in transit, will at all times be kept by the Borrower and
the Guarantors, as the case may be, at one or more of the business
locations set forth in Schedule 6.7; provided, however, that the
Borrower and the Guarantors may keep Inventory at such other
locations where it is held on consignment or may be subject to a
warehouseman's or other bailee's lien, so long as (a) the consignor
shall have timely complied with Section 9114 of the UCC as to such
Inventory and (b) the Agent shall have received written
acknowledgment from such consignee, warehouseman or bailee of the
Agent's prior Lien.
6.8 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
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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.
6.9 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.
6.10 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.
6.11 Year 2000 Issues. Take all action reasonably necessary
and appropriate to implement the Year 2000 Plan to insure that
(a) the Borrower and each of its Subsidiaries are Year 2000
Compliant in all of their material systems by September 30, 1999,
except to the extent that the failure to be Year 2000 Compliant as
of such date would not result in a Material Adverse Effect, and
(b) the Year 2000 Problem shall not result in a Material Adverse
Effect.
6.12 Additional Guarantors. In the event that the Borrower
creates or acquires any additional Subsidiary with assets in excess
of $30,000, or any existing Subsidiary acquires total assets in
excess of $30,000 (except, in each case, the Financing Subsidiaries
and the Insurance Subsidiaries), the Borrower shall cause such
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Subsidiary to execute a Guaranty, a Security Agreement and
Financing Statements.
6.13 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 from time to time, to confirm the rights created or now
or hereafter intended to be created under the Loan Documents, to
protect and further the validity, priority and enforceability of
the Liens created under the Security Documents, to subject to the
Liens created under the Security Documents any Property intended by
the terms of any Loan Document to be covered by the Security
Documents, or otherwise. 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) Liens in favor of the Agent and the Lenders to
secure payment and performance of the Obligations;
(b) Liens to secure the John Hancock Debt, provided
that such Liens shall not encumber the Collateral;
(c) Existing Liens disclosed on Schedule 7.1, other
than those Liens shown on such Schedule as United Grocers, Inc.
item 2, provided that the obligations secured thereby are not
increased;
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(d) 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
$40,000,000 at any time;
(e) 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;
(f) 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, (iv) 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(f) 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;
(g) Permitted Rights of Others;
(h) 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;
(i) Liens relating to Capital Leases;
(j) 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
(k) 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 $10,000,000 at any time;
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(l) Liens on any assets of any of the Financing
Subsidiaries or the Insurance Subsidiaries; and
(m) 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;
(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 any of the Financing
Subsidiaries or 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;
(h) Investments in Stock of Persons engaged in the
same business as Borrower (or a business reasonably related
thereto); and
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(i) Investments hereafter made in any Insurance
Subsidiary to the extent required by a Governmental Authority, so
long as the Borrower has obtained the prior written consent of
Requisite Lenders;
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
$40,000,000; 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(d), (i) and (k);
(c) Indebtedness incurred by any of the Financing
Subsidiaries consisting of a working capital credit facility at any
time in an aggregate amount not to exceed $20,000,000, and any
Contingent Obligations of any of the Financing Subsidiaries with
respect to Indebtedness of another Person;
(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 United Capital
Investment Notes;
(f) Indebtedness consisting of "daylight
overdrafts" at the bank holding the Designated Deposit Account;
(g) 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,
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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;
(h) Indebtedness (in addition to the Indebtedness
permitted pursuant to Section 7.3(g)) 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;
(i) 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
(j) Indebtedness of United Grocers to its
terminated member-patrons evidencing United Grocer's obligation to
repurchase its Common Stock from such terminated member-patrons as
of the Closing Date, for an aggregate amount not to exceed
$5,600,000.
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, provided further, that
no Event of Default or Potential Event of Default has occurred and
is continuing or would result from such sale (for purposes of
clarifying, and not limiting the foregoing, the Borrower may sell
assets of Sav Max, including Stock of Sav Max, in whole or in
part), (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
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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.
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, (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), and (e) repurchase of Class B Shares of the Borrower from
terminated member-patrons of the Borrower entitled to such
repurchase as of the Closing Date, for an aggregate cash amount not
to exceed $13,500,000 less approximately $2,200,000 in canceled
debt owing to such member-patrons; 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.
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, including, without limitation, those transactions
shown on Schedule 7.7.
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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 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; provided,
however, that the Insurance Subsidiaries may enter into such an
agreement to the extent required by any Governmental Authority.
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
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(i) 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, (ii) Indebtedness of United Grocers
to its terminated member-patrons evidencing United Grocer's
obligation to repurchase its Common Stock from such terminated
member-patrons as of the Closing Date, for an aggregate amount not
to exceed $5,600,000, and (iii) Indebtedness of United Grocers
under redeemable building notes, in an aggregate amount not to
exceed $2,800,000; 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; provided that in no event, shall the Borrower
subordinate, or agree to subordinate, the Indebtedness evidenced by
the Tranche B Notes (as defined in the John Hancock Agreement)
without the prior written consent of Requisite Lenders.
