<PAGE>
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended January 4, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ______________ to ______________.
Commission File Number: 33-41791
SPARTAN STORES, INC.
(Exact Name of Registrant as Specified in Its Charter)
MICHIGAN 38-0593940
(State or Other Jurisdiction (I.R.S. Employer
of Incorporation or Organization) Identification No.)
850 76TH STREET, S.W.
P.O. BOX 8700
GRAND RAPIDS, MICHIGAN 49518
(Address of Principal Executive Offices) (Zip Code)
(616) 878-2000
(Registrant's Telephone Number, Including Area Code)
Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes _X_ No ___
As of February 10, 1997, the issuer had 1,199,453 outstanding shares of
Class A Common Stock, $20 par value.
_____________________
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<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
<TABLE>
SPARTAN STORES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
<CAPTION>
THIRD QUARTER (16 WEEKS) ENDED
--------------------------------
JANUARY 4, DECEMBER 30,
1997 1995
(UNAUDITED) (UNAUDITED)
------------ ------------
<S> <C> <C>
NET SALES $746,155,415 $782,199,949
LESS VOLUME INCENTIVE REBATES 5,859,270
------------ ------------
746,155,415 776,340,679
COSTS AND EXPENSES
Cost of sales 690,536,049 714,972,006
Operating and administrative 42,239,795 49,408,981
Depreciation and amortization 6,150,033 6,656,252
Interest (net) 1,665,945 1,849,136
(Gain) loss on sale of property and equipment (241,916) 73,841
------------ ------------
740,349,906 772,960,216
------------ ------------
EARNINGS BEFORE TAXES ON INCOME 5,805,509 3,380,463
TAXES ON INCOME 2,071,000 603,000
------------ ------------
NET EARNINGS $ 3,734,509 $ 2,777,463
============ ============
NET EARNINGS PER CLASS A SHARE $ 3.08 $ 2.26
WEIGHTED AVERAGE NUMBER OF CLASS A
SHARES OUTSTANDING 1,211,037 1,231,542
DIVIDENDS DECLARED PER CLASS A SHARE $ 0.125 $ 0.125
</TABLE>
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<PAGE>
<TABLE>
SPARTAN STORES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
<CAPTION>
THREE QUARTERS (40 WEEKS) ENDED
----------------------------------
JANUARY 4, DECEMBER 30,
1997 1995
(UNAUDITED) (UNAUDITED)
-------------- --------------
<S> <C> <C>
NET SALES $1,891,931,567 $1,935,162,960
LESS VOLUME INCENTIVE REBATES 13,650,689
-------------- --------------
1,891,931,567 1,921,512,271
COSTS AND EXPENSES
Cost of sales 1,749,742,524 1,771,331,541
Operating and administrative 110,584,986 122,231,558
Depreciation and amortization 15,126,745 15,093,211
Interest (net) 4,169,359 4,294,119
Gain on sale of property and equipment (1,613,294) (110,065)
-------------- --------------
1,878,010,320 1,912,840,364
-------------- --------------
EARNINGS BEFORE TAXES ON INCOME 13,921,247 8,671,907
TAXES ON INCOME 4,900,000 2,638,000
-------------- --------------
NET EARNINGS $ 9,021,247 $ 6,033,907
============== ==============
NET EARNINGS PER CLASS A SHARE $ 7.38 $ 4.84
WEIGHTED AVERAGE NUMBER OF CLASS A
SHARES OUTSTANDING 1,221,984 1,246,989
DIVIDENDS DECLARED PER CLASS A SHARE $ 0.375 $ 0.375
</TABLE>
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<PAGE>
<TABLE>
SPARTAN STORES, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
<CAPTION>
JANUARY 4,
1997 MARCH 30,
(UNAUDITED) 1996
------------ ------------
<S> <C> <C>
ASSETS
- ------
CURRENT ASSETS
Cash and cash equivalents $ 33,804,135 $ 39,796,018
Marketable securities 15,731,182 16,051,608
Accounts receivable 64,113,959 68,444,576
Refundable taxes on income 2,385,769 10,173,305
Inventories 87,706,871 78,659,807
Prepaid expenses 6,280,058 4,072,104
Deferred taxes on income 7,526,000 7,579,000
------------ ------------
TOTAL CURRENT ASSETS 217,547,974 224,776,418
OTHER ASSETS 8,016,872 9,959,071
PROPERTY AND EQUIPMENT 301,402,611 279,534,993
Less accumulated depreciation and amortization 133,817,745 126,819,069
------------ ------------
NET PROPERTY AND EQUIPMENT 167,584,866 152,715,924
------------ ------------
TOTAL ASSETS $393,149,712 $387,451,413
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Notes payable $ 30,000,000 $ 15,000,000
Accounts payable 92,910,809 84,868,588
Insurance reserves 18,000,769 18,484,660
Current maturities of long-term debt 6,009,544 7,678,972
Current obligations under capital leases 580,216 582,135
Other current liabilities 20,406,591 28,878,016
------------ ------------
TOTAL CURRENT LIABILITIES 167,907,929 155,492,371
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DEFERRED GAIN ON SALE OF REAL PROPERTY 232,877 298,477
DEFERRED TAXES ON INCOME 690,000 600,000
POSTRETIREMENT BENEFITS OTHER THAN PENSIONS 4,101,483 4,101,483
LONG-TERM DEBT 112,010,161 122,013,296
LONG-TERM OBLIGATIONS UNDER CAPITAL LEASES 1,902,860 2,359,075
SHAREHOLDERS' EQUITY
Class A common stock, voting, par value
$20 per share 23,985,300 24,920,960
Additional paid-in capital 17,806,152 19,622,472
Retained earnings 64,512,950 58,043,279
------------ ------------
TOTAL SHAREHOLDERS' EQUITY 106,304,402 102,586,711
------------ ------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $393,149,712 $387,451,413
============ ============
</TABLE>
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<TABLE>
SPARTAN STORES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
<CAPTION>
CLASS A ADDITIONAL
COMMON PAID-IN RETAINED
STOCK CAPITAL EARNINGS
----------- ----------- -----------
<S> <C> <C> <C>
BALANCE - MARCH 25, 1995 $25,088,980 $17,473,010 $83,238,742
CLASS A COMMON STOCK TRANSACTIONS
76,046 shares purchased (1,520,920) (3,165,335) (2,904,751)
67,645 shares issued 1,352,900 5,314,797
NET LOSS (21,667,595)
CASH DIVIDENDS - $.50 PER SHARE (623,117)
----------- ----------- -----------
BALANCE - MARCH 30, 1996 24,920,960 19,622,472 58,043,279
CLASS A COMMON STOCK TRANSACTIONS
70,924 shares purchased (1,418,480) (3,842,725) (2,096,045)
24,141 shares issued 482,820 2,026,405
NET EARNINGS 9,021,247
----------- ----------- -----------
CASH DIVIDENDS - $.375 PER SHARE (455,531)
BALANCE - JANUARY 4, 1997 $23,985,300 $17,806,152 $64,512,950
=========== =========== ===========
</TABLE>
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<PAGE>
<TABLE>
SPARTAN STORES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<CAPTION>
THREE QUARTERS (40 WEEKS) ENDED
-------------------------------
JANUARY 4, DECEMBER 30,
1997 1995
(UNAUDITED) (UNAUDITED)
----------- ------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net earnings $ 9,021,247 $ 6,033,907
Adjustments to reconcile net earnings to net
cash provided by (used in) operating activities:
Depreciation and amortization 15,126,745 15,093,211
Rebates paid in common stock 3,489,421
Deferred taxes on income 143,000 214,000
Gain on sale of property and equipment (1,613,294) (110,065)
Change in assets and liabilities:
Marketable securities 320,426 (1,658,767)
Accounts receivable 4,330,617 (1,726,520)
Refundable taxes on income 7,787,536
Inventories (9,047,064) 5,422,521
Prepaid expenses (2,207,954) 368,033
Accounts payable 8,042,221 (4,335,038)
Rebates due to customers 420,761 2,119,846
Accrued payroll and benefits (1,293,943) (446,667)
Insurance reserves (483,891) 444,588
Other accrued expenses (7,598,243) (583,260)
----------- -----------
NET CASH PROVIDED BY OPERATING ACTIVITIES 22,948,164 24,325,210
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property and equipment (36,002,250) (34,464,729)
Proceeds from the sale of property and equipment 7,876,157 1,070,703
Other 1,620,299 (816,547)
----------- -----------
NET CASH USED IN INVESTING ACTIVITIES (26,505,794) (34,210,573)
CASH FLOWS FROM FINANCING ACTIVITIES
Changes in notes payable 15,000,000 21,730,945
Proceeds from long-term borrowings 26,907,660 11,997,315
Repayment of long-term debt (38,580,223) (12,384,112)
Reduction of obligations under capital leases (458,134) (416,335)
Proceeds from sale of common stock 2,509,225 1,363,876
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Common stock purchased (7,357,250) (7,124,006)
Dividends paid (455,531) (467,356)
----------- -----------
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES (2,434,253) 14,700,327
----------- -----------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (5,991,883) 4,814,964
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 39,796,018 25,161,193
----------- -----------
CASH AND CASH EQUIVALENTS AT END OF THIRD QUARTER $33,804,135 $29,976,157
=========== ===========
</TABLE>
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<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
ACCOUNTING POLICIES:
The 1996 annual report contains a summary of significant accounting
policies in the notes to consolidated financial statements. The Company
follows the same accounting policies in the preparation of interim
financial statements.
ACCOUNTS RECEIVABLE:
Accounts receivable include the current portion of notes receivable and are
shown net of allowances for credit losses of $2,653,000 and $2,300,000 at
January 4, 1997, and March 30, 1996, respectively.
INVENTORIES:
Inventories are stated at the lower of cost or market using the LIFO (last-
in, first-out) method. If replacement cost had been used, inventories
would have been $44,300,000 and $43,500,000 higher at January 4, 1997, and
March 30, 1996, respectively.
ACCOUNTS PAYABLE:
Accounts payable include $16,791,000 and $19,130,000 at January 4, 1997,
and March 30, 1996, respectively, representing checks which have been
issued and have not cleared the Company's controlled disbursing bank
accounts.
INTEREST (NET):
Interest (net) includes interest income of $1,405,000 and $1,206,000 for
the third quarter of fiscal 1997 and 1996, respectively. Interest income
for the first forty weeks of fiscal 1997 and 1996 was $3,527,000 and
$3,182,000, respectively.
TAXES ON INCOME:
The Company's effective tax rate for the third quarter and first forty
weeks of fiscal 1996 differs from the statutory rate due primarily to
goodwill amortization and tax credits for investments in research
activities.
CREDIT AGREEMENT:
On December 23, 1996, the Company entered into a new unsecured $140 million
revolving credit agreement. This agreement is segregated into a short-term
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<PAGE>
$60 million line of credit loan commitment, a long-term $60 million
revolving loan commitment and a long-term $20 million single facility loan
commitment. The Company believes the new credit facility along with
internally-generated funds will provide the Company with the financial
flexibility to meet future liquidity needs.
STATEMENT OF REGISTRANT:
The data presented herein is unaudited, but in the opinion of management,
includes all adjustments (which consist solely of normal recurring
accruals) necessary for a fair presentation of the consolidated financial
position of the Company and its subsidiaries at January 4, 1997, and the
results of their operations and the changes in cash flows for the periods
ended January 4, 1997, and December 30, 1995. These interim results are
not necessarily indicative of the results of the fiscal years as a whole.
CONTINGENCIES:
On August 21, 1996, the Attorney General for the State of Michigan filed an
action in Michigan circuit court against the leading United States
cigarette manufacturers, twelve wholesalers and distributors of tobacco
products in Michigan (including three Company subsidiaries) and others
seeking certain injunctive relief, the reimbursement of $4 billion in
Medicaid and other expenditures incurred or to be incurred by the State of
Michigan to treat diseases allegedly caused by cigarette smoking and
punitive damages of $10 billion. The Company believes that its
subsidiaries have valid defenses to this legal action. This action will be
vigorously defended. One of the cigarette manufacturers named as a
defendant in this action has agreed to indemnify the Company's subsidiaries
from damages arising out of this action. Management believes that the
ultimate outcome of this action should not have a material adverse effect
on the consolidated financial position, results of operations or liquidity
of the Company.
Various other lawsuits and claims, arising in the ordinary course of
business, are pending or have been asserted against the Company. While the
ultimate effect of such actions cannot be predicted with certainty,
management believes that their outcome will not result in a material
adverse effect on the consolidated financial position, operating results or
liquidity of the Company.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
On February 4, 1996, the Company changed its pricing methodology from a
variable mark-up program with volume incentive rebates to a cost-plus
pricing program. As a result of adopting the cost-plus pricing strategy,
transportation and other services costs are no longer included in the
selling price and volume incentive rebates have been discontinued.
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<PAGE>
RESULTS OF OPERATIONS
NET SALES
Net sales, less any volume incentive rebates, decreased $30.2 million or
3.9% for the third quarter and decreased $29.6 million or 1.5% for the
first forty weeks of fiscal 1997 compared to the corresponding periods of
fiscal 1996. The decrease was due primarily to the implementation of the
cost-plus pricing program in which transportation and other service costs
are no longer included in the selling price. In addition, sales declined
as a result of the closing of one of the Company's subsidiaries,
Capistar, Inc., during the fourth quarter of fiscal 1996, the loss of a
customer of another subsidiary of the Company, J.F. Walker Company, Inc.,
and the consolidations of three J.F. Walker distribution centers. Food
inflation was negligible for the first forty weeks of fiscal 1997 and
Spartan continues to operate in a highly competitive retail market.
GROSS PROFIT
Gross profit in the Distribution segment as a percentage of net sales, less
any volume incentive rebates, decreased to 6.5% for the third quarter of
fiscal 1997 compared to 7.1% for the same period last year and decreased to
6.4% for the first forty weeks of fiscal 1997 compared to 6.8% for the same
period last year. These decreases were attributable primarily to the
implementation of the cost-plus pricing program during February, 1996, in
which transportation and other service costs are no longer included in the
selling price. The decrease in gross profit for the third quarter and the
first forty weeks of fiscal 1997 as compared to the same periods last year
was mitigated partially by the closing of Capistar and the consolidations
of three J.F. Walker distribution centers.
OPERATING AND ADMINISTRATIVE EXPENSES
Operating and administrative expenses as a percentage of net sales, less
any volume incentive rebates, improved to 5.7% for the third quarter and
5.8% for the first forty weeks of fiscal 1997 compared to 6.4% for both the
third quarter and the first forty weeks of fiscal 1996. The reduction in
operating and administrative expenses was due primarily to the
implementation of the cost-plus pricing program, the closing of Capistar
and the consolidations of three J.F. Walker distribution centers. The
Company has experienced a reduction in operating and administrative
expenses of approximately $20 million for the first forty weeks of fiscal
1997 and anticipates a reduction of approximately $26 million for fiscal
1997 due to separately charging customers for transportation and other
service costs which are now netted against operating and administrative
expenses.
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<PAGE>
NET EARNINGS
Net earnings increased by approximately $1.0 million or 34% and $3.0
million or 50% over the comparable third quarter and forty-week period last
year. Net earnings in the Distribution segment were $2.6 million for the
third quarter and $5.8 million for the first forty weeks of fiscal 1997
compared to $1.8 million and $3.2 million, respectively, for the same
periods of fiscal 1996. The improvement in net earnings in the
Distribution segment for both the third quarter and first forty weeks of
1997 compared to the same periods last year was due primarily to the
closing of Capistar and the consolidations of three J.F. Walker
distributions centers. Net earnings in the Insurance segment for the third
quarter and first forty weeks of fiscal 1997 were $.7 million and $1.7
million, respectively, which were approximately the same as the
corresponding periods last fiscal year. Net earnings in the Real Estate
and Finance segment were $.4 million for the third quarter and $1.5 million
for the first forty weeks of fiscal 1997 compared to $.3 million and $1.0
million, respectively, for the same periods last year. The improvement in
net earnings in the Real Estate and Finance segment for both the third
quarter and first forty weeks of fiscal 1997 compared to the same period
last year was due primarily to the rental of new facilities.
LIQUIDITY AND CAPITAL RESOURCES
The Company's principal sources of liquidity continue to be cash flows from
operating activities and borrowings under bank credit agreements. Cash
provided by operations for the first forty weeks of fiscal 1997 was $22.9
million compared with $24.3 million for the same period last year. The
decrease was due primarily to an increase in inventories and a decrease in
other accrued expenses offset partially by a reduction in refundable taxes
on income and an increase in accounts payable.
CAUTIONARY STATEMENTS FOR PURPOSES OF THE SAFE HARBOR PROVISIONS OF THE
PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
Except for the historical information contained in the report, the matters
discussed in this report include forward looking statements which involve
risk and uncertainties including but not limited to economic, competitive,
governmental and technological factors affecting the Company's operations,
markets, products, services and prices, and other factors discussed in the
Company's filings with the Securities and Exchange Commission.
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PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
For a discussion of certain litigation, reference is made to
"Contingencies" in the Notes to Consolidated Financial Statements included
in Part I, Item 1, of this report, which is incorporated herein by
reference.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBITS. The following documents are filed as
exhibits to this report on Form 10-Q:
EXHIBIT NUMBER DOCUMENT
-------------- --------
10.18 Credit Agreement among Spartan Stores, Inc.
(as Borrower), Michigan National Bank
(as a Bank), Michigan National Bank (as
Agent), Old Kent Bank, NBD Bank, Harris
Trust and Savings Bank and National City
Bank of Columbus, dated December 23, 1996.
27 Financial Data Schedule
(b) REPORTS ON FORM 8-K. No reports on Form 8-K have been
filed during the period for which this report is filed.
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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 thereunto duly authorized.
Date: February 18, 1997 SPARTAN STORES, INC.
(Registrant)
By S/JAMES B. MEYER
James B. Meyer
President and Chief Operating
Officer
(Duly authorized Signatory for
Registrant)
By S/CHARLES B. FOSNAUGH
Charles B. Fosnaugh
Senior Vice President Business
Development and Finance
(Principal Financial Officer)
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EXHIBIT INDEX
EXHIBIT NUMBER DOCUMENT
- -------------- --------
10.18 Credit Agreement among Spartan Stores, Inc. (as
Borrower), Michigan National Bank (as a Bank),
Michigan National Bank (as Agent), Old Kent
Bank, NBD Bank, Harris Trust and Savings Bank
and National City Bank of Columbus, dated
December 23, 1996.
27 Financial Data Schedule
<PAGE>
EXHIBIT 10.18
_________________________________
CREDIT AGREEMENT
among
SPARTAN STORES, INC.
(as Borrower),
and
MICHIGAN NATIONAL BANK
(as a Bank),
and
MICHIGAN NATIONAL BANK
(as Agent)
and
THE BANKS LISTED ON THE
SIGNATURE PAGES HEREOF
_________________________________
_________________________________
Dated as of December 23, 1996
_________________________________
<PAGE>
CREDIT AGREEMENT
This CREDIT AGREEMENT (this "Agreement"), dated as of December 23,
1996, is entered into among SPARTAN STORES, INC., a Michigan corporation
(the "Borrower"), THE BANKS LISTED ON THE SIGNATURE PAGES HEREOF
(individually referred to herein as a "Bank" and collectively as the
"Banks"), and MICHIGAN NATIONAL BANK, a national banking association,
individually ("MNB"), and as agent for the Banks (the "Agent").
RECITALS:
A. The Borrower desires that the Banks extend certain credit
facilities to the Borrower for the purposes set forth in Section 2.7
hereof.
B. The Borrower also desires that each Issuing Bank (as defined
herein) issue from time to time one or more letters of credit on behalf of
the Borrower or certain of its subsidiaries, to secure the performance of
certain obligations that the Borrower or such subsidiaries may have from
time to time to third parties in the normal conduct of its business.
C. The Borrower is also contemplating obtaining certain financing in
a single private placement of debt through the capital markets up to the
amount of $30,000,000 (the "Private Placement").
NOW, THEREFORE, in consideration of the premises and the agreements
herein contained the Borrower, the Banks, and the Agent agree as follows:
1. DEFINITIONS.
1.1 DEFINITIONS. For purposes of this Agreement, the following
capitalized terms will have the following meanings:
"AFFILIATE", as applied to any Person, means (a) any other Person
directly or indirectly controlling, controlled by, or under common control
with, that Person. "Control" (including with correlative meanings, the
terms "controlling," "controlled by" and "under common control with"), as
applied to any Person, means the possession, directly or indirectly, of the
power to direct or cause the direction of the management and policies of
that Person, whether through the ownership of voting securities or by
contract or otherwise.
"AGENT" means Michigan National Bank, when acting as administrative
agent for the Banks and not as a Bank, and any permitted successor(s)
thereto, when so acting.
"AGENT'S ADDRESS" means 77 Monroe Center, Grand Rapids, Michigan
49503, or such other address as Agent may hereafter specify to Borrower in
writing.
<PAGE>
"AGENT'S COUNSEL" means Dykema Gossett PLLC, 200 Oldtown Riverfront
Building, Grand Rapids, Michigan 49503.
"BANK" means each and, when used in the plural, all of the banking
institutions which have signed this Agreement (including Michigan National
Bank, when acting as a Bank or in its individual capacity as MNB, and not
as Agent) and their respective successor(s) and permitted assign(s).
"BORROWER" means Spartan Stores, Inc., a Michigan corporation, and its
permitted successor(s) and assign(s).
"BORROWER'S ADDRESS" means P.O. Box 8700, 850 76th Street, S.W., Grand
Rapids, Michigan 49518, or such other address as Borrower may hereafter
specify to Agent in writing.
"BORROWER'S COUNSEL" means Warner Norcross & Judd LLP, 900 Old Kent
Building, Grand Rapids, Michigan 49503.
"BUSINESS DAY" means (a) for all purposes other than as covered by
clause (b) below, any day excluding (i) Saturday, (ii) Sunday, and (iii)
any day that (1) is a legal holiday under the laws of the State of
Michigan, Ohio or Illinois or (2) is a day on which banking institutions
located in Michigan, Ohio or Illinois are authorized or required by law or
other governmental action to close, and (b) with respect to all notices,
determinations, fundings and payments made with or by reference to the
LIBOR Rate or the LIBOR Average, any day that is a Business Day described
in clause (a), and on which dealings in Dollars are conducted in the London
interbank market.
"CAPITAL LEASE", as applied to any Person, means any lease of any
property (whether real, personal or mixed) by such Person as lessee which
would, in accordance with GAAP, be required to be classified and accounted
for as a capital lease of such Person, other than, in the case of the
Borrower or a Subsidiary, any such lease under which the Borrower or a
Subsidiary is the lessor.
"CAPITAL LEASE OBLIGATION", with respect to any Capital Lease, means
the amount of the obligation of lessee thereunder, determined in accordance
with GAAP, in respect of such Capital Lease.
"CERCLA" means the Comprehensive Environmental Response, Compensation,
and Liability Act of 1980, as amended by the Superfund Amendments and
Reauthorization Act of 1986.
"CLOSING DATE" means the date this Agreement is executed and
delivered.
"CODE" means the Internal Revenue Code of 1986, as amended.
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"COMMERCIAL LETTER OF CREDIT" means a Letter of Credit issued for the
benefit of a supplier or exporter (or such supplier's or exporter's
confirming bank) offering the Issuing Bank's credit in connection with the
purchase of goods by the Borrower or a Subsidiary from such supplier or
exporter.
"COMMITMENT" or "COMMITMENTS" means, as the context requires, one or
more of (i) the Line of Credit Loan Commitments, the Single Facility Loan
Commitment, or the Revolving Loan Commitments, or (ii) the Total Line of
Credit Loan Commitment or the Total Revolving Loan Commitment.
"CONSISTENT BASIS" means, in reference to the application of GAAP,
that the accounting principles observed in the current period are
comparable in all material respects to those applied in the preceding
period.
"CONSOLIDATED CURRENT ASSETS" means, with respect to the Borrower and
its Subsidiaries, as of any date of determination, the total assets of the
Borrower and its Subsidiaries that may properly be classified as current
assets in conformity with GAAP on a consolidated basis.
"CONSOLIDATED CURRENT LIABILITIES" means, with respect to the Borrower
and its Subsidiaries, as of any date of determination, the total
liabilities of the Borrower and its Subsidiaries that may properly be
classified as current liabilities in conformity with GAAP on a consolidated
basis.
"CONSOLIDATED NET INCOME" means, for any period, the net earnings (or
net loss) of the Borrower and its Subsidiaries for such period determined
in accordance with GAAP on a consolidated basis.
"CONSOLIDATED TOTAL ASSETS" means, as at any date of determination,
the aggregate book value as of such date of the assets of the Borrower and
its Subsidiaries, real, personal and mixed, determined on a consolidated
basis in accordance with GAAP.
"CONSOLIDATED TOTAL LIABILITIES" means, as of any date of
determination, the total liabilities of the Borrower and its Subsidiaries,
as determined in conformity with GAAP on a consolidated basis.
"DEFAULTING BANK" means any Bank that, at the time funds were required
to be provided under this Agreement by such Bank, (a) fails in its
obligation to make any Loan pursuant to Section 2, (b) fails in its
obligation to make available to an Issuing Bank such Bank's participation
in any unreimbursed amount of any drawing under a Participated Letter of
Credit, or (c) fails to pay Agent such Bank's Ratable Share of any expense
or liability for which Agent has in writing requested reimbursement or
indemnification.
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"DUAL FACILITY COMMITMENT" when used in reference to a single Bank,
means that Bank's Line of Credit Loan Commitment or Revolving Loan
Commitment, and when used in reference to all of the Banks, means the Total
Line of Credit Loan Commitment or the Total Revolving Loan Commitment, as
each of those terms are defined and used in Section 2.
"DUAL FACILITY LOAN" OR "DUAL FACILITY LOANS" means one or more of the
Revolving Loans or the Line of Credit Loans, or any combination thereof.
"EFFECTIVE RATE" means the interest rate in effect for a Loan from
time to time when such Loan is not in default, as set forth in Section 2.4
hereof.
"EMPLOYEE BENEFIT PLAN" means an employee benefit plan within the
meaning of Section 3(3) of ERISA maintained, sponsored or contributed to by
the Borrower, a Subsidiary or any of their respective ERISA Affiliates.
"ENVIRONMENTAL PROTECTION STATUTE" means any federal, state or local
law, statute, or regulation enacted in connection with or relating to the
protection or regulation of the environment, including, but not limited to,
those laws, statutes and regulations regulating, relating to or imposing
liability or standards of conduct concerning the disposal, removal,
production, storing, refining, handling, transferring, processing or
transporting of hazardous materials and any regulations issued or
promulgated in connection with such statutes by any governmental agency or
instrumentality, including, without limitation, CERCLA and RCRA.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
the same may from time to time be amended or supplemented, including any
rules or regulations issued in connection therewith.
"ERISA AFFILIATE," as applied to any Person, means any trade or
business (whether or not incorporated) which is under common control with
that Person within the meaning of Section 4001(b) of ERISA, Section 414(b),
(c), (m) or (o) of the Code, as amended, and the regulations promulgated
thereunder.
"EVENT OF DEFAULT" has the meaning set forth in Section 7.1 of this
Agreement.
"FASB" means the Financial Accounting Standards Board.
"FISCAL YEAR" means, for the Borrower and the Subsidiaries, a period
of 52 calendar weeks, with Fiscal Year 1997 beginning on March 30, 1996.
"FIXED CHARGES" means, for any period, on a consolidated basis the sum
of (a) all Rentals (other than Capital Lease Obligations) payable during
such period by the Borrower and its Subsidiaries, and (b) Interest Expense
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on all Indebtedness (including the interest component of Capital Lease
Obligations) of the Borrower and its Subsidiaries payable during such
period.
"FUNDED DEBT" means, with respect to the Borrower and its Subsidiaries
as of any date of determination, all Indebtedness of the Borrower and its
Subsidiaries that by its terms or by the terms of any instrument or
agreement relating thereto matures one year or more from, or is directly
renewable or extendable at the option of the debtor to a date one year or
more from (including an option of the debtor 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
(excluding any portion thereof which is on such date included in current
liabilities of such Person), determined on a consolidated basis in
conformity with GAAP.
"FUNDING DATE" means a Business Day on which Borrower has requested in
accordance with this Agreement that a Loan be made or a Letter of Credit be
issued hereunder.
"GAAP" means generally accepted accounting principles as set forth in
the opinions and pronouncements of the Accounting Principles Board and the
American Institute of Certified Public Accountants and statements and
pronouncements of the FASB or in such other statements by such other Person
as may be approved by a significant segment of the accounting profession,
which are applicable to the circumstances as of the date of determination
and which are applied on a Consistent Basis.
"GOVERNMENTAL AUTHORITY" means any nation or government, any state or
other political subdivision thereof, and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or
pertaining to government.
"GUARANTY" as applied to any Person, means any direct or indirect
liability, contingent or otherwise, of such Person with respect to any
indebtedness, lease, dividend or other obligation of another, including,
without limitation, any such obligation directly or indirectly guaranteed,
endorsed (otherwise than for collection or deposit in the ordinary course
of business) or discounted or sold with recourse by such Person 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, stock purchases, capital contributions or otherwise), or to
maintain the solvency or any balance sheet or other financial condition of
the obligor of such obligation, or to make payment for any products,
materials or supplies or for any transportation or services 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
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will be complied with, or that the holders of such obligation will be
protected against loss in respect thereof. The amount of any Guaranty
shall be equal to the amount of the obligation guaranteed.
"INCREASED COST" has the meaning assigned to that term in Section 3.5
of this Agreement.
"INCREASED COST NOTICE" has the meaning assigned to that term in
Section 3.5 of this Agreement.
"INCOME AVAILABLE FOR FIXED CHARGES" means, for any period, the sum of
(a) Consolidated Net Income during such period, PLUS (to the extent
deducted in determining Consolidated Net Income), (b)(i) all provisions and
reserves for any federal, state (including taxes payable on the
consolidated "BUSINESS INCOME" of the Borrower and its Subsidiaries as such
term is defined in the Michigan Single Business Tax MCLA <Section>208.1 ET.
SEQ.) or other income taxes made by the Borrower and its Subsidiaries
during such period, and (ii) Fixed Charges of the Borrower and its
Subsidiaries during such period.
"INDEBTEDNESS" means (i) all items of indebtedness of any Person,
direct or indirect, joint or several, as determined in accordance with
GAAP, plus (ii) any Guaranty by such Person.
"INITIAL LETTERS OF CREDIT" means the Letters of Credit issued and
outstanding on the Closing Date and specifically described in Schedule 3.6
to this Agreement.
"INITIAL LINE OF CREDIT LOANS" means the Line of Credit Loans that are
funded on or as of the Closing Date.
"INITIAL LOANS" means the Initial Line of Credit Loans, the Initial
Revolving Loans and the Initial Single Facility Loans.
"INITIAL REVOLVING LOANS" means the Revolving Loans that are funded on
or as of the Closing Date.
"INITIAL SINGLE FACILITY LOANS" means the Single Facility Loans that
are funded on or as of the Closing Date.
"INTEREST EXPENSe" means, for any period, all interest and all
amortization of debt discount and expense on any particular indebtedness
(including, without limitation, payment-in-kind, zero coupon and any other
like Security) for which such calculations are being made. Computations of
Interest Expense on a PRO FORMA basis for Indebtedness having a variable
interest rate shall be calculated at the rate in effect on the date of any
determination.
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"INTEREST PERIOD", with respect to a LIBOR Rate Loan, has the meaning
set forth in Section 2.4 hereof.
"ISSUING BANK" means, with respect to each Letter of Credit, the Bank
that issues such Letter of Credit.
"LETTER OF CREDIT" or "LETTERS OF CREDIT" means any one or more
letters of credit or similar instruments issued or to be issued by an
Issuing Bank for the account of the Borrower or a Wholly-owned Subsidiary
of the Borrower pursuant to Section 3.6, for the purpose of offering the
Issuing Bank's credit to facilitate transactions that the Borrower or such
Subsidiary may have from time to time to third parties in the normal
conduct of their business and (a) as required by law or governmental rule
or regulation, or (b) in accordance with custom and practice in the
industry in which the Borrower is engaged.
"LIBOR" means the arithmetic mean, truncated to the nearest one
one-hundredth of a percent, of interbank interest rates offered by major
banks in the London, United Kingdom market at 11:00 a.m. London Time, for
U.S. dollar denominated deposits on deposit for a period of time equal to
the Interest Period selected by and made available to the Borrower
hereunder, as referenced and reported two (2) Business Days prior to the
effective day of such rate by one of the following sources, selected by the
Agent on an availability basis in descending order of priority: (i) the
Telerate System "Page 3750" report of such interest rates as determined by
the British Bankers Association; (ii) the Telerate System "LIBO Page"
report of such interest rates as determined by Reuter's News Service; (iii)
the Wall Street Journal, Midwest Edition, report of such interest rate; or
(iv) any other generally accepted authoritative source as the Agent may
reference. LIBOR, as so determined with respect to Line of Credit Loans or
Revolving Loans, will be fixed when calculating the Effective Rate until
the last day of the specified Interest Period, if such last day is a
Business Day, and if not, then until the next succeeding Business Day.
"LIBOR AVERAGE" means a fully floating rate that is the thirty day
average, as calculated by Agent on any day, of the One-month LIBOR reported
on each calendar day during the thirty (30) day period that immediately
precedes such calculation. For each calendar day during such thirty (30)
day period which is not a Business Day, the One-month LIBOR shall be equal
to the One-month LIBOR reported as of the Business Day next preceding the
calendar day on which LIBOR is not reported. The LIBOR Average shall be
redetermined as of each Business Day and, as so determined, fixed at such
level until the following Business Day. The LIBOR Average may apply with
respect to the determination of Effective Rates for Single Facility Loans
only.
"LIBOR AVERAGE LOAN" means a Single Facility Loan that bears interest
at a rate determined by reference to the LIBOR Average.
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"LIBOR RATE" means the rate of interest payable on a Line of Credit
Loan or Revolving Loan determined by reference to LIBOR.
"LIBOR RATE LOAN" means a Loan, other than a Single Facility Loan,
that bears interest at a rate determined by reference to the LIBOR Rate.
"LIEN" means, as to any Person, any mortgage, lien, pledge, adverse
claim, charge, security interest or other encumbrance in or on, or any
interest or title of any vendor, lessor, lender or other secured party to
or of such Person under any conditional sale or other title retention
agreement or Capital Lease with respect to, any property or asset of such
Person, or the signing or filing of a financing statement which names such
Person as debtor, or the signing of any security agreement authorizing any
other party as the secured party thereunder to file any financing statement
which names such Person as debtor.
"LINE OF CREDIT LOAN" means a Loan that is made pursuant to Section
2.1 of this Agreement.
"LINE OF CREDIT LOAN COMMITMENT" means the commitment of each Bank to
make the Line of Credit Loans as set forth in Section 2.4.6.