7.14 Capital Expenditures. The Borrower shall not, and shall
not permit any of its Subsidiaries to make or commit to make
Capital Expenditures during any Fiscal Year in an aggregate amount
in excess of $25,000,000; provided, however, that after Borrower
and its Subsidiaries have made or committed to make Capital
Expenditures in such maximum aggregate amount during any Fiscal
Year, then to the extent that the actual Capital Expenditures for
the immediately preceding Fiscal Year is less than such aggregate
maximum amount (the "Excess Capital Expenditure Availability"), and
so long as no Potential Event of Default or Event of Default exists
or would exist after any of such Excess Capital Expenditure
Availability were expended in such Fiscal Year, such Excess Capital
Expenditure Availability may be expended solely during such Fiscal
Year in addition to the Capital Expenditures otherwise permitted
during such Fiscal Year.
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
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(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 September 30, 2000, and annually thereafter, 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 $75,000,000.
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.
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 (a) 4.50:1.00 until the second anniversary of the
Closing Date and (b) 3.75:1.00 on and after the second anniversary
of the Closing Date.
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
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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 or
any of the Guarantors in this Agreement or any of the other Loan
Documents 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
(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
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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
(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
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(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;
(d) Exercise in addition to all other rights and
remedies granted hereunder, any and all rights and remedies granted
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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.
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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. RELEASE OF COLLATERAL. Prior to the payment in full of the
Obligations, the Agent shall release the Lien of the Security
Documents in and to the Collateral upon the occurrence of all of
the following:
(a) the Borrower receives a senior unsecured debt
rating of (i) not less than BBB by Standard & Poor's Rating Group
of Standard & Poor's Corporation, (ii) not less than Baa2 by
Moody's Investors Service, Inc., or (iii) a comparable rating by
any other nationally recognized rating agency, as confirmed in
writing by the securities valuation office of the National
Association of Insurance Commissioners, and the Borrower has
maintained such rating for a period of not less than one (1) year
commencing on the first day of the Fiscal Year commencing
immediately after the Fiscal Year ending upon which the rating
agency based such rating;
(b) the holders of the John Hancock Debt
concurrently release the Lien in and to the John Hancock
Collateral; and
(c) no Potential Event of Default or Event of
Default exists.
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SECTION 11. AGENT.
11.1 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.
11.2 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.
11.3 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.
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11.4 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
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.
11.5 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
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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 11; 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.
11.6 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 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 or
statements made herein or therein or made in any written or oral
statements, or in any financial or other statements, instruments,
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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.
11.7 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 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
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otherwise, including penalties and interest, and including any
taxes imposed by any jurisdiction on the amounts payable to the
Agent under this Section 11.7, together with all costs and expenses
(including Attorney Costs). The obligation of the Lenders in this
Section 11.7 shall survive the payment of all Obligations.
11.8 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.
11.9 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 11 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.
87.
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<PAGE>
SECTION 12. AMENDMENTS AND WAIVERS; ASSIGNMENTS, PARTICIPATION, ETC.
12.1 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;
(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) release any Guarantor from its obligations
under a Guaranty;
(f) release any Collateral (other than pursuant to
Section 10 or Collateral of Sav Max as permitted under Section
7.5(b)) securing the Obligations under this Agreement and the other
Loan Documents;
(g) amend this Section 12.1;
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.
88.
Page 269 of 287
<PAGE>
12.2 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 I ("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 $3,500; 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 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
89.
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<PAGE>
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 12.1 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, 12.1 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 13.3 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
90.
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<PAGE>
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 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.
91.
Page 272 of 287
<PAGE>
SECTION 13. MISCELLANEOUS.
13.1 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.
13.2 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 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.
13.3 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
92.
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<PAGE>
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 13.3 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 13.3 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.
13.4 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 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
93.
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<PAGE>
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.
13.5 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.
13.6 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.
13.7 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, syndication 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 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;
94.
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<PAGE>
(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 12.7 of this Agreement.
13.8 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.
13.9 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.
13.10 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.
13.11 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.
95.
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<PAGE>
13.12 Severability. Whenever possible, each provision of this
Agreement, the Notes and 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.
13.13 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.
13.14 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.
13.15 Time. Time is of the essence as to each term or
provision of this Agreement and each of the other Loan Documents.
96.
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<PAGE>
13.16 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.
13.17 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 APPLICABLE LAWS OF THE UNITED STATES OF AMERICA.
13.18 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.
13.19 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.
97.