"LINE OF CREDIT MATURITY" means December 23, 1997; provided that if
Borrower delivers to Agent, on or before October 1, 1997, and each
anniversary thereof, Borrower's written request to extend the maturity date
for the Line of Credit Loans, then the Line of Credit Maturity may be
extended by written consent of the Requisite Banks (which for purposes of
extending the Line of Credit Maturity means Banks whose Share of the Total
Commitment (determined after excluding any Defaulting Bank) equals 100% in
the aggregate), in their sole discretion, for the twelve month period
succeeding the existing Line of Credit Maturity, subject to all of the
terms and conditions of this Agreement, as the same may be supplemented or
amended.
"LINE OF CREDIT NOTES" has the meaning set forth in Section 2.5.1 of
this Agreement.
"LOAN" or "LOANS" means one or more of the Revolving Loans, the Line
of Credit Loans, the Single Facility Loans or any combination thereof.
"LOAN DOCUMENTS" means this Agreement, the Notes, and all other
documents, instruments or certificates delivered to the Agent or the Banks
in connection with this Agreement, the Loans and the Letters of Credit.
"MATERIAL ADVERSE EFFECT" means, as applied to any Person, a material
adverse effect on such Person's business, properties, operations or
condition (financial or otherwise); PROVIDED, that such term, when used in
reference to the Borrower or its Subsidiaries, or without reference to any
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particular Person, shall mean such effect on the Borrower and its
Subsidiaries, taken as a whole, and includes any material adverse effect on
the Borrower's ability to perform its obligations under the Loan Documents.
"MATURITY DATE" means, as applied to a Line of Credit Loan, the Line
of Credit Maturity, as applied to a Revolving Loan, the Revolving Loan
Maturity, and as applied to a Single Facility Loan, the Single Facility
Loan Maturity.
"MAXIMUM RATE" means the maximum non-usurious rate of interest that
the Banks are allowed to contract for, charge, take, reserve or receive
under the applicable laws of any applicable state or of the United States
of America (whichever from time to time permits the highest rate for the
use, forbearance or detention of money) after taking into account, to the
extent required by applicable law, any and all relevant payments or charges
under this Agreement, the Notes or under any other document or instrument
executed and delivered in connection herewith and the indebtedness
evidenced by the Notes.
"MULTIEMPLOYER PLAN" means a "multiemployer plan" as defined in
Section 4001(a)(3) of ERISA to which the Borrower, a Subsidiary or any of
their ERISA Affiliates has, or has had, any obligation to contribute on
behalf of its employees.
"NET WORTH" means, with respect to the Borrower and its Subsidiaries,
as of any date of determination, the sum of common shareholders' equity,
determined in accordance with GAAP on a consolidated basis.
"NON-PARTICIPATED LETTER OF CREDIT" means a Letter of Credit issued by
MNB pursuant to section 3.6.5, so long as such letter is not converted by
MNB to a Participated Letter of Credit.
"NOTES" means the Line of Credit Notes, the Revolving Notes, the
Single Facility Note and any other promissory notes issued by Borrower to
the order of any Bank evidencing the Obligations of Borrower to repay the
Loans.
"NOTICE OF BORROWING" means a notice substantially in the form of
Exhibit I annexed hereto with respect to a proposed borrowing or Letter of
Credit issuance.
"OBLIGATIONS" means any and all liabilities, obligations, or
indebtedness owing by Borrower to any Bank under the Loan Documents, of any
kind or description, irrespective of whether for the payment of money,
whether direct or indirect, absolute or contingent, due or to become due,
now existing or hereafter arising.
"ONE-MONTH LIBOR" means LIBOR for U.S. dollar denominated thirty day
deposits.
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"PARTICIPATED LETTER OF CREDIT" means any Letter of Credit, other than
a Non-participated Letter of Credit.
"PERMITTED INDEBTEDNESS LIMITATION" has the meaning assigned to such
term in Section 6.1 of this Agreement.
"PERSON" or "PERSONS" means natural persons, corporations, limited
partnerships, general partnerships, joint stock companies, joint ventures,
associations, companies, trusts, lenders, trust companies, land trusts,
vehicle trusts, business trusts or other organizations, irrespective of
whether they are legal entities, and governments and agencies and political
subdivisions thereof.
"PLAN" means a PENSION PLAN, as such term is defined in ERISA,
established or maintained by the Borrower or any ERISA Affiliate or as to
which the Borrower or any ERISA Affiliate contributed or is a member or
otherwise may have any liability.
"PRIME RATE" means the rate that MNB announces from time to time as
its prime lending rate. The Prime Rate is a reference rate and does not
necessarily represent the lowest or best rate actually charged to any
customer. MNB may make commercial loans or other loans at rates of
interest at, above or below the Prime Rate. Any change in any of the
interest rates determined by reference to a Prime Rate will become
effective on the day that the change in the Prime Rate is effective.
"PRIME RATE LOAN" means a Loan that bears interest at a rate
determined by reference to the Prime Rate.
"PROHIBITED TRANSACTION" has the meaning set forth in Section 406 or
Section 2003(a) of ERISA.
"QUARTER" or "QUARTERLY" means, for the Borrower and the Subsidiaries,
a period of 3 months, with the first Quarter of Fiscal Year 1997 beginning
on March 31, 1996.
"RATABLE SHARE" means the percentage, for each Bank, shown on the
signatures pages of this Agreement, of such Bank's Ratable Share of the
Total Dual Facility Commitment or Share of the Total Commitment, as the
context provides. Aggregate advances of Line of Credit Loans and Revolving
Loans and Participated Letter of Credit reimbursements for each Bank will
be limited to the maximum U.S. dollar amount also shown on the signature
pages of this Agreement.
"RCRA" means the Resource, Conservation and Recovery Act, as amended.
"RENTALS" means and includes, as of the date of any determination
thereof, all fixed payments (including as such all payments which the
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lessee is obligated to make to the lessor on termination of the lease or
surrender of the property) payable by the Borrower or a Subsidiary, as
lessee or sublessee under a lease of real or personal property (LESS, in
the case of any determination of Fixed Charges, any Rentals received by the
Borrower or such Subsidiary as sublessor under any sublease of the same
such real or personal property), but shall be exclusive of any amounts
required to be paid by the Borrower or a Subsidiary (whether or not
designated as rents or additional rents) on account of maintenance,
repairs, insurance, taxes and similar charges. Fixed rents under any
so-called "PERCENTAGE LEASES" shall be computed solely on the basis of the
minimum rents, if any, required to be paid by the lessee regardless of
sales volume or gross revenues and if any such percentage lease does not so
provide for minimum rents, then fixed rents under any such percentage lease
shall be computed on the basis of the amount of the last payment of rent
next preceding any date of determination thereof.
"REPORTABLE EVENT" has the meaning set forth in Section 4043 of ERISA.
"REQUIREMENT OF LAW" means, with respect to any Person, the articles
(or certificate) of incorporation and bylaws or other organizational or
governing documents of such Person, and any law, treaty, rule or regulation
or determination of an arbitrator or a court or other Governmental
Authority, in each case applicable to or binding upon such Person or any of
its property or to which such Person or any of its property is subject.
"REQUISITE BANKS" means, except as expressly set forth in this
Agreement, Banks whose aggregate Share of the Total Commitment exceeds
66-2/3%, excluding from both the numerator and denominator, however, any
Defaulting Bank; provided, Agent will not agree (and Borrower acknowledges
that written consent is required) to change a Maturity Date, Funding Date,
payment date, interest rate, this definition of Requisite Banks, the Total
Commitment, any Bank's Revolving Loan Commitment or Line of Credit Loan
Commitment, any Bank's share of the Total Commitment or any fee payable by
the Borrower hereunder, without the prior written consent of the "Requisite
Banks", which shall mean for those purposes Banks (determined after
excluding any Defaulting Bank) whose Share of the Total Commitment is 100%
in the aggregate.
"REVIEW PERIOD" has the meaning assigned to that term in Section 2.6
of this Agreement.
"REVOLVING LOAN" means a Loan that is made pursuant to Section 2.2 of
this Agreement.
"REVOLVING LOAN COMMITMENT" means the commitment of each Bank to make
the Revolving Loans as set forth in Section 2.4.6.
"REVOLVING LOAN MATURITY" means December 23, 1999; provided that if
Borrower delivers to Agent on or before October 1, 1999, and each
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anniversary thereof, Borrower's written request to extend the maturity date
for the Revolving Loans, then the Revolving Loan Maturity may be extended
by written consent of the Requisite Banks (which for purposes of extending
the Revolving Loan Maturity means Banks whose Share of the Total Commitment
(determined after excluding any Defaulting Bank) equals 100% in the
aggregate), in their sole discretion, for the twelve month period
succeeding the existing Revolving Loan Maturity, subject to all of the
terms and conditions of this Agreement, as the same may be supplemented or
amended.
"REVOLVING NOTES" has the meaning set forth in Section 2.5.2 of this
Agreement.
"SEC" means the Securities and Exchange Commission or any successor
agency.
"SECURITY" has the meaning set forth in Section 2(1) of the Securities
Act.
"SECURITIES ACT" means the Securities Act of 1933, as amended from
time to time, the rules and regulations promulgated thereunder, and any
successor statute.
"SHARE OF THE TOTAL COMMITMENT" means, with respect to each Bank, the
percentage as shown for such Bank in the signature pages of this Agreement.
"SHAREHOLDERS' EQUITY" means, as at any date of determination, the
shareholders equity of the Borrower and its Subsidiaries appearing on a
consolidated balance sheet of the Borrower and its Subsidiaries prepared in
accordance with GAAP as of such date of determination.
"SINGLE FACILITY LOAN" means a Loan that is made pursuant to Section
2.3 of this Agreement.
"SINGLE FACILITY LOAN COMMITMENT" means the commitment to make the
Single Facility Loans as set forth in Section 2.3.
"SINGLE FACILITY LOAN MATURITY" means December 23, 1999; provided that
if Borrower delivers to MNB, on or before October 1, 1999, and each
anniversary thereof, Borrower's written request to extend the maturity date
for the Single Facility Loans, then the Single Facility Loan Maturity may
be extended by written consent of MNB for the twelve month period
succeeding the existing Single Facility Loan Maturity, subject to all of
the terms and conditions of this Agreement, as the same may be supplemented
or amended.
"SINGLE FACILITY NOTE" has the meaning set forth in Section 2.5.3 of
this Agreement.
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"STANDBY LETTER OF CREDIT" means a Letter of Credit, other than a
Commercial Letter of Credit.
"SUBSIDIARY" of any Person means (i) any corporation more than 50% of
whose stock of any class or classes having by the terms thereof ordinary
voting power to elect a majority of the directors of such corporation
(irrespective of whether or not at the time stock of any class or classes
of such corporation shall have or might have voting power by reason of the
happening of any contingency) is at the time owned or controlled by such
Person, directly or indirectly through Subsidiaries and (ii) any
partnership, association, joint venture or other entity in which such
Person, directly or indirectly through Subsidiaries, has more than a 50%
equity interest at the time. Unless expressly stated otherwise, each
reference to a Subsidiary in any Loan Document means a Subsidiary of
Borrower.
"TAXES" means any taxes, charges, fees, levies or other assessments
based upon or measured by net or gross income, gross receipts, sales, use,
ad valorem, transfer, franchise, withholding, payroll, employment, excise,
premium or property taxes, together with any interest and penalties,
additions to tax and additional amounts imposed by any federal, state,
local or foreign taxing authority upon any Person.
"TO THE BEST OF BORROWER'S KNOWLEDGE", and any other phrase regarding
the Borrower's knowledge with respect to the existence or absence of facts,
means (i) the actual knowledge of the officers and directors of Borrower,
and (ii) the knowledge that could be acquired by such Persons after due
inquiry.
"TOTAL COMMITMENT" means the sum of the Total Line of Credit Loan
Commitment, the Total Revolving Loan Commitment, and the Single Facility
Loan Commitment, as each are defined herein and in effect from time to
time.
"TOTAL DUAL FACILITY COMMITMENT" means the sum of the Total Line of
Credit Loan Commitment and the Total Revolving Loan Commitment, as each of
those terms are defined and used in Section 2, and as each are in effect
from time to time.
"TOTAL LINE OF CREDIT LOAN COMMITMENT" has the meaning assigned to
that term in Section 2.1.
"TOTAL REVOLVING LOAN COMMITMENT" has the meaning assigned to that
term in Section 2.2.
"UNMATURED EVENT OF DEFAULT" means an event, act, or occurrence which
with the giving of notice or the lapse of time, or both, would become an
Event of Default.
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"VOTING STOCK" means capital stock of a corporation, the holders of
which are ordinarily, in the absence of contingencies, entitled to vote in
the elections of the corporate directors (or persons performing similar
functions).
"WHOLLY-OWNED SUBSIDIARY" means any Subsidiary, all of the equity
Securities (except directors' qualifying shares) of which are owned by the
Borrower or another Wholly-owned Subsidiary.
"YIELD MAINTENANCE PAYMENT" means, for each LIBOR Rate Loan, an
amount, if positive, which the Borrower is required to pay to maintain each
Bank's anticipated Loan yield with respect to such LIBOR Rate Loan, which
is the product of (a) the dollar amount of such LIBOR Rate Loan, which for
any voluntary or involuntary reason (i) is not disbursed on the Funding
Date as a result of the Borrower's revocation of its request or
non-acceptance of funds or (ii) is repaid on a date which is not the last
day of an Interest Period, (b) the difference between the Effective Rate
immediately prior to such event and the LIBOR Rate, as determined by Agent
by reference to the current yield for LIBOR rate funds having an Interest
Period beginning, as close as possible, on the date of such event and
ending at the expiration of the Interest Period in effect with respect to
the subject Loan, and (c) the ratio of the number of full calendar days
which on the date of such event remain until the conclusion of the
applicable Interest Period and 360 days.
1.2 ACCOUNTING TERMS. All accounting terms not specifically defined
herein, to the extent not inconsistent with definitions set forth in
Section 1.1 of this Agreement, will be construed in accordance with GAAP as
in effect from time to time. When used herein, the term "financial
statements" will include the notes and schedules thereto.
1.3 OTHER DEFINITIONAL PROVISIONS.
(a) Unless otherwise specified therein, all terms defined in
this Agreement will have the defined meanings when used in the Loan
Documents or any certificate or other document made or delivered pursuant
hereto.
(b) Section, subsection, Schedule and Exhibit references
contained in this Agreement are references of Sections, subsections,
Schedules and Exhibits in or to this Agreement unless otherwise specified.
(c) Any of the terms defined in Section 1.1 may, unless the
context otherwise requires, be used in the singular or the plural depending
on the reference.
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2. AMOUNTS AND TERMS OF LOANS.
2.1 AMOUNT OF LINE OF CREDIT LOAN COMMITMENT. Subject to the terms
and conditions hereof, Banks agree to advance to Borrower until the Line of
Credit Maturity, as Borrower may request in accordance with Section 2.4
hereof, up to the aggregate principal amount of $60,000,000 (the "Total
Line of Credit Loan Commitment"). Amounts borrowed as Line of Credit Loans
may be borrowed, repaid and reborrowed.
2.2 AMOUNT OF REVOLVING LOAN COMMITMENT. Subject to the terms and
conditions hereof, Banks agree to advance to Borrower until the Revolving
Loan Maturity, as Borrower may request in accordance with Section 2.4
hereof, up to the aggregate principal amount of $60,000,000 (the "Total
Revolving Loan Commitment"). Amounts borrowed as Revolving Loans may be
borrowed, repaid and reborrowed.
2.3 AMOUNT OF SINGLE FACILITY LOAN COMMITMENT. Subject to the terms
and conditions hereof, MNB agrees to advance to Borrower until the Single
Facility Loan Maturity, as Borrower may request in accordance with Section
2.4 hereof, up to the aggregate principal amount of $20,000,000 (the
"Single Facility Loan Commitment"). Amounts borrowed as Single Facility
Loans may be borrowed, repaid and reborrowed.
2.4 NOTICE AND MANNER OF BORROWING.
2.4.1 Borrower may select from one of the following interest
rate options when requesting a Dual Facility Loan:
(a) The Prime Rate, less .90%; or
(b) LIBOR, plus .50%.
PROVIDED, HOWEVER, that if, any consolidated financial statements of the
Borrower and the Subsidiaries indicate that on and as of the last day of a
Quarter, the ratio of Consolidated Total Liabilities to Shareholders'
Equity was less than 2:1, then during the 90 day period immediately
following Agent's receipt of such financial statements, the Effective Rates
for all Dual Facility Loans shall be as follows:
(i) with respect to Prime Rate Loans, the Prime Rate, less
1.00%; and
(ii) with respect to LIBOR Rate Loans, LIBOR, plus .40%.
2.4.2 Each Dual Facility Loan for which the interest rate option
set forth in subsection 2.4.1(b) is selected will be for a specified time
period (each an "Interest Period") of 1 month, 2 months, 3 months or 6
months in each instance, with a specified due date not later than the
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Maturity Date for such Loan. Line of Credit Loans may be obtained until
the Line of Credit Maturity, at which time all principal and interest
outstanding on the Line of Credit Loans will be immediately due and payable
by Borrower to Agent. Revolving Loans may be obtained until the Revolving
Loan Maturity, at which time all principal and interest outstanding on the
Revolving Loans will be immediately due and payable by Borrower to Agent.
2.4.3 Borrower may select from one of the following interest
rate options when requesting a Single Facility Loan:
(a) The Prime Rate, less .90%; or
(b) the LIBOR Average, plus .60%.
2.4.4 Single Facility Loans may be obtained until the Single
Facility Loan Maturity, at which time all principal and interest
outstanding on all Single Facility Loans will be immediately due and
payable by Borrower to MNB.
2.4.5 Borrower shall give Agent notice of its request for each
Loan or Letter of Credit in substantially the form of EXHIBIT I hereto (a
"Notice of Borrowing") not later than 12:30 p.m., Grand Rapids, Michigan
time (a) three (3) Business Days prior to the date such Loan is requested
to be made if such Loan is to be a LIBOR Rate Loan, (b) three (3) Business
Days prior to the date a Letter of Credit is requested to be issued, and
(c) on the date such Loan is requested to be made in all other cases, which
notice shall specify (i) whether a Revolving Loan, a Line of Credit Loan, a
Single Facility Loan or a Letter of Credit is requested, (ii) if a Loan is
requested, the interest rate option chosen with respect to such Loan and
the account into which the Loan funds should be deposited, and (iii) in the
case of each requested LIBOR Rate Loan, the Interest Period to be
applicable to such Loan. Agent shall provide notice of each requested Dual
Facility Loan or Participated Letter of Credit to each Bank. Subject to
the terms and conditions of this Agreement, the proceeds of each such
requested Loan (other than a Letter of Credit) shall be made available to
Borrower by depositing the proceeds thereof, in immediately available
funds, in an account of the Borrower or a Wholly-owned Subsidiary
designated by the Borrower maintained at the principal office of Agent.
Notwithstanding anything to the contrary contained in this Agreement, in
the event that a Loan is to be made to reimburse an Issuing Bank for funds
drawn upon a Letter of Credit, (i) if MNB is the Issuing Bank, MNB may, in
its sole discretion, elect to disburse such funds from the Single Facility
Loan Commitment as a Prime Rate Loan, and (ii) in all other cases, such
Loan may (subject to availability) be a Prime Rate Loan disbursed under the
Line of Credit Loan Commitment. Borrower shall provide to Agent a written
schedule of individuals who are authorized to request (i) Loans on behalf
of Borrower or (ii) Letters of Credit on behalf of Borrower or a
Wholly-owned Subsidiary, which schedule may be amended by Borrower in its
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discretion. Agent and the Banks may rely on the most recent schedule
received by Agent to make Loans and issue Letters of Credit hereunder.
Notwithstanding anything to the contrary contained in this Agreement or any
other Loan Document, Borrower shall be deemed to be the borrower of all
Loans, and shall be liable for the payment and performance with respect to
all sums and obligations arising in favor of Agent, MNB, and Banks, under
this Agreement or any other Loan Document.
2.4.6 Each Bank's commitment to make Line of Credit Loans to the
Borrower pursuant to this Agreement is called its "Line of Credit Loan
Commitment", and each Bank's commitment to make Revolving Loans to the
Borrower under this Agreement is called its "Revolving Loan Commitment".
The initial amounts of each Bank's Line of Credit Loan Commitment and
Revolving Loan Commitment are shown on the signature pages of this
Agreement. Neither the Agent nor any Bank shall be responsible for the
failure of any other Bank to make its Ratable Share available on the
applicable Funding Date.
2.4.7 Upon fulfillment of the conditions set forth in Sections
2.4, 2.10, and 3.4 of this Agreement (and subject to Agent's then current
deadlines for wire transfers and crediting of Agent and Bank accounts),
Agent will disburse such Loan (other than a Letter of Credit) to Borrower
in immediately available funds at Borrower's expense.
2.4.8 Banks will have no obligation to honor any request for a
Loan if giving effect to such request would cause the total number of
outstanding Dual Facility Loans to exceed 10. For purposes of calculating
the foregoing limitation: (a) each LIBOR Rate Loan for which a distinct
Interest Period applies will be counted as a single Loan, and (b) all Prime
Rate Loans will be counted as a single Loan.
2.4.9 If the Borrower fails to either (a) repay any LIBOR Rate
Loan upon the expiration of its Interest Period, or (b) timely deliver a
Notice of Borrowing with respect to the principal component of such funds,
subject to the other terms and conditions of this Agreement (including,
without limitation, the Commitment maximums established in this Agreement),
Borrower shall be deemed to have delivered to the Agent a Notice of
Borrowing for the principal component of such funds as a Prime Rate Loan
disbursed from the Line of Credit Loan Commitment with a Funding Date equal
to the maturity date of the expiring Interest Period.
2.4.10 The minimum amount of a Loan made on any Funding Date
shall be the least of the following: (i) $1,000,000 and integral multiples
of $100,000 in excess of that amount, (ii) the unutilized amount of the
Commitment from which the Loan is requested, or (iii) with respect to a
reimbursement for funds drawn upon a Letter of Credit, the amount of such
reimbursement.
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2.5 AUTHORIZATION AND ISSUANCE OF NOTES.
2.5.1 All Loans made by the Banks as Line of Credit Loans will
be evidenced by separate promissory notes of Borrower, in the form of
EXHIBIT II to this Agreement (each a "Line of Credit Note" and collectively
the "Line of Credit Notes"), to be executed and delivered by Borrower to
each of the Banks, in the principal amount of each such Bank's Line of
Credit Loan Commitment, on the Closing Date.
2.5.2 All Loans made by the Banks as Revolving Loans will be
evidenced by separate promissory notes of Borrower, in the form of EXHIBIT
III to this Agreement (each a "Revolving Note" and collectively the
"Revolving Notes"), to be executed and delivered by Borrower to each of the
Banks, in the principal amount of each such Bank's Revolving Loan
Commitment, on the Closing Date.
2.5.3 All Loans made as Single Facility Loans will be evidenced
by a single promissory note of Borrower, in the form of EXHIBIT IV to this
Agreement (the "Single Facility Note"), to be executed and delivered by
Borrower, in the stated principal amount of $20,000,000, on the Closing
Date.
2.6 UNUSED COMMITMENT - DUAL FACILITY LOANS. Beginning on the
Closing Date and ending on the later of the Line of Credit Loan Maturity
and the Revolving Loan Maturity, Borrower will pay to the Agent, for each
calendar quarter, in arrears, from funds other than those supplied by the
Loans, an amount equal to the quotient of (a) .15% of the daily average
unused portion during such quarter, of the Total Dual Facility Commitment
(determined by subtracting from the Total Dual Facility Commitment the sum
of (i) outstanding principal under Line of Credits Loans and the Revolving
Loans, plus (ii) the sum of the face amounts of all outstanding
Participated Letters of Credit and reimbursement obligations of the
Borrower with respect to Participated Letters of Credit), as in effect from
time to time, (b) divided by 4. Agent will provide to Borrower, promptly
upon the end of each calendar quarter, a statement setting forth the fee
owing by Borrower under this Section 2.6 for the immediately preceding
calendar quarter (each a "Fee Statement"), which will be deemed to be
correct and accepted by Borrower, unless Agent receives a written statement
of exceptions from Borrower within sixty (60) days after such statement has
been rendered to Borrower (the "Review Period"). Borrower shall pay to
Agent the amount set forth on the Fee Statement within 10 days after such
statement has been rendered to Borrower, notwithstanding that the Review
Period will not have expired at such time.
2.7 USE OF PROCEEDS. The proceeds of the Loans will be used by
Borrower (a) to repay and replace certain line of credit Indebtedness
outstanding from the Banks immediately prior to the execution of this
Agreement, (b) for general corporate purposes, (c) for general working
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capital needs, (d) with respect to Single Facility Loans and Line of Credit
Loans, to reimburse the Banks for funds drawn under Letters of Credit, and
(e) to pay fees and expenses arising in connection with this Agreement and
the transactions contemplated hereby.
2.8 PAYMENT.
2.8.1 Interest will be paid by Borrower upon the principal
balance outstanding from time to time under each Loan, in arrears (i) with
respect to all Loans other than LIBOR Rate Loans, monthly as set forth in
the immediately succeeding paragraph, (ii) with respect to each LIBOR Rate
Loan having an Interest Period of 3 months or less, at the expiration of
the Interest Period, (iii) with respect to each LIBOR Rate Loan having an
Interest Period of more than 3 months, at the end of each calendar quarter
in accordance with the immediately succeeding paragraph and at the
expiration of the Interest Period, (iv) upon any prepayment of any such
Loan (to the extent accrued on the amount being prepaid), and (v) at
maturity.
Agent will provide Borrower, on or about the 20th day of each calendar
month, a statement setting forth the interest owing, and in the reasonable
estimation of Agent the interest that will accrue, with respect to the
Loans for the calendar month for which the statement is provided (each an
"Interest Statement"). Each Interest Statement will also reflect any
adjustments necessary for any discrepancies between estimated and actual
accrued interest determined since the immediately preceding Interest
Statement. With respect to determinations of actual accrued interest, each
Interest Statement will be deemed to be correct and accepted by Borrower,
unless Agent receives a written statement of exceptions from Borrower
within sixty (60) days after such statement has been received by Borrower.
Borrower shall pay to Agent the amount set forth on the Interest Statement
on or before the later to occur of (i) the tenth day after the Interest
Statement has been rendered to Borrower, and (ii) the date specified on the
Interest Statement, notwithstanding that the review period will not have
expired at such time.
2.8.2 Principal will be repaid by Borrower to Agent, as follows:
(a) The outstanding principal amount of each LIBOR Rate Loan
will be payable (i) subject to any right of the Borrower to reborrow such
funds, in full, upon the expiration of the Interest Period applicable to
such Loan, (ii) at maturity, and (iii) otherwise as set forth in Section
2.9 below; and
(b) The outstanding principal amount of each Prime Rate Loan and
LIBOR Average Loan will be payable (i) at maturity, (ii) as Borrower, in
its sole discretion, determines that working capital permits, and (iii)
otherwise as set forth in Section 2.9 below.
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All payments of principal and interest by Borrower to Agent shall be
made in immediately available United States funds.
2.9 PREPAYMENTS.
2.9.1 Borrower may prepay, in whole or in part, at any time,
without premium or penalty, any Prime Rate Loan or any LIBOR Average Loan.
LIBOR Rate Loans may only be prepaid upon five (5) days' prior written
notice, from Borrower to Agent, and upon payment by Borrower on the date of
prepayment a Yield Maintenance Payment. The Borrower's non-acceptance of
funds or revocation of a request for LIBOR Rate Loan funds shall be deemed
to be a prepayment on the proposed Funding Date in the full amount of the
requested Loan amount. The minimum amount of any prepayment made under
this Section 2.9.1 shall be the least of (a) $100,000 and integral
multiples of $100,000 in excess of that amount or (b) the outstanding
principal with respect to a Loan.
2.9.2 If at any time the total outstanding amount of Line of
Credit Loans will exceed the Total Line of Credit Loan Commitment, the
total outstanding amount of Revolving Loans will exceed the Total Revolving
Loan Commitment, or the total outstanding amount of Single Facility Loans
will exceed the Single Facility Loan Commitment, Borrower shall within two
Business Days after such excess arises remit and pay to Agent, or MNB, as
the case may be, such amounts as may be necessary to reduce such
outstanding amount to the applicable Commitment.
2.9.3 Any principal prepayment shall be applied (a) as between
Prime Rate Loans and LIBOR Rate Loans, first to Prime Rate Loans to the
full extent thereof before application to LIBOR Rate Loans, and (b) as
among Line of Credit Loans, Revolving Loans and Single Facility Loans, pro
rata on the basis of the aggregate outstanding balance of each such Loans
on the date of repayment; provided, however, that so long as no Event of
Default or Unmatured Event of Default has occurred or exists, voluntary
principal prepayments shall be applied as directed by the Borrower.
2.9.4 Borrower shall pay to Agent with respect to (i)
prepayments of Dual Facility Loans that are LIBOR Rate Loans (regardless
of whether such prepayments are voluntary or mandatory), and (ii)
non-acceptance of funds or revocation of a request for a LIBOR Rate Loan,
the applicable Yield Maintenance Payment. Such Yield Maintenance Payments
shall be due, with respect to a mandatory prepayment, on the due date of
such mandatory prepayment, with respect to a voluntary prepayment, on the
date of such prepayment, and with respect to non-acceptance of funds or
revocation of a request for a LIBOR Rate Loan, immediately upon demand of
the Agent.
2.9.5 Without in any way affecting Borrower's obligations
arising under this Agreement prior to such termination (including, without
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limitation, the obligation to repay amounts owing under the Notes or this
Agreement), Borrower may terminate the Line of Credit Loan Commitment, the
Revolving Loan Commitment or the Single Facility Loan Commitment at any
time upon delivery of written notice to Agent thirty (30) days prior to
such termination.
2.10 LOAN DISBURSEMENT AND ACCOUNTS.
2.10.1 All Loans will be made by Agent on behalf of the Banks on
the requested Funding Date, except that the Ratable Share of any Bank which
the Agent receives after 2:30 p.m., Grand Rapids, Michigan time on the
Funding Date, or at any time after the Funding Date, will be disbursed on
the Business Day following its receipt. Nothing in this Agreement or any
other Loan Document is to be construed to require Agent to advance funds on
behalf of any Bank.
2.10.2 Agent will have no liability to Borrower or any
Wholly-owned Subsidiary for the failure of any Bank to make a Loan on the
Funding Date.
2.10.3 All payments in respect of Loans, interest, fees or
expenses incurred by the Banks and required by Borrower to be reimbursed
will be deemed paid when immediately available U.S. currency or its
equivalent is paid in the amount required by Borrower to Agent.
2.10.4 Loans will be charged to an account in Borrower's name on
Agent's books, and Agent will debit to such account the amount of each Loan
when made and credit to such account the amount of each repayment
thereunder. Agent will provide to Borrower, from time to time, a statement
setting forth the debit balance in the loan account, which will be deemed
to be correct and accepted by Borrower, unless Agent receives a written
statement of exceptions within sixty (60) days after such statement has
been received by Borrower. Such statement will be prima facie evidence of
the correctness of the Loan balances and payment amounts owing to the Banks
by Borrower hereunder, unless there will be manifest error evident on its
face. Similarly, each Bank is hereby authorized by Borrower to record in
its books and records, the date, and amount and type of each Loan and the
duration of the related Interest Period (if applicable), the amount of each
payment or prepayment of principal thereon, which books and records shall
constitute prima facie evidence of the information so recorded, PROVIDED,
HOWEVER, that failure of any Bank to record, or any error in recording, any
such information shall not relieve Borrower of its obligation to repay the
outstanding principal amounts of the Loans, all accrued interest thereon
and other amounts payable with respect thereto in accordance with the terms
of the Notes and this Agreement.
2.11 PRIVATE PLACEMENT REDUCTION. Notwithstanding anything to the
contrary contained in this Agreement or any of the other Loan Documents,
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the Total Line of Credit Loan Commitment and the Total Revolving Loan
Commitment will each be reduced by $.333 for each dollar obtained at any
time during the term of this Agreement in connection with the Private
Placement.
3. GENERAL PROVISIONS.
3.1 AGENT'S FEE. Borrower will pay to Agent on the Closing Date a
fee in an amount agreed upon by the Agent and the Borrower for Agent's
agreement to serve as agent hereunder.
3.2 DEFAULT RATE, ETC.
3.2.1 Without affecting any Bank's rights and remedies provided
for herein and in the Notes, after any Event of Default, (i) the entire
outstanding principal balance of the Dual Facility Loans will, at the
option of the Requisite Banks, and (ii) the entire outstanding principal
balance of the Single Facility Loans will, at the option of MNB, bear
interest at two percent (2%) per annum in excess of the otherwise Effective
Rate for such Loans.
3.2.2 In addition to, and not in lieu of any amounts that may be
owing under 3.2.1 above, if any required payment under any Note is not paid
within ten (10) days from the date it is due, at the option of the
Requisite Banks with respect to the Dual Facility Loans and MNB with
respect to the Single Facility Loans, a late charge of five cents ($.05)
for each dollar of the payment so overdue may be charged.
3.3 COMPUTATION OF INTEREST AND FEES; MAXIMUM INTEREST RATE.
3.3.1 All computations of interest on the Loans and interest due
thereunder for any period will be calculated on the basis of the actual
number of days elapsed over a year of three hundred sixty (360) days.
Interest will accrue from the date of any Loan up to but excluding the date
of repayment of such Loan, in accordance with the provisions hereof.
3.3.2 Notwithstanding anything to the contrary contained in this
Agreement, Borrower will not be obligated to pay, and the Banks will not be
entitled to charge, collect or receive, interest in excess of the Maximum
Rate and in the event the Banks ever receive, collect or apply, as
interest, any such excess, such amount which would be excessive interest
will be deemed a partial prepayment of principal and treated hereunder as
such; and, if the principal hereof is paid in full, any remaining excess
will immediately be returned to Borrower. If any construction of this
Agreement, the Notes or the other Loan Documents indicates a different
right given to the Banks to ask for, demand or receive any larger sum as
interest, such as a mistake in calculation or wording, this clause will
override and control, it being the intention of Borrower and the Banks that
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this Agreement, the Notes and the other Loan Documents will in all respects
comply with applicable law, and proper adjustment will automatically be
made accordingly. In determining whether or not the interest paid or
payable, under any specific contingency, exceeds the Maximum Rate, Borrower
and the Banks will, to the maximum extent permitted by law (a) characterize
any nonprincipal payment as an expense, fee or premium rather than as
interest; (b) exclude voluntary prepayments and the effects thereof; and
(c) amortize, prorate, allocate and spread the total amount of interest
through the entire contemplated term of such indebtedness until payment in
full of the principal (including the period of any extension or renewal
thereof) so that the interest on account of such indebtedness will not
exceed the Maximum Rate.
3.4 CONDITIONS PRECEDENT TO ALL SUBSEQUENT LOANS. The obligation of
the Banks and each of them to make Loans or issue Letters of Credit after
the Closing Date is subject to the fulfillment, in form and substance
satisfactory to Agent and its counsel, of each of the following conditions
on or before the date of each such Loan or Letter of Credit:
3.4.1 As of the date of making each Loan or issuance of Letter
of Credit, no Event of Default and no Unmatured Event of Default will have
occurred and be continuing, nor will either result from or exist after the
making of such Loan or issuance of such Letter of Credit.