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<PAGE>
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 UNIFIED WESTERN GROCERS, INC.,
a California corporation
By: /s/ David A. Woodward
-------------------------------
David A. Woodward
Treasurer
Notices to Borrower to be sent to:
UNIFIED WESTERN GROCERS, INC.
5200 Sheila Street
Commerce, California 90040
Attention: Chief Executive
Officer and
Corporate Secretary
Telephone: (323) 264-5200
Facsimile: (323) 265-4162
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 AND A LENDER COOPERATIEVE CENTRALE RAIFFEISEN-
BOERENLEENBANK B.A., "RABOBANK
NEDERLAND", NEW YORK BRANCH,
as the Agent and as a Lender
By: /s/ Bradford F. Scott
-------------------------------
Bradford F. Scott
Vice President
By:
-------------------------------
Name:
-------------------------------
Title:
-------------------------------
98.
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<PAGE>
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
Rabo Support Services
Ten Exchange Place
Jersey City, New Jersey 07302
Attention: Corporate Finance Department
Telephone: (201) 499-5200
Facsimile: (201) 499-5328
With a copy to:
Rabobank Nederland
Four Embarcadero Center, Suite 3200
San Francisco, California 94111
Attention: Bradford F. Scott
Telephone: (415) 782-9808
Facsimile: (415) 986-8349
With a copy to:
Cooley Godward LLP
Five Palo Alto Square
3000 El Camino Real
Palo Alto, California 94306
Attention: Deborah L. Budach, Esq.
Telephone: (650) 843-5000
Telecopy: (650) 857-0663
99.
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<PAGE>
SCHEDULE 1.0
COMMITMENTS
================================================================================
REVOLVING LOAN FACILITY
- --------------------------------------------------------------------------------
Lender Commitment Pro Rata Share
- --------------------------------------------------------------------------------
Rabobank Nederland $200,000,000 100%
Total: $200,000,000 100%
================================================================================
Page 281 of 287
<PAGE>
Exhibit 23.1
------------
[PricewaterhouseCoopers LLP Letterhead]
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in this Form
8-K of Unified Western Grocers, Inc. (formerly, Certified Grocers of California,
Ltd.) of our report dated April 30, 1999 included in its Registration Statement
on Form S-4 (No. 333-85917) dated August 26, 1999, relating to the consolidated
financial statements of United Grocers, Inc. as of October 2, 1998 and October
3, 1997 and for the three years ended October 2, 1998.
/s/ PricewaterhouseCoopers LLP
Portland, Oregon
October 12, 1999
Page 282 of 287
<PAGE>
Exhibit 99-1
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For Immediate Release Contacts:
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June 16, 1999 Certified: Bob Ling (323) 264-5200
United: Amy Paterson (503) 221-0480
BOARDS OF CERTIFIED AND UNITED GROCERS
APPROVE MERGER
(LOS ANGELES) - An agreement to merge Certified Grocers of California,
Ltd. and United Grocers, Inc. was unanimously approved June 9, 1999 by the
Boards of Directors of both organizations.
The new company will be named Unified Western Grocers, Inc. and will
continue to conduct business under the trade names Certified Grocers of
California and United Grocers, Inc. in three primary West Coast regions:
Southern California, Northern California and Oregon. As announced previously,
Alfred A. Plamann, president and chief executive officer of Certified Grocers of
California, will serve as chief executive officer of the new organization.
Consummation of the merger is contingent upon clearance from regulatory
authorities, completion of financing, approval by shareholders of both
organizations at meetings that are tentatively scheduled for late August, and
various other conditions. If the merger is consummated, it will create the
largest retailer-owned grocery cooperative in the Western United States with
annual sales volume of approximately $3 billion.
Officials at both organizations anticipate that the combination of the two
companies will result in annual savings in excess of $20 million after
management's plans have been implemented. These savings are expected to be
achieved by eliminating redundant facilities, combining similar departments and
functions and by reducing overall administrative costs. Additionally, the new
company expects to benefit from increased buying power and from synergies
representing the best practices of both organizations.
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"This is a tremendously important transaction for independent grocery
retailers located throughout the Western United States," said Plamann. "Years
ago, independent grocers formed retailer-owned organizations in order to remain
competitive with fast growing supermarket chains. Today, these organizations
must merge in order to remain competitive with our supermarket chain
counterparts. This transaction is a major step in that direction."
According to Terry Olsen, president and chief executive officer, United
Grocers, Inc., the merger of Certified and United Grocers will significantly
enhance the existing strengths of the two organizations. "The combination of our
companies will create an organization with significant size and marketplace
clout - characteristics that will translate into a wider array of benefits,
services and growth opportunities for each and every one of our retail
members/customers."