3.4.2 This Agreement and each of the other Loan Documents will
be in full force and effect.
3.4.3 Each of the representations and warranties contained in
Section 4 of this Agreement or in any other Loan Document, document or
financial statement furnished by or on behalf of Borrower to any Bank, will
be true and correct in all material respects on and as of the date of the
Loan (unless stated to relate to a specific earlier date, in which case
such representations and warranties will be true and correct in all
material respects as of such earlier date).
3.4.4 There will have been no change that has a Material Adverse
Effect on the Borrower or any Subsidiary since the date of the most recent
financial statements of Borrower and the Subsidiaries delivered to Agent.
3.4.5 There shall be no law, rule, regulation, judgment, order
or decree passed, promulgated or entered by any Governmental Authority
prohibiting or restricting such Loan or Letter of Credit.
3.5 COMPENSATION FOR INCREASED COSTS.
3.5.1 In the event after the date of this Agreement, any
introduction of any law, or any change in any law, or the interpretation or
application thereof by any court or Governmental Authority charged with the
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administration thereof, or the compliance with any guideline or request
from any Governmental Authority (whether or not having the force of law),
which has the effect of subjecting the Requisite Banks (which for purposes
of this Section 3.5 means Banks whose aggregate Share of the Total
Commitment exceeds 66-2/3%, excluding from both the numerator and
denominator, however, any Defaulting Bank) to any tax, deduction or
withholding with respect to this Agreement or any other Loan Document
(other than any tax incurred by or based upon the overall net income of any
such Banks), and the result thereof is to increase the cost to the
Requisite Banks, reduce the income receivable by the Requisite Banks,
impose any expense upon the Requisite Banks or reduce the amount of any
payment receivable by the Requisite Banks with respect to their Commitments
hereunder, or any portion thereof, by an amount which the Requisite Banks
deem to be material (an "Increased Cost"), then any Bank affected by either
of the foregoing shall from time to time notify the Agent and Borrower
thereof by delivery of a certificate of an officer of such Bank of the
nature described in the next sentence (an "Increased Cost Notice"), and,
subject to paragraph 3.5.4 below, the Borrower shall pay to the Agent for
delivery to such Bank that amount which shall compensate such Bank (on an
after tax basis) for such Increased Cost. A certificate setting forth in
reasonable detail such Increased Cost, and the manner of calculating the
same as determined by such Bank, shall be submitted by such Bank to the
Agent and Borrower and, absent manifest error, shall be conclusive as to
the correctness of the amount of the Increased Cost (provided that such
determination be made reasonably and in good faith).
3.5.2 If the Requisite Banks shall have determined that the
introduction of or any change in any applicable law regarding capital
adequacy, or any change in the interpretation or administration thereof by
any Governmental Authority, central bank or comparable agency charged with
the interpretation or administration thereof, or compliance by the
Requisite Banks with any request or directive regarding capital adequacy
(whether or not having the force of law) or any such authority, central
bank or comparable agency, has or would have the effect of reducing the
rate of return on the Requisite Banks' capital as a consequence of its
obligations hereunder, its commitment hereunder, or the transactions
contemplated hereby to a level below that which the Requisite Banks could
have achieved but for such adoption, change or compliance by an amount
deemed by the Requisite Banks to be material, then the Borrower shall,
subject to paragraph 3.5.4, pay to the Agent for delivery to each Bank
affected by the foregoing, such additional amount or amounts determined by
such Bank as will compensate such Bank for such reduced rate of return.
3.5.3 Borrower acknowledges that compensation to any Bank for
any increased costs incurred, or reduced rate of return realized, by such
Bank and payable by Borrower pursuant to this Section 3.5 may take the form
of an increase in the interest rate payable under the Loans.
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3.5.4 Notwithstanding anything to the contrary contained in this
section 3.5, Borrower will not be responsible for the additional amounts
imposed under paragraphs 3.5.1 or 3.5.2 if within 30 days after Borrower's
receipt of written notice that such amounts are owing, Borrower repays in
full the indebtedness (including premiums, if any) giving rise to such
additional amounts.
3.6 LETTERS OF CREDIT.
3.6.1 Subject to the terms and conditions hereof, Borrower and
any Wholly-owned Subsidiary may request the Agent to cause to be issued by
Agent or, subject to the Intercreditor Agreement among Agent and the Banks
dated even date herewith, any other Bank that so agrees Standby Letters of
Credit or Commercial Letters of Credit for Borrower's or such Subsidiary's
account, each of which, upon the issuance thereof, will constitute a Letter
of Credit. Any Letter of Credit issued pursuant to this Agreement shall
have a term, not including renewals, not exceeding one year. The Borrower
or Wholly-owned Subsidiary for whose account a Letter of Credit is issued
shall execute and deliver to the Issuing Bank (subject in any event to the
terms of this Agreement and the Notes) such bank's standard application and
reimbursement documents with respect thereto. Borrower shall be obligated,
which obligation shall (a) survive the maturity of any Loan or Commitment
provided for hereunder, (b) be joint and several with the obligations of
any Wholly-owned Subsidiary for which a Letter of Credit is issued, and (c)
be effective regardless of whether there exists any availability under any
of the Commitments, to reimburse the Issuing Bank for any funds drawn upon
any Letter of Credit. Unreimbursed Letter of Credit amounts shall bear
interest from the date the applicable Letter of Credit is honored until
satisfaction of the Borrower's reimbursement obligation at an annual rate
equal to the Prime Rate. The Total Line of Credit Loan Commitment shall be
reduced by the face amount of each Letter of Credit issued hereunder until
the earlier of (i) the expiration or termination thereof, and (ii) payment
by Borrower to the Issuing Bank of its reimbursement obligation with
respect thereto. Also, the Single Facility Loan Commitment shall be
reduced by the face amount of each Non-participated Letter of Credit until
the earlier of (u) the expiration or termination thereof, and (v) payment
by Borrower to MNB of its reimbursement obligation hereunder with respect
thereto. Provided (w) the Line of Credit Maturity has not passed, and (x)
there exists adequate availability under the Total Line of Credit Loan
Commitment, at such time as funds are drawn upon a Participated Letter of
Credit, the amount of such draw may, in the discretion of the Agent, be
deemed to be borrowed under the Total Line of Credit Loan Commitment and
immediately will begin to bear interest as a Prime Rate Loan. Provided (y)
the Single Facility Loan Maturity has not passed, and (z) there exists
adequate availability under the Single Facility Loan Commitment, at such
time as funds are drawn upon a Non-participated Letter of Credit, the
amount of such draw may, at MNB's discretion, be deemed to be borrowed
under the Single Facility Loan Commitment and immediately will begin to
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bear interest as a Prime Rate Loan. Borrower will pay, to the Agent for
Participated Letters of Credit (for distribution to the Banks, net of funds
paid to the Issuing Bank by Borrower or a Wholly-owned Subsidiary for the
costs of issuance), and to MNB for Non-participated Letters of Credit, a
fee of .50% per annum of the face amount of any newly issued or renewed
Standby Letter of Credit at the time of issuance or renewal of such Letter
of Credit. Such fee is nonrefundable and Borrower shall not be entitled to
any rebate of any portion thereof if such Letter of Credit does not remain
outstanding through its stated expiry date or for any other reason. The
Banks' agreement to issue Letters of Credit will expire on the Line of
Credit Maturity.
3.6.2 Borrower and any Wholly-owned Subsidiary for which a
Letter of Credit is issued assumes all risks of the acts or omissions of
any beneficiary under any Letter of Credit with respect to the use by such
beneficiary of such Letter of Credit. Borrower acknowledges that neither
the Banks, the Agent nor any of their officers or directors will be liable
or responsible for (a) the use which may be made of any Letter of Credit or
for any acts or omissions of any beneficiary in connection therewith, (b)
the validity or genuineness of any documents delivered in connection with
any Letter of Credit, or of any endorsements thereon, even if such
documents should in fact prove to be in any or all respects invalid,
fraudulent or forged, or (c) any other circumstances whatsoever in
connection with honoring or dishonoring any Letter of Credit except, in all
cases, the foregoing persons shall not be relieved of liability in the case
of (i) payment under a Letter of Credit against presentation of a draft or
other document that does not comply with the terms of the Letter of Credit,
or (ii) acts constituting the gross negligence or willful misconduct of any
such Person. The Issuing Bank may, subject to applicable United States
law, 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.
3.6.3 Borrower hereby indemnifies Agent and the Banks and agrees
to keep Agent and the Banks at all times indemnified against all
liabilities (including costs and reasonable attorneys' fees) which Agent
and the Banks may incur or which may be claimed against Agent and the Banks
by any Person by reason of or relating to any matters arising in connection
with any Letter of Credit or any of the transactions contemplated thereby;
PROVIDED, HOWEVER, that Borrower shall not be required to indemnify any
Bank for any claims, damages, losses, liabilities, costs or expenses
arising solely from (i) payment under a Letter of Credit against
presentation of a draft or other document that does not comply with the
terms of the Letter of Credit, or (ii) acts constituting the gross
negligence or willful misconduct of the Issuing Bank, or (iii) the Agent's
or Issuing Bank's willful failure to pay under the Letter of Credit after
the presentation to the Agent or Issuing Bank by a Letter of Credit
beneficiary of a sight draft and certificate(s) complying with the terms
and conditions of the Letter of Credit.
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3.6.4 The Banks will have no obligation to issue any Letter of
Credit if, at any date of determination, the sum of (a) the maximum
aggregate amount available to be drawn under all Letters of Credit then
outstanding, PLUS (b) the aggregate amount of all drawings under Letters of
Credit not theretofore reimbursed by the Borrower (either by direct payment
or an advance under a Commitment), would exceed $25,000,000.
3.6.5 MNB may elect (but is not obligated) to issue a Letter of
Credit without subjecting the letter to participation by the other Banks
(each a "Non-participated Letter of Credit"), if the letter satisfies the
following conditions:
(a) The amount available to be drawn under such Letter of
Credit does not exceed $25,000; and
(b) The issuance of such Letter of Credit will not cause the
sum of (i) the maximum aggregate amount available to be
drawn under all Non-participated Letters of Credit then
outstanding, PLUS (ii) the aggregate amount of all drawings
under Non-participated Letters of Credit not theretofore
reimbursed by the Borrower (either by direct payment or an
advance under a Commitment), to exceed $350,000.
provided, however, that MNB may, at any time, and in its sole discretion,
convert one or more Non-participated Letters of Credit (before or after
presentation and honor) to Participated Letters of Credit. Agent will
provide written notice to Borrower of the conversion of any
Non-participated Letters of Credit to Participated Letters of Credit within
30 days after such conversion.
3.6.6 Borrower shall pay to the Issuing Bank (for distribution
to the Banks with respect to Participated Letters of Credit, net of funds
paid to the Issuing Bank by Borrower or a Wholly-owned Subsidiary for the
costs of issuance), for the issuance or renewal of each Commercial Letter
of Credit, a fee of .25% of the face amount of any newly issued or renewed
Commercial Letter of Credit at the time of issuance or renewal of such
Letter of Credit. Such fee is nonrefundable and Borrower shall not be
entitled to any rebate of any portion thereof if such Letter of Credit does
not remain outstanding through its stated expiry date or for any other
reason. Further, with respect to each Letter of Credit, in addition to the
Loan Documents, Borrower or the Subsidiary, as applicable, shall execute
and deliver such additional documents and agreements as are customarily
obtained by the Issuing Bank in connection with letters of credit of the
type requested.
3.6.7 The Agent or another Bank shall issue the Letter of Credit
upon Borrower's or a Wholly-owned Subsidiary's request pursuant to the
terms of this Agreement; provided, however, that neither the Agent, nor any
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Bank, shall have any obligation to issue a Letter of Credit during any time
that there exists an Event of Default or Unmatured Event of Default.
4. REPRESENTATIONS AND WARRANTIES. In order to induce each Bank to enter
into this Agreement and to provide the Loans, Borrower represents and
warrants to each Bank that the following statements are true, correct and
complete at the date hereof and at the date of each Loan:
4.1 ORGANIZATION, POWERS, GOOD STANDING.
4.1.1 (a) Borrower and each Subsidiary is a corporation duly
organized, validly existing and in good standing under the laws of the
respective states of their incorporation, (b) Borrower and each Subsidiary
has full power, authority and legal right to own and operate its property
and to conduct the business in which it is currently engaged, (c) Borrower
and each Subsidiary is duly qualified and is in good standing under the
laws of each jurisdiction in which the failure to so qualify may have a
Material Adverse Effect, and (d) Borrower and each Subsidiary is in
compliance with all Requirements of Law, except where the lack of
compliance could not reasonably be expected to have a Material Adverse
Effect.
4.1.2 Borrower has full power and authority to execute, deliver
and perform the Loan Documents, including, without limitation, to borrow
under this Agreement. Borrower has taken all necessary action to authorize
the execution, delivery and performance of the Loan Documents and Borrower
has taken all necessary action to borrow under this Agreement. No consent
or authorization of, or filing with, any Person (including, without
limitation, any Governmental Authority) is required in connection with the
execution, delivery and performance by Borrower or the validity or
enforceability against Borrower of the Loan Documents.
4.2 AUTHORIZATION OF BORROWING; ETC.
4.2.1 The execution, delivery and performance by Borrower of
this Agreement and the other Loan Documents do not and will not (a) violate
any Requirement of Law applicable to Borrower or any Subsidiary, (b)
conflict with, result in a breach of or constitute (with due notice or
lapse of time or both) a default under any material contractual obligation
of Borrower or any Subsidiary, (c) result in or require the creation or
imposition of any Lien of any nature whatsoever upon any of Borrower's or
any Subsidiary's properties or assets, other than in favor of the Banks, or
(d) require any approval of any court or Governmental Authority or any
approval or consent of any Person under any contractual obligation of
Borrower, except where any violation, conflict, breach, default, imposition
or failure to obtain any approval or consent would not have a Material
Adverse Effect.
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4.2.2 The Loan Documents, when executed and delivered, will be
the legally valid and binding obligations of Borrower, enforceable against
it in accordance with their respective terms, except as enforcement may be
limited by equitable principles or by bankruptcy, insolvency,
reorganization, moratorium or similar laws, usury laws, or equitable
principles relating to or limiting creditors' rights generally.
4.3 SUBSIDIARIES. SCHEDULE 4.3 correctly sets forth as to each
Subsidiary, its name, the jurisdiction of its incorporation, the name of
its immediate parent and the percentage of its capital stock that is
directly or indirectly owned by Borrower. Other than the Subsidiaries,
Borrower does not own any material amount of capital stock in any Person.
4.4 TITLE. Borrower and Subsidiaries, as applicable, have good and
valid legal title to the assets reflected in Borrower's audited
consolidated financial statements dated as of March 30, 1996 previously
submitted to each of the Banks, and there are no Liens, charges or
encumbrances (other than as permitted by this Agreement), on such property
or assets.
4.5 LITIGATION; ADVERSE FACTS. Except as set forth on SCHEDULE 4.5
to this Agreement, there is no action, suit, dispute, investigation,
inquiry, arbitration, tax claim or other proceeding (including, without
limitation, the enactment or promulgation of a statute or rule) at law or
in equity or before or by any arbitrator or Governmental Authority pending
or, to the knowledge of Borrower, threatened, against Borrower or any
Subsidiary which might reasonably be expected to have a Material Adverse
Effect.
4.6 PAYMENT OF TAXES. All tax returns and reports required to be
filed by Borrower and each Subsidiary have been prepared in accordance with
acceptable standards and have been timely filed, and all Taxes,
assessments, fees and amounts required to be withheld and paid to a
Governmental Authority, and other governmental charges upon Borrower and
each Subsidiary and upon their properties, assets, income and franchises
which are shown on such returns to be due and payable have been paid when
due and payable. Borrower does not know of any proposed, asserted or
assessed tax deficiency against it or any Subsidiary that would be material
to the condition (financial or otherwise) of Borrower or any Subsidiary.
Neither Borrower nor any Subsidiary is a party to, bound by or obligated
under any tax sharing or similar agreement.
4.7 MATERIALLY ADVERSE AGREEMENTS; PERFORMANCE.
4.7.1 To the best of Borrower's knowledge, neither Borrower nor
any Subsidiary is in material default in the performance, observance or
fulfillment of any of the obligations, covenants or conditions contained in
any of its material contractual obligations and no condition exists which,
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with the giving of notice or the lapse of time or both, would constitute
such a default.
4.7.2 Borrower and each Subsidiary owns or possesses all
patents, trademarks, service marks, trade names, copyrights, licenses and
rights necessary for the present and planned future conduct of its
business, without any known conflict with the rights of others.
4.8 ERISA COMPLIANCE. Borrower and Subsidiaries are in compliance in
all material respects with any applicable provisions of ERISA. To the best
of Borrower's knowledge, neither a Reportable Event nor a Prohibited
Transaction has occurred or is continuing in relation to any pension plan
and Borrower and each Subsidiary have not incurred any liability to the
Pension Benefit Guaranty Corporation, except where the occurrence of such
event could not reasonably be expected to have a Material Adverse Effect.
4.9 ENVIRONMENTAL MATTERS. To the best of Borrower's knowledge,
Borrower and each Subsidiary has complied in all respects with all
Environmental Protection Statutes, except where the lack of compliance
could not reasonably be expected to have a Material Adverse Effect. To the
best of Borrower's knowledge, neither Borrower nor any Subsidiary nor any
other Person has used any real property owned or leased by Borrower or any
Subsidiary in the disposal of or to refine, generate, produce, store,
treat, transfer, release or transport any hazardous waste or hazardous
substance, or been designated by the United States Environmental Protection
Agency or under any Environmental Protection Statute as a hazardous waste
or hazardous substance disposal or removal site, superfund or clean-up site
or candidate for removal or closure pursuant to any Environmental
Protection Statute. No lien arising under or in connection with any
Environmental Protection Statute has attached to any revenues or to any
real or personal property owned by Borrower or any Subsidiary. Borrower
agrees to indemnify and hold each Bank harmless from any and all violations
by Borrower or any Subsidiary of any Environmental Protection Statute.
4.10 INVESTMENT COMPANY. Borrower is not directly or indirectly
controlled by, or acting on behalf of, a Person which is an "Investment
Company" within the meaning of the Investment Company Act of 1940, as
amended, that is organized or otherwise created under the laws of the
United States, any State of the United States, the District of Columbia,
Puerto Rico, the Philippine Islands, the Virgin Islands or any other
possession of the United States.
4.11 REGULATIONS U AND X. No part of the proceeds of the Loans will
be used to purchase or carry any margin stock (within the meaning of
Regulation U of the Federal Reserve Board of Governors) or to extend credit
to others for the purpose of purchasing or carrying any margin stock.
Neither Borrower nor any Subsidiary is engaged principally, or as one of
its important activities, in the business of extending credit for the
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purposes of purchasing or carrying any such margin stock. If requested by
Agent, Borrower will furnish Agent with a statement in conformity with the
requirements of Federal Reserve Form U-1 referred to in such Regulation.
Borrower also warrants that no part of the proceeds of the borrowings
hereunder will be used by it for any purpose which violates, or which is
inconsistent with, the provisions of Regulation X of said Board of
Governors.
4.12 INDEBTEDNESS. Neither Borrower nor any Subsidiary has any
outstanding Indebtedness for borrowed money or with respect to Capital
Leases except Indebtedness described in (a) SCHEDULE 4.12 to this Agreement
or (b) Section 6.1 to this Agreement.
4.13 SURVIVAL. All of the representations and warranties set forth
in this Section 4 will survive until all of the Obligations are satisfied
in full and there remain no outstanding commitments hereunder.
5. AFFIRMATIVE COVENANTS. Borrower covenants and agrees that, until all
of the Obligations are satisfied, Borrower will perform each and all of the
following:
5.1 USE OF PROCEEDS. Borrower will use the proceeds of the Loans
only for the purposes set forth in Section 2.7.
5.2 ACCOUNTING RECORDS. Borrower will, and will cause the
Wholly-owned Subsidiaries to, maintain adequate records in accordance with
sound business practices and GAAP, applied on a Consistent Basis, except
for changes required by GAAP or consented to in writing by Agent (which
consent will not be unreasonably withheld). Upon five (5) days' prior
notice, Borrower will provide, and cause each Subsidiary to provide, access
to representatives of each Bank to visit any of the properties of Borrower
or any Subsidiary and examine the books of account and discuss Borrower's
and each Subsidiary's affairs, finances and accounts with, and be advised
of the same by, Borrower's and each Subsidiary's officers, all at such
reasonable times and as often as any Bank may reasonably request.
5.3 REPORTS. Borrower will deliver to Agent:
5.3.1 Not later than sixty (60) days after the end of each
Quarter (except the 4th Quarter, for the which financial statement due date
shall be 90 days after the end of the Quarter), management prepared
consolidated and consolidating financial statements of Borrower and
Subsidiaries as of the end of such Quarter, and the consolidated and
consolidating statements of profit and loss and surplus of Borrower and
Subsidiaries from the beginning of Borrower's and Subsidiaries' Fiscal Year
to the end of such Quarter, certified as correct (subject to year end
adjustments) by the chief financial officer of Borrower.
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5.3.2 Not later than one hundred twenty (120) days after the end
of each Fiscal Year of Borrower, the complete audited, consolidated and
consolidating financial statements of Borrower and Subsidiaries, including
the consolidated and consolidating balance sheet of Borrower and
Subsidiaries as of the end of such year and the consolidated and
consolidating statements of profit and loss and surplus of Borrower and
Subsidiaries for the fiscal year then ended, certified by independent
certified public accountants of recognized standing, to be prepared in
accordance with GAAP and to present fairly the financial position and
results of operation of Borrower and Subsidiaries.
5.3.3 Within sixty (60) days after the end of each Quarter
(except the 4th Quarter, for the which compliance certificate due date
shall be 90 days after the end of such Quarter), a compliance certificate
in the form of EXHIBIT V to this Agreement, duly completed and executed by
the chief financial officer of Borrower.
5.3.4 Promptly upon Borrower becoming aware of the occurrence of
any: (a) Reportable Event; or (b) Prohibited Transaction in connection
with any pension plan or any trust created thereunder, a written notice
specifying the nature thereof, what action Borrower is taking or proposes
to take with respect thereto, and, when known, any action taken by the
Internal Revenue Service with respect thereto.
5.3.5 Promptly upon becoming aware of any Person seeking to
obtain or threatening in writing to seek to obtain a decree or order for
relief with respect to Borrower or any Wholly-owned Subsidiary in an
involuntary case under any applicable bankruptcy, insolvency, or other
similar law now or hereafter in effect, a written notice thereof specifying
what action Borrower or such Subsidiary is taking or proposes to take with
respect thereto.
5.3.6 Promptly, copies of all amendments to the articles of
incorporation or bylaws of Borrower.
5.3.7 Promptly after the sending or filing thereof, copies of
all reports, proxy statements and financial statements which Borrower files
with its shareholders or any securities exchange or the SEC, including,
without limitation, all reports on Form 10-K, 10-Q, and 8-K. Such reports
need not include exhibits. Borrower agrees to promptly provide Agent with
exhibits specifically requested by Agent.
5.3.8 Promptly, upon Borrower's learning of any litigation or
proceeding in which it or any Subsidiary is a party if an adverse decision
in any such matter is reasonably likely to require it (i) to pay an amount
in excess of 15% of Shareholder's Equity, as reflected in the most recent
financial statements delivered to Agent, or (ii) deliver assets the value
of which exceeds such sum (whether or not the claim is considered to be
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covered by insurance); or of the institution of any other suit or
proceeding to which Borrower or any Subsidiary is a party that, by itself
or together with any other such matters, might have a Material Adverse
Effect a written notice thereof describing such event.
5.3.9 Promptly, such other information and data with respect to
Borrower or any Subsidiary as from time to time may be reasonably requested
by any Bank.
5.4 FINANCIAL COVENANTS. Borrower will at all times comply with the
following covenants:
5.4.1 Borrower will maintain a minimum Net Worth of $95,000,000;
5.4.2 Borrower will maintain the ratio of Funded Debt to
Shareholders' Equity equal to or less than 1.25 to 1.00;
5.4.3 Borrower will maintain the ratio of Consolidated Current
Assets to Consolidated Current Liabilities equal to or greater than 1.25 to
1.00; and
5.4.4 Borrower will maintain the ratio of Income Available for
Fixed Charges to Fixed Charges for the immediately preceding four
consecutive Quarter period equal to or greater than 1.25 to 1.0 for such
four Quarter period.
5.5 CORPORATE EXISTENCE. Except as permitted by Section 6.3,
Borrower will at all times preserve and keep in full force and effect its
and each Subsidiary's corporate existence and any rights material to its
business and will maintain its and each Subsidiary's right to transact
business in each jurisdiction where its assets or the nature of its
activities makes such qualification necessary, except where the failure
could not reasonably be expected to have a Material Adverse Effect.
5.6 PAYMENT OF TAXES AND CLAIMS. Borrower will pay or cause to be
paid all Taxes, assessments and other governmental charges imposed upon
Borrower or any Subsidiary before any penalty or interest accrues thereon;
provided, however, that Borrower will not be required to pay any such
Taxes, assessments, or charges if (a) the validity thereof will currently
be contested in good faith by appropriate proceedings, (b) Borrower will
have set aside on its books adequate reserves with respect to such Taxes,
assessments, or charges and (c) Borrower gives notice in writing of such
action to Agent; provided that any such Taxes, assessments, or charges will
be paid immediately upon the commencement of proceedings to foreclose any
liens securing the same, or upon institution of distraint proceedings.
5.7 INSURANCE. Borrower will, at all times by financially sound and
reputable insurers, maintain and cause each Subsidiary to maintain, in full
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force and effect, adequate fire and extended risk coverage, business
interruption, workers' compensation, public liability and such other
insurance coverages as may be required by law and/or in such amounts as is
customary in the case of entities of well-established reputation engaged in
the same or similar business.
5.8 COMPLIANCE WITH LAWS, ETC. Borrower will exercise all due
diligence in order to comply, in all material respects, with all
Requirements of Laws, except where the lack of compliance could not
reasonably be expected to have a Material Adverse Effect, including,
without limitation, the following:
5.8.1 Borrower will comply in all material respects with all
applicable workers' compensation laws, regulations and administrative
rules, directives or requirements. Borrower will furnish Agent upon demand
evidence in form and substance as Agent or its counsel may reasonably
require in order to verify such compliance. In the event that Borrower is
qualified to self-insure under such laws, regulations and administrative
rules, directives or requirements, and that Borrower is not otherwise
precluded from so self-insuring by the terms of this Agreement, Borrower
will comply in all material respects with all such laws, regulations,
rules, directives and requirements pertaining to its self-insured status.
5.8.2 Neither Borrower nor any of its Plans will engage in any
Prohibited Transaction; incur any "accumulated funding deficiency" (as such
term is defined in Section 302 of ERISA) whether or not waived; or
terminate any such Plan in a manner which could result in the imposition of
a lien on the property of Borrower, pursuant to Section 4068 of ERISA or
any successor provision thereto.
5.8.3 Borrower will comply in all material respects with the
Fair Labor Standards Act and will furnish Agent upon demand evidence in
form and substance as Agent or its counsel will require to verify such
compliance.
5.8.4 Borrower will comply in all material respects with all
applicable Environmental Protection Statutes.
5.9 PAYMENT OF INDEBTEDNESS. Borrower and each of its Wholly-owned
Subsidiaries will pay all of its Indebtedness, promptly when due in
accordance with the terms of such Indebtedness, except to the extent that
failure to pay such Indebtedness would not constitute an Event of Default
under Section 7.1.4 hereof, and except to the extent a good faith basis
exists for delay or non-payment thereof and Borrower or Subsidiary, as the
case may be, is contesting in good faith any claim for payment thereof.
5.10 MAINTENANCE OF FRANCHISES, ETC. Borrower and each Subsidiary
will do or cause to be done all things necessary to preserve, renew and
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keep in full force and effect the rights, licenses, permits, franchises,
agency agreements, and trade names material to the conduct of its business,
and maintain and operate such businesses properly and efficiently, and in
substantially the manner in which they are presently conducted and operated
(subject to changes in the ordinary course of business).
5.11 FURTHER ASSURANCES. At any time or from time to time, upon the
request of Agent, Borrower will execute and deliver such further documents
and do such other acts and things as Agent may reasonably request in order
to effect fully the purpose of this Agreement, the other Loan Documents and
other agreements contemplated hereby and to provide for payment of and
security for the Loans made hereunder in accordance with the terms of this
Agreement.
6. NEGATIVE COVENANTS. Borrower covenants and agrees that, until all of
the Obligations are satisfied, Borrower will not, without the prior written
consent of the Requisite Banks do any of the following:
6.1 INDEBTEDNESS. The Borrower will not permit any Subsidiary to
create, incur, assume or otherwise become or be, directly or indirectly,
liable in respect of any Indebtedness (other than Indebtedness of a
Subsidiary to the Borrower or to another Subsidiary), unless on the date of
the incurrence of such Indebtedness and after giving effect to such
incurrence, the sum of (the "Permitted Indebtedness Limitation"):
(a) the aggregate principal amount of outstanding Indebtedness
of all Subsidiaries (other than (i) Indebtedness of a Subsidiary to the
Borrower or another Subsidiary, and (ii) Indebtedness arising in connection
with the issuance of, or a draw upon, a Letter of Credit); plus (without
duplication)
(b) the aggregate principal amount of all outstanding
Indebtedness of the Subsidiaries secured by Liens permitted by paragraphs
(g), (h), and (i) of Section 6.2 (such sum, as determined on any date,
being hereinafter referred to as the "Priority Debt Amount");
shall not exceed 15% of Consolidated Total Assets as of the end of the
fiscal Quarter of the Borrower which shall have ended most recently prior
to such date of incurrence.
6.2 LIENS. The Borrower will not, and will not permit any Subsidiary
to, directly or indirectly, create, incur, assume or permit to exist any
Lien on or with respect to any asset of any character of the Borrower or
any Subsidiary (whether held on the date hereof or hereafter acquired) or
any interest therein or any income or profits therefrom, except that,
subject in any event to the Indebtedness limitations set forth in Section
6.1 above, the Borrower may permit to exist the following Liens:
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(a) Liens for taxes, assessments or governmental charges or
levies either not yet due or the payment of which is not at the time
required by Section 5.6;
(b) Liens of landlords, carriers, warehousemen, mechanics,
materialmen and other similar Persons incurred in the ordinary course of
business for sums either not yet due or the payment of which is not at the
time required by Section 5.9;
(c) Liens (other than any Lien created or imposed under ERISA)
incurred or deposits made in the ordinary course of business in connection
with workers' compensation, unemployment insurance and other types of
social security, or to secure the performance of letters of credit,
tenders, statutory obligations, surety and appeal bonds, bids, leases,
government contracts, performance and return-of-money bonds and other
similar obligations (exclusive in any case of obligations incurred in
connection with the borrowing of money or the obtaining of advances or
credit);
(d) any attachment, judgment or other similar Lien arising in
connection with court proceedings, provided that (i) the execution or other
enforcement of such Lien is effectively stayed and the claims secured
thereby are being actively contested in good faith and by appropriate
proceedings diligently conducted and effective to delay or prevent the
forfeiture or sale of any property of the Borrower or any Subsidiary or any
material interference with the use thereof by the Borrower or any
Subsidiary, and (ii) such reserve or other appropriate provision, if any,
as shall be required by GAAP shall have been made therefor (or, if no such
reserve or other provision is required, the Borrower shall have set aside
on its books reserves deemed by it to be adequate therefor);
(e) easements, licenses, rights-of-way and other rights and
privileges in the nature of easements and similar Liens incidental to the
ownership of property and not incurred in connection with the borrowing of
money or the obtaining of advances or credit, and which do not,
individually or in the aggregate, materially interfere with the ordinary
conduct of the business of the Borrower or any Subsidiary or materially
detract from the value of the properties subject to any such Liens;
(f) Liens on property of any Subsidiary securing Indebtedness or
other obligations of such Subsidiary owing to the Borrower or to a
Subsidiary;
(g) Liens existing on September 14, 1996; provided, however,
that no such lien shall be extended to any other property or asset of the
Borrower or any Subsidiary;
(h) any Lien (including a Capital Lease) created solely to
secure the deferred purchase price of property consisting of fixed assets
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acquired by the Borrower or any Subsidiary after the date hereof, or
created to secure Indebtedness, incurred solely for the purpose of
financing the acquisition of such property (if such debt is incurred at the
time of or within 90 days after such acquisition), or existing on property
acquired at the time of acquisition thereof, or, in the case of any Person
which hereafter becomes a Subsidiary, any Lien in respect of its property
existing at the time such Person becomes a Subsidiary, provided, however,
that
(i) no such Lien shall at any time extend to or cover any
property of the Borrower or any Subsidiary other than the
acquired property on which it was originally imposed and
improvements thereto and proceeds thereof; and
(ii) the principal amount of all Indebtedness secured by
all such Liens on any such property shall at no time exceed
an amount equal to the lesser of (1) the cost to the
Borrower or such Subsidiary (including the principal amount
of any pre-existing Indebtedness secured by such Liens,
whether or not the Borrower or such Subsidiary has any
personal liability with respect thereto) of such property,
and (2) the fair market value of such property at the time
of acquisition thereof (or, in the case of a Lien in respect
of property existing at the time of a Person becoming a
Subsidiary after the date hereof, the fair market value of
such property at such time);
(i) Liens extending, renewing or replacing any Lien permitted by
clause (g) of this Section 6.2, provided that the principal amount of the
Indebtedness secured by such Lien is not increased and such Lien is not
extended to other property.
For all purposes of this Section 6.2, any Person becoming a Subsidiary
after the date of this Agreement shall be deemed to have incurred all of
its then existing Liens at the time it becomes a Subsidiary, and any
extension, renewal or refinancing of any Lien by the Borrower or any
Subsidiary shall be deemed to be an incurrence of such Lien at the time of
such extension, renewal or refinancing, and any Lien existing on any
property or assets at the time it is acquired by the Borrower or any
Subsidiary shall be deemed to have been created at the time of such
acquisition.