Founded in 1922, Certified Grocers is a retailer-owned grocery distributor
that supplies more than 2,500 retail stores in California, Arizona, Nevada and
the Pacific. Certified and its subsidiaries, which generated $1.8 billion in
sales during the fiscal 1998 year, offer independent retailers all the resources
they need to compete in the supermarket industry. Certified is headquartered in
Commerce, Calif., has distribution centers in Commerce, Stockton, Santa Fe
Springs and Fresno and operates manufacturing facilities in Los Angeles.
Based in Portland, Ore., United Grocers is a retailer-owned grocery
distributor that supplies groceries and related products and services to
approximately 1,200 independent retailers located in Oregon, Western Washington
and Northern California. Organized in 1915, United Grocers maintains
distribution centers in Milwaukie, Ore., Medford, Ore., Modesto, Calif. and
Tracy, Calif.
This press release contains forward looking statements including statements with
respect to benefits expected to be derived from the proposed merger. There are a
variety of factors which could cause actual results to differ materially from
those anticipated by the statements made above. The merger and the risks
associated therewith will be described in detail in a joint proxy
statement/prospectus to be delivered to shareholders.
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Exhibit 99-2
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UNIFIED LOGO
5200 Sheila Street . Commerce . California 90040 . (323) 264-5200
For Immediate Release Contacts:
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Sept. 28, 1999 Tom Schaffner (323) 264-5200, ext. 4150
Amy Paterson (503) 221-0480
CERTIFIED, UNITED SHAREHOLDERS APPROVE MERGER,
CREATE UNIFIED WESTERN GROCERS
(LOS ANGELES) - Shareholders of Certified Grocers of California, Ltd. and
United Grocers, Inc. have voted overwhelmingly in favor of merging their grocery
cooperatives into a single entity named Unified Western Grocers. The
announcement follows meetings of members of both organizations held yesterday in
Los Angeles and Portland, Ore.
Closing of the merger is conditioned upon completion of financing and
other conditions and is expected within a few days. The merger will create an
organization with $3 billion in annual sales and approximately 3,500 employees.
With approximately 725 members, Unified Western Grocers will supply independent
retail grocers in Washington, Oregon, California, Nevada, Arizona and Hawaii and
becomes the largest retailer-owned grocery cooperative in the western United
States.
Alfred A. Plamann, president and chief executive officer of Certified
Grocers, has been named president and chief executive officer of Unified Western
Grocers and Terrence W. Olsen, president and chief executive officer of United
Grocers has been named executive vice president and chief operating officer of
the new company.
"This merger is in direct response to the competitive environment that has
characterized the nation's grocery industry in the past few years," said
Plamann. "Unified Western Grocers will have the necessary size and scale to
ensure that independent retailers remain competitive in the overall grocery
market."
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Page 2
Unified Western Grocers
By eliminating redundant facilities, combining similar departments and
functions and operating more efficiently, Unified Western Grocers expects to
benefit from lower costs. Additionally, the new company expects to benefit from
increased buying power and from synergies representing the best practices of
both Certified and United Grocers.
Unified Western Grocers, Inc. will continue to conduct business under the
trade names Certified Grocers of California and United Grocers, Inc. in three
primary West Coast regions: Southern California, Northern California and Oregon.
Additionally, the company will maintain offices in Southern California, Northern
California and Oregon.
"Even though this merger has been in the works for several months,
personnel from both companies have spent a considerable amount of time working
together and planning for the successful integration of our two organizations,"
Olsen said. "Several transition teams are already in place and have developed
initiatives that will help us achieve our synergy targets efficiently and
effectively."
This press release contains certain forward-looking statements about the future
performance of Unified Western Grocers. These statements are based on
management's assumptions and beliefs in light of the information currently
available to it. We assume no obligation to update the information contained
herein. These forward-looking statements are subject to uncertainties and other
factors that could cause actual results to differ materially from such
statements including, but not limited to, material adverse changes in the
business or financial condition of Unified Western Grocers and other factors
affecting the businesses of the Company, which are described in filings with the
Securities and Exchange Commission.
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Exhibit 99-3
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UNIFIED LOGO
5200 Sheila Street . Commerce . California 90040 . (323) 264-5200
For Immediate Release Contacts:
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Sept. 30, 1999 Tom Schaffner (323) 264-5200, ext. 4150
Amy Paterson (503) 221-0480
MERGER COMPLETED BETWEEN CERTIFIED, UNITED GROCERS
(LOS ANGELES) - Certified Grocers of California, Ltd. and United Grocers,
Inc. announced today the completion of their merger. The new company, Unified
Western Grocers ("Unified"), begins its new fiscal year on Sunday, Oct. 3, 1999.
Unified Western Grocers is a retailer-owned grocery distributor that
supplies independent retailers in California, Oregon, Nevada, Arizona and
Hawaii. Unified and its subsidiaries, which generated approximately $3 billion
in sales during the 1999 fiscal year, offer independent retailers all the
resources they need to compete in the supermarket industry.
Page 287 of 287