6.3 RESTRICTION ON FUNDAMENTAL CHANGES. The Borrower will not, and
will not permit any Subsidiary to, voluntarily liquidate or dissolve, or
consolidate or merge with any other Person, or permit any other Person to
consolidate or merge with it, except that:
(a) any Subsidiary may consolidate into or merge with (i) the
Borrower or any Wholly-owned Subsidiary (if the Borrower or such
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Wholly-owned Subsidiary shall be the continuing or surviving corporation)
or (ii) any other corporation (if such Subsidiary shall be the continuing
or surviving corporation);
(b) any Subsidiary may sell, lease, transfer or otherwise
dispose of its assets in their entirety to the Borrower or any Wholly-owned
Subsidiary, and may thereafter liquidate and dissolve;
(c) the Borrower may merge with any other corporation provided
that the Borrower shall be the continuing or surviving corporation;
(d) the Borrower may, subject to the written approval of all the
Banks and the Agent, consolidate with or merge into any solvent corporation
which shall be duly organized and validly existing in good standing under
the laws of the United States of America or a state thereof, which shall be
engaged in a line of business which is substantially the same or similar to
the business in which the Borrower and its Subsidiaries are primarily
engaged on the date of this Agreement and which shall expressly assume,
pursuant to a written agreement satisfactory in form, scope and substance
to the holders of the Notes, the due and punctual payment of the principal
of, premium, if any, and interest on the Notes according to their tenor,
and the due and punctual performance and observance of the obligations of
the Borrower under this Agreement and the Notes, an executed counterpart of
which assumption agreement shall have been furnished to each holder of a
Note together with a favorable opinion of counsel satisfactory to each such
holder covering such matters relating to such assumption and such
assumption agreement as such holder may reasonably request; and
(e) any Subsidiary may sell, lease, transfer or otherwise
dispose of all or any portion of its assets if the disposition would comply
with the restrictions set forth in Section 6.7.1(d) of this Agreement,
after which such Subsidiary may liquidate and dissolve.
It shall be a further condition to any consolidation or merger that,
on the date of such consolidation or merger and immediately after giving
effect to such action, no Event of Default or Unmatured Event of Default
shall have occurred and be continuing and the Permitted Indebtedness
Limitation shall not be exceeded. Nothing contained in this Section 6.3
shall permit the disposition of assets consisting of Indebtedness, stock or
similar interests in any Subsidiary unless such disposition is also in
compliance with the other terms and conditions of this Agreement.
6.4 VIOLATION OF REGULATIONS. Borrower will not make any investment
of any nature which would result in the violation of Regulations G, U, or X
of the Board of Governors of the Federal Reserve System as the same may
from time to time be amended or modified.
6.5 SCOPE OF BUSINESS ACTIVITY. Borrower will not engage in any
business or activities other than those representing its present business,
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provided that, subject to the other terms and conditions of this Agreement,
Borrower may acquire or commence new or additional related businesses which
do not have a Material Adverse Effect.
6.6 DIVIDENDS AND DISTRIBUTIONS; CAPITAL STRUCTURE. The Borrower
may, through a Subsidiary or otherwise, pay dividends or make capital
distributions only so long as (a) no Event of Default has occurred and is
continuing, (b) such dividend or distribution will not cause an Event of
Default, and (c) there exists no Unmatured Event of Default. The Borrower
may, directly or indirectly, through a Subsidiary or otherwise, purchase or
retire any of its shares, or alter or amend its capital structure only so
long as (a) no Event of Default has occurred and is continuing, (b) such
transaction will not cause an Event of Default, and (c) there exists no
Unmatured Event of Default.
6.7 ADDITIONAL RESTRICTED TRANSACTIONS.
6.7.1 The Borrower will not:
(a) and will not permit any Subsidiary to, directly or
indirectly, sell, assign, pledge or otherwise dispose of any Indebtedness
of, or claim against, or any shares of stock or similar interests or other
Securities (or warrants, rights or options to acquire stock or similar
interests) of any Subsidiary, except to the Borrower or a Wholly-owned
Subsidiary or except as to directors' qualifying shares if required by
applicable law;
(b) permit any Subsidiary to, directly or indirectly, issue or
sell any shares of its stock or similar interests or other Securities (or
warrants, rights or options to acquire any stock or similar interests) of
such Subsidiary except to the Borrower or a Wholly-owned Subsidiary or
except as to directors' qualifying shares or to satisfy preemptive rights
if required by applicable law;
(c) permit any Subsidiary to have outstanding any shares of
preferred stock, except shares of preferred stock owned by the Borrower or
a Wholly-owned Subsidiary; or
(d) during any twelve month period sell, lease or otherwise
dispose of, or permit to be sold, leased or otherwise disposed of, assets
in excess of 15% (as reflected by the financial statements provided to
Agent most recently before the first day of such twelve month period and
ending on the date of such sale, lease or other disposition) of the
aggregate book value of the Consolidated Total Assets of the Borrower and
its Subsidiaries; PROVIDED, HOWEVER, that there shall not be included
within the 15% limitation any assets subject to any of the following
transactions:
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(i) the Borrower or any Subsidiary may sell and lease-back
assets on such terms and conditions as the Agent may
approve, which approval may not be unreasonably withheld;
and
(ii) the Borrower or any Subsidiary may sell or transfer
property (other than Securities), provided that (i) such
property is sold for no less than its fair market value, and
(ii) the net proceeds of such sales are used to purchase
other property of a similar nature or at least equivalent
value.
Notwithstanding the foregoing, the Borrower or any Subsidiary may sell
shares of stock of a Subsidiary, if each such sale satisfies both of the
following conditions:
(A) the shares will be sold for no less than their fair
market value; and
(B) such sale will not cause the sum of the consideration
received for all sales of Subsidiary stock during the 12
month period immediately preceding the proposed date of sale
to exceed an amount equal to 15% of the Consolidated Total
Assets, as reflected by the financial statements provided to
Agent most recently before the first day of such twelve
month period.
7. EVENTS OF DEFAULT; ACCELERATION; REMEDIES.
7.1 EVENTS OF DEFAULT. The occurrence of any one or more of the
following events, acts or occurrences will constitute an event of default
(an "Event of Default") hereunder:
7.1.1 FAILURE TO MAKE PAYMENTS WHEN DUE. Borrower will fail to
pay any principal and/or interest owing under any Note when such amount is
due (whether at stated maturity, as a result of a mandatory prepayment
requirement, by acceleration, by notice of prepayment or otherwise), or
Borrower will fail to pay any other amounts (including, without limitation,
fees, costs and expenses) payable under this Agreement when such amounts
are due.
7.1.2 BREACH OF REPRESENTATION, WARRANTY OR CERTIFICATION. Any
representation, warranty or certification made or furnished by Borrower or
any Subsidiary under this Agreement, any other Loan Document or in any
statement, document, letter or other writing or instrument furnished or
delivered to any Bank pursuant to or in connection with this Agreement or
other Loan Document or as an inducement to the Banks to enter into this
Agreement, will, at any time, prove to have been materially false,
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incorrect or incomplete when made, effective or reaffirmed, as the case may
be.
7.1.3 DEFAULT UNDER LOAN DOCUMENTS, ETC. Borrower or any
Subsidiary will fail to observe or perform any term, covenant, condition or
agreement set forth in this Agreement, other than the terms and agreements
described in Subsections 7.1.1 and 7.1.2 above, within 30 days after
Borrower's receipt of written notice from Agent of such failure.
7.1.4 DEFAULT ON OTHER AGREEMENTS. Any creditor or
representative of any creditor of Borrower or any Wholly-owned Subsidiary
declares or is or becomes entitled to declare any Indebtedness owing on any
bond, debenture, note or other evidence of Indebtedness for borrowed money
in an aggregate amount, in the case of a single creditor of Borrower or
such Subsidiary, in excess of One Million ($1,000,000) Dollars, and for all
creditors of Borrower or such Subsidiary, in excess of Two Million
($2,000,000) Dollars, to be due and payable prior to its expressed maturity
by reason of any default by Borrower or such Subsidiary in the performance
or observance of any obligation or condition (whether or not such creditor
or representative has declared such Indebtedness to be due and payable) or
any such Indebtedness becomes due by its terms and is not promptly paid or
extended; PROVIDED, HOWEVER, that an Event of Default will not occur under
this section 7.1.4 if such other default or breach is being contested in
good faith by appropriate proceedings, notice thereof is promptly given to
Agent and adequate reserves in accordance with GAAP have been made therefor
and no other Event of Default has occurred.
7.1.5 INVOLUNTARY BANKRUPTCY; APPOINTMENT OF TRUSTEE, ETC.
(a) If an involuntary case seeking the liquidation or
reorganization of Borrower or any Wholly-owned Subsidiary under Chapter 7
or Chapter 11, respectively, of the Federal Bankruptcy Code or any similar
proceeding will be commenced against Borrower or any Wholly-owned
Subsidiary under any other applicable law and any one or more of the
following events occur: (i) Borrower or such Subsidiary consents to the
institution of the involuntary case, (ii) the petition commencing the
involuntary case is not timely controverted; (iii) the petition commencing
the involuntary case is not dismissed within sixty (60) days of its filing;
(iv) an interim trustee is appointed to take possession of all or a
substantial portion of the property and/or to operate all or any
substantial portion of the business of Borrower or such Subsidiary or (v)
an order for relief will have been issued or entered therein.
(b) A decree or order of a court having jurisdiction in the
premises for the appointment of a receiver, liquidator, sequestrator,
custodian, trustee or other officer having similar powers of Borrower or
any Wholly-owned Subsidiary to take possession of all or a substantial
portion of the property and/or to operate all or a substantial portion of
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the business of Borrower or such Subsidiary will have been entered and,
within sixty (60) days from the date of entry, is not vacated, discharged
or bonded against, or any similar relief will be granted against Borrower
or such Subsidiary under any applicable federal or state law, and, within
sixty (60) days from the date of entry, is not vacated, discharged or
bonded against.
7.1.6 VOLUNTARY BANKRUPTCY; APPOINTMENT OF TRUSTEE, ETC.
(a) Borrower or any Wholly-owned Subsidiary will (i) institute a
voluntary case seeking liquidation or reorganization under Chapter 7 or
Chapter 11, respectively, of the federal Bankruptcy Code; (ii) file a
petition, answer or complaint or will otherwise institute any similar
proceeding under any other applicable law, or will consent thereto; (iii)
consent to the conversion of a voluntary case to an involuntary case; (iv)
consent to the conversion of an involuntary case to a voluntary case, (v)
consent or acquiesce to the appointment of a trustee, receiver, liquidator,
sequestrator, custodian or other officer with similar powers to take
possession of all or a substantial portion of the property and/or to
operate all or a substantial portion of the business of Borrower or any
Subsidiary; or (vi) make a general assignment for the benefit of creditors.
(b) The Board of Directors of Borrower or any Wholly-owned
Subsidiary adopts any resolution or otherwise authorizes action to approve
any of the foregoing.
7.1.7 JUDGMENTS AND ATTACHMENTS.
(a) Borrower or any Wholly-owned Subsidiary suffers any money
judgment(s), fines or penalties in excess of $5,000,000 not covered by
insurance, writ(s) or warrant(s) of attachment or similar process(es) and
do not satisfy, discharge, vacate, bond or stay the same within a period of
thirty (30) days or, in any event, within ten (10) days prior to the date
of any proposed sale thereunder.
(b) A judgment creditor obtains possession of any portion of the
properties or assets of Borrower or any Wholly-owned Subsidiary by any
means, including, without limitation, levy, distraint, replevin or
self-help, and such possession has a Material Adverse Effect.
7.1.8 DISSOLUTION. Any order, judgment or decree is entered
against Borrower or any Wholly-owned Subsidiary having assets in excess of
$100,000 decreeing the dissolution or division of it and such order will
remain undischarged or unstayed for a period in excess of thirty (30) days.
7.1.9 TERMINATION OF LOAN DOCUMENTS, ETC. Any of the Loan
Documents cease to be in full force and effect for any reason other than a
release or termination thereof upon the full payment and satisfaction of
the Obligations.
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7.2 REMEDIES; TERMINATION OF COMMITMENTS. Upon the occurrence of an
Event of Default, all amounts owing with respect to the Single Facility
Loan and the Non-participated Letters of Credit will, at the option of MNB,
and all other Obligations will, at the option of the Requisite Banks, be
immediately due and payable without presentment, demand, protest, notice or
other requirements of any kind, all of which are hereby expressly waived by
Borrower, and all Commitments of the Banks hereunder will terminate,
without further action of any kind. Upon acceleration, Agent may proceed
to protect, exercise and enforce the Banks' rights and remedies hereunder
and under the other Loan Documents and any other rights and remedies as are
provided by law or equity. If any Loan is then one which may be repaid
only upon payment of a Yield Maintenance Payment, the Agent will also
assess a Yield Maintenance Payment. Agent may determine, in its sole
discretion, the order and manner in which the Banks' rights and remedies
are to be exercised, and all payments received by Agent will be applied as
follows: FIRST, to all costs and expenses incurred by Agent in collecting
any Obligations by reason of such Event of Default; SECOND, to accrued
interest; and THIRD, to other Obligations in such order as Agent may
determine in its sole discretion. Neither the Agent nor any Bank shall
have any obligation to make any Loan or issue any Letter of Credit during
any time that there exists an Event of Default or Unmatured Event of
Default.
7.3 RIGHT OF SET-OFF. In addition to all other remedies available to
the Banks, after any Event of Default which has not been cured within any
applicable period provided in this Section 7, each Bank is hereby
authorized at any time and from time to time, without further notice to
Borrower, to set off and apply any and all deposits (general or special,
time or demand, provisional or final) at any time held and other
indebtedness at any time owing by such Bank to or for the credit or the
account of Borrower, against any and all the obligations of Borrower, now
or hereafter existing under any Loan Document. The Banks agree that any
sums obtained as a result of set-off shall be made available for
distribution among the Banks in accordance with their Ratable Share of the
Total Commitment.
8. MISCELLANEOUS.
8.1 COSTS AND ATTORNEYS' FEES. All reasonable out-of-pocket fees,
costs and expenses incurred by Agent in connection with the preparation,
execution, delivery, performance and administration of the Loan Documents,
any and all amendments, supplements and modifications thereof and the other
instruments and documents to be delivered hereunder in connection with any
matters contemplated by or arising out of this Agreement, whether (a) to
commence, defend any action commenced by any party other than Borrower, or
intervene in any litigation or to file a petition, complaint, answer,
motion or other pleadings, (b) to take any other action in or with respect
to any suit or proceedings (bankruptcy or otherwise), (c) to consult with
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officers of Agent or to advise Agent or (d) to enforce any rights of the
Banks to collect any of the Obligations, including, without limitation,
reasonable fees, costs and expenses of Agent's attorneys and paralegals,
the allocated costs of Agent's internal counsel, together with interest
thereon at the highest applicable default rate hereunder, will be part of
the Obligations, payable on demand. All of the foregoing amounts may, at
Agent's option, be charged as a Line of Credit Loan, a Single Facility Loan
or a Revolving Loan, as determined by Agent, under this Agreement.
8.2 WAIVERS, MODIFICATIONS IN WRITING. No failure or delay on the
part of Agent or any Bank in exercising any right, power or remedy
hereunder will operate as a waiver thereof, nor will any single or partial
exercise of any such right, power or remedy preclude any other or further
exercise thereof or the exercise of any other right, power or remedy. The
remedies provided for under this Agreement, in the Notes and in the other
Loan Documents are cumulative and are not exclusive of any remedies that
may be available to the Banks at law, in equity or otherwise. No
amendment, modification, supplement, termination, consent or waiver of or
to any provision of this Agreement, the Notes or the other Loan Documents,
nor any consent to any departure therefrom, will in any event be effective
unless the same will be in writing and signed by or on behalf of the
Requisite Banks and Borrower; except that any change in a Maturity Date,
Funding Date, payment date, interest rate, the definition of "Requisite
Banks," the Total Commitment, any Bank's Revolving Loan Commitment or Line
of Credit Loan Commitment, any Bank's share of the Total Commitment or any
fee payable by the Borrower hereunder shall be effective only if evidenced
by a writing signed by or on behalf of all the Banks (excluding any
Defaulting Bank). No amendment, modification, termination or waiver of any
provision of any Note shall be effective without the written concurrence of
the holder of that Note. Any waiver or consent shall be effective only in
the specific instance and for the specific purpose for which it was given.
8.3 NOTICES, ETC. All notices, demands, instructions and other
communications required or permitted to be given to or made upon any party
hereto will be in writing and (except for financial statements and other
related informational documents to be furnished pursuant hereto which may
be sent by first-class mail, postage prepaid), will be personally
delivered, telecopied or sent by registered or certified mail, postage
prepaid or sent by nationally recognized overnight delivery service and
will be deemed to be received for purposes of this Agreement, (a) if
mailed, three (3) Business Days after mailing by the sender, (b) if sent by
overnight delivery service, one (1) Business Day after delivery to such
service, and (c) if telecopied and mailed, at the time of sending (provided
receipt can be confirmed by the sender). Unless otherwise specified in a
notice sent or delivered in accordance with the foregoing provisions of
this Section 8.3, notices, demands, instruments and other communications in
writing will be given to or made upon the respective parties hereto as
follows: if to Agent, at Agent's Address, with a copy to Agent's Counsel;
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and if to Borrower, at Borrower's Address, with a copy to Borrower's
Counsel.
8.4 NOTICE OF WRONGFUL ACT OR OMISSION BY AGENT OR BANKS. No action
will be commenced by Borrower against Agent or any Bank arising out of or
attributable to any act or omission of Agent or any Bank unless a notice
specifically describing the act or omission will have been given to Agent
or such Bank thirty (30) days prior to such judicial action.
8.5 AGENT'S FAILURE TO ADVANCE. Upon any breach by Agent or a Bank
under this Agreement, notwithstanding Borrower's conformance with the
provisions of hereof, Borrower's sole remedies on account thereof will be:
(a) to compel the Agent or such Bank to render the performance
for which the breach is claimed; and
(b) to recover actual and provable damages on account of such
breach, including, without limitation, all reasonable fees and expenses
incurred by the Borrower in connection the enforcement of this Agreement or
any other Loan Document; provided, however, that neither Agent nor any Bank
will ever be liable to Borrower for consequential damages, whatever the
nature of the breach by Agent or such Bank hereunder; and
(c) to protect, exercise and enforce any Borrower's rights under
this Agreement or other Loan Documents or, subject to the limitations set
forth above, any other rights and remedies provided by law or equity.
8.6 HEADINGS. Section headings used in this Agreement are for
convenience of reference only and will not constitute a part of this
Agreement for any other purpose or affect the construction of this
Agreement.
8.7 EXECUTION IN COUNTERPARTS. This Agreement may be executed in
counterparts and by different parties on separate counterparts, each of
which counterparts, when so executed and delivered, will be deemed to be an
original and each of which counterparts, taken together, will constitute
but one and the same agreement. This Agreement will become effective upon
the execution of a counterpart hereof by all of the parties hereto.
8.8 BINDING EFFECT; ASSIGNMENT. This Agreement will be binding upon,
and inure to the benefit of, Borrower and the Banks, and their respective
successors and assigns; PROVIDED, HOWEVER, that except as expressly
permitted under this Agreement, Borrower may not assign its rights
hereunder or in connection herewith or any interest herein (voluntarily, by
operation of law or otherwise) without the prior written consent of all the
Banks. This Agreement will not be construed so as to confer any right or
benefit upon any Person other than the parties to this Agreement and each
of their respective successors and assigns. Borrower and Banks agree that
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Agent's written consent shall be required with respect to any assignment of
an interest or delegation of an obligation by a Bank; provided, however,
that (i) no consent shall be required from Borrower or any other Bank for
the assignment of an interest or delegation of an obligation by a Bank to
an Affiliate of such Bank, and (ii) no such assignment or delegation shall
relieve the assigning or delegating Bank from performing any agreement or
fulfilling any obligation of the Bank, or prejudice any rights of the
Borrower, under this Agreement.
8.9 SEVERABILITY OF PROVISIONS. Any provision of this Agreement
which is illegal, invalid, prohibited or unenforceable in any jurisdiction
will, as to such jurisdiction, be ineffective to the extent of such
illegality, invalidity, prohibition or unenforceability without
invalidating or impairing the remaining provisions hereof or affecting the
validity or enforceability of such provision in any other jurisdiction.
8.10 CHANGES IN ACCOUNTING PRINCIPLES. If any changes in accounting
principles from those used in the preparation of the financial statements
referred to in this Agreement are hereafter occasioned by the promulgation
of rules, regulations, pronouncements or opinions of or required by the
FASB or the American Institute of Certified Public Accountants (or
successors thereto or agencies with similar functions), or there will occur
any change in Borrower's fiscal or tax years and, as a result of any such
changes, there will result in a change in the method of calculating any of
the financial covenants, negative covenants, standards, or other terms or
conditions found in this Agreement, then the parties hereto agree to enter
into negotiations in order to amend such provisions so as to equitably
reflect such changes with the desired result that the criteria for
evaluating Borrower's financial condition will be the same after such
changes as if such changes had not been made.
8.11 SURVIVAL OF AGREEMENTS; REPRESENTATIONS, WARRANTIES INDEMNITIES
AND COVENANTS. All agreements, representations, warranties, indemnities
and covenants made herein will survive the execution and delivery of this
Agreement, the making of the Loans hereunder and the execution and delivery
of the Notes.
8.12 INDEPENDENCE OF COVENANTS. All covenants under this Agreement
will each be given independent effect so that if a particular action or
condition is not permitted by any such covenant, the fact that it would be
permitted by another covenant, by an exception thereto, or be otherwise
within the limitations thereof, will not avoid the occurrence of an Event
of Default or Unmatured Event of Default if such action is taken or
condition exists.
8.13 CONSTRUCTION OF AGREEMENT. Neither this Agreement nor any
uncertainty or ambiguity herein will be construed or resolved against Agent
any Bank, whether under any rule of construction or otherwise. On the
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contrary, this Agreement has been reviewed by each of the parties and their
counsel and will be construed and interpreted according to the ordinary
meaning of the words used so as to fairly accomplish the purposes and
intentions of all parties hereto.
8.14 COMPLETE AGREEMENT. This Agreement, together with the exhibits
and schedules to this Agreement, the Notes and the other Loan Documents,
and the other agreements referred to herein or by their terms referring
hereto, is intended by the parties as a final expression of their agreement
and is intended as a complete statement of the terms and conditions of
their agreement.
8.15 NO FIDUCIARY RELATIONSHIP. No provision herein or in any of the
other Loan Documents and no course of dealing between the parties will be
deemed to create any fiduciary duty by Agent or the Banks to Borrower.
8.16 CHOICE OF LAW. The validity of this Agreement, its
construction, interpretation and enforcement and the rights of the parties
hereto will be determined under, governed by and construed in accordance
with the internal laws of the State of Michigan, without regard to
principles of conflicts of law.
8.17 VENUE; JURISDICTION. The parties agree that all actions or
proceedings arising in connection with this Agreement, the Loan Documents
and the Loans may be tried and litigated in the federal courts of the
United States of the Western District of Michigan or a state court of
general jurisdiction in Kent County, Michigan. Borrower hereby irrevocably
accepts for itself and in respect of its property, generally and
unconditionally, the jurisdiction of such courts. Borrower irrevocably
consents to the service of process out of any such courts in any such
action or proceeding by the mailing of copies thereof by registered or
certified mail, postage prepaid, to Borrower, at its address set forth for
notices in this Agreement, such service to become effective ten (10) days
after such mailing. Nothing herein will affect the right of any Bank to
serve process in any other manner permitted by law or to commence legal
proceedings or otherwise proceed against Borrower in any other
jurisdiction. Borrower irrevocably waives any right it may have to assert
the doctrine of FORUM NON CONVENIENS or to object to venue to the extent
any proceeding is brought in accordance with this Section 8.17.
8.18 WAIVERS VOLUNTARY. The waivers contained in this Agreement are
freely, knowingly and voluntarily given by each party, without any duress
or coercion, after each party has had opportunity to consult with its
counsel and has carefully and completely read all of the terms and
provisions of this Agreement, specifically including the waivers contained
in this Section 8. Neither the Banks nor Borrower will be deemed to have
relinquished the waivers contained herein except by a writing signed by the
party to be charged with having relinquished any such waiver.
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8.19 WAIVER OF JURY TRIAL. Banks and Borrower acknowledge and agree
that there may be a constitutional right to a jury trial in connection with
any claim, dispute or lawsuit arising between them, but that such right may
be waived. Accordingly, the parties agree that notwithstanding such
constitutional right, in this commercial matter the parties believe and
agree that it will be in their best interest to waive such right, and
accordingly, hereby waive such right to jury trial, and further agree that
the best forum for hearing any claim, dispute or lawsuit, if any, arising
in connection with this Agreement, any Loan Document or the relationship
between the Banks and Borrower, will be a court of competent jurisdiction
sitting without a jury.
BORROWER ACKNOWLEDGES THAT IT HAS BEEN ADVISED BY COUNSEL OF ITS
CHOICE WITH RESPECT TO THIS AGREEMENT AND THE TRANSACTIONS CONTEMPLATED
HEREBY, AND BORROWER ACKNOWLEDGES AND AGREES THAT (a) EACH OF THE WAIVERS
SET FORTH HEREIN, WERE KNOWINGLY AND VOLUNTARILY MADE; (b) THE OBLIGATIONS
OF THE BANKS HEREUNDER, INCLUDING THE OBLIGATION TO ADVANCE AND LEND FUNDS
TO BORROWER IN ACCORDANCE HEREWITH, WILL BE STRICTLY CONSTRUED AND WILL BE
EXPRESSLY SUBJECT TO SUCH BORROWER'S COMPLIANCE IN ALL RESPECTS WITH THE
TERMS AND CONDITIONS HEREIN SET FORTH; AND (c) NO REPRESENTATIVE OF ANY
BANK HAS WAIVED OR MODIFIED ANY OF THE PROVISIONS OF THIS AGREEMENT AS OF
THE DATE HEREOF AND NO SUCH WAIVER OR MODIFICATION FOLLOWING THE DATE
HEREOF WILL BE EFFECTIVE UNLESS MADE IN ACCORDANCE WITH SECTION 8.2 HEREOF.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed and delivered as of the date first set forth above.
"BORROWER"
SPARTAN STORES, INC.
WITNESS:
______________________ By: ____________________________
______________________ Its: Senior Vice President
"BANKS"
MICHIGAN NATIONAL BANK
______________________ By: ____________________________
______________________ Its: ___________________________
RATABLE SHARE OF EACH AND THE
TOTAL DUAL FACILITY COMMITMENT:
16.667%
SHARE OF THE TOTAL COMMITMENT:
28.571%
LINE OF CREDIT
LOAN COMMITMENT: $10,000,000
REVOLVING LOAN
COMMITMENT: $10,000,000
SINGLE FACILITY
LOAN COMMITMENT: $20,000,000
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OLD KENT BANK
______________________ By: ____________________________
______________________ Its: ___________________________
RATABLE SHARE OF EACH AND THE
TOTAL DUAL FACILITY COMMITMENT:
16.667%
SHARE OF THE TOTAL COMMITMENT:
14.286%
LINE OF CREDIT
LOAN COMMITMENT: $10,000,000
REVOLVING LOAN
COMMITMENT: $10,000,000
NBD BANK
______________________ By: ____________________________
______________________ Its: ___________________________
RATABLE SHARE OF EACH AND THE
TOTAL DUAL FACILITY COMMITMENT:
33.333%
SHARE OF THE TOTAL COMMITMENT:
28.571%
LINE OF CREDIT
LOAN COMMITMENT: $20,000,000
REVOLVING LOAN
COMMITMENT: $20,000,000
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HARRIS TRUST AND SAVINGS BANK
______________________ By: ____________________________
______________________ Its: ___________________________
RATABLE SHARE OF EACH AND THE
TOTAL DUAL FACILITY COMMITMENT:
20.833%
SHARE OF THE TOTAL COMMITMENT:
17.857%
LINE OF CREDIT
LOAN COMMITMENT: $12,500,000
REVOLVING LOAN
COMMITMENT: $12,500,000
NATIONAL CITY BANK OF
COLUMBUS
______________________ By: ____________________________
______________________ Its: ___________________________
RATABLE SHARE OF EACH AND THE
TOTAL DUAL FACILITY COMMITMENT:
12.5%
SHARE OF THE TOTAL COMMITMENT:
10.714%
LINE OF CREDIT
LOAN COMMITMENT: $7,500,000
REVOLVING LOAN
COMMITMENT: $7,500,000
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"AGENT"
MICHIGAN NATIONAL BANK
______________________ By: ____________________________
______________________ Its: ___________________________
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Exhibit I to
Credit Agreement
FORM OF NOTICE OF BORROWING/REQUEST FOR ISSUANCE
(Cut-off is 12:30 p.m. Eastern Time)
TO: MICHIGAN NATIONAL BANK
ATTENTION: TOM STEVENS
FAX #: (616) 771-__________________
FROM: SPARTAN STORES, INC.
RE: $60,000,000 LINE OF CREDIT COMMITMENT
$60,000,000 REVOLVING LOAN COMMITMENT
$20,000,000 SINGLE FACILITY COMMITMENT
DATED AS OF DECEMBER 23, 1996
===========================================================================
This request for a Loan or Letter of Credit is made pursuant and
subject to the Credit Agreement dated as of December 23, 1996 (as amended,
amended and restated, supplemented or otherwise modified in accordance with
its terms, the "Credit Agreement") among Spartan Stores, Inc., a Michigan
corporation (the "Borrower"), the banks listed therein (the "Banks") and
Michigan National Bank, individually and as Agent for the Banks (the
"Agent"). Unless otherwise defined herein, terms used herein have the
meanings assigned to them in the Credit Agreement.
LOAN REQUESTED:
LOAN REQUEST DATE: _____/_____/_____
FUNDING DATE: _____/_____/_____
LOAN AMOUNT: $________________
FACILITY OPTION (Check to Indicate):
_____ $60,000,000 LINE OF CREDIT
_____ $60,000,000 REVOLVING LOAN
_____ $20,000,000 SINGLE FACILITY LOAN
<PAGE>
INTEREST RATE OPTION (Line of Credit or Revolving Loan):
_____ PRIME RATE LOAN
_____ LIBOR RATE LOAN ________________*
*PLEASE SPECIFY one month, two month, three month or six month
INTEREST PERIOD
INTEREST RATE OPTION (Single Facility Loan):
_____ PRIME RATE LOAN
_____ LIBOR AVERAGE LOAN
METHOD OF ADVANCE:
-CREDIT TO ACCOUNT #__________ OF
_______________ (Borrower or Wholly-owned Subsidiary)
-SPECIAL WIRE INSTRUCTIONS AS FOLLOWS:
________________________________________
________________________________________
________________________________________
________________________________________
LETTER OF CREDIT REQUESTED:
LETTER OF CREDIT AMOUNT: _________________________
LETTER OF CREDIT EXPIRATION DATE: _________________________
NAME OF BENEFICIARY: ______________________________
ADDRESS OF BENEFICIARY: _________________________
_________________________
_________________________
_________________________
COMPANY FOR WHICH THE
LETTER IS TO BE ISSUED: ___________________________________
(Borrower or Wholly-owned Sub.)
-2-
<PAGE>
PURPOSE OF LETTER: ________________________________________
____________________________________________________________
____________________________________________________________
The undersigned officer or agent of the Borrower does hereby
certify that (i) all representations and warranties contained in the Credit
Agreement and in the other Loan Documents are true and correct in all
material respects on and as of the date hereof to the same extent as though
made on and as of the date hereof (unless stated to relate to a specific
earlier date, in which case such representations and warranties will be
true and correct in all material respects as of such earlier date); (ii) no
Event of Default or Unmatured Event of Default has occurred, is continuing
or will result from or exist after the consummation of the borrowing
contemplated by this Notice or the application of the proceeds thereof;
(iii) the Borrower has performed in all material respects all agreements
and satisfied all conditions under the Credit Agreement and the other Loan
Documents provided to be performed or satisfied by it on or before the date
hereof; (iv) nothing has occurred or has become known which has or could
have a Material Adverse Effect on the business, operations, properties or
condition (financial or otherwise) of the Borrower or the Subsidiaries
since the date of the most recent financial statements provided to Agent by
the Borrower; and (v) all conditions to the making of the requested Loan
contained in the Credit Agreement have been, and will be on the Funding
Date, satisfied.
REQUESTED BY:
____________________________________
(AUTHORIZED SIGNATURE)
-3-
<PAGE>
Exhibit II to
Credit Agreement
FORM OF LINE OF CREDIT NOTE
$[ ]<F1> Grand Rapids, Michigan
[ , 1996]<F2>
FOR VALUE RECEIVED, Spartan Stores, Inc., a Michigan corporation
(the "Borrower") hereby promises to pay to the order of [ ]<F3>
(the "Bank") in lawful money of the United States of America in immediately
available funds, at the office of Michigan National Bank located at 77
Monroe Center, Grand Rapids, Michigan 49503 or as otherwise designated
pursuant to the Agreement (as hereinafter defined), on the Line of Credit
Maturity (or earlier as set forth in the Agreement), the principal sum of
[$ ]<F1> ( <F4> DOLLARS) or, if less, the unpaid
principal amount of the Line of Credit Loans made by the Bank pursuant to
the Agreement.
The Borrower also promises to pay interest on the unpaid
principal amount hereof in like money at said office from the date hereof
until paid at the rates and at the times provided in the Agreement.
This Note is one of the Line of Credit Notes referred to in the
Credit Agreement, dated as of December 23, 1996, among the Borrower, the
Banks listed therein, and Michigan National Bank, as Agent (as amended,
amended and restated, supplemented or otherwise modified in accordance with
its terms, the "Agreement"). Unless otherwise defined herein, capitalized
terms used herein have the meanings assigned to them in the Agreement, are
entitled to the benefits thereof and shall be subject to the provisions
thereof. As provided in the Agreement, this Note is subject to mandatory
and voluntary prepayment, in whole or in part. The terms and conditions of
the Agreement are incorporated herein by this reference, and any in the
event of any discrepancy between any term of this Note and a term of the
Agreement, the Agreement will control.
_________________________
<F1> Insert amount of Bank's Line of Credit Commitment.
<F2> Insert date of Note.
<F3> Insert name of Bank.
<F4> Insert amount of Bank's Line of Credit Commitment in words.
<PAGE>
In case an Event of Default shall occur, the principal of and
accrued interest on this Note, together with any fees, costs and premiums
owing therewith, may be declared to be due and payable in the manner and
with the effect provided in the Agreement.
Advances under this Note are subject to the terms and conditions
of the Agreement. Subject to the Agreement, all advances made hereunder
shall be charged to a loan account in Borrower's name on Bank's books, and
Bank shall debit to such account the amount of each advance made to, and
credit to such account the amount of each repayment made by the Borrower.
The Borrower hereby waives presentment, demand, protest or notice
of any kind in connection with this Note. Reference is made to the Credit
Agreement with respect to additional amounts that may be owing as a result
of prepayments of principal hereunder, which amounts may be imposed in the
event of a voluntary or involuntary prepayment.
Neither the failure of the holder hereof promptly to exercise its
right to declare the outstanding principal and accrued and unpaid interest
and other charges hereunder to be immediately due and payable, nor failure
to exercise any other right or remedy the holder may have for default, nor
the acceptance by the holder of late or partial payments, nor the failure
of the holder to demand strict performance of any obligation of the
Borrower or of any other person who may be liable hereunder, shall
constitute a waiver of any such rights while such default continues, nor a
waiver of any such rights in connection with any future default oh the part
of the Borrower or any other person who may be liable for the indebtedness
evidenced hereby. Further, acceptance by the holder of partial payments
prior to or following due acceleration of the indebtedness evidenced hereby
shall not constitute a waiver by the holder of the acceleration of such
indebtedness or of Borrower's default or of any other right or remedy
otherwise available to the holder in such circumstance, all such partial
payments constituting payments on account only.
This Note shall be governed by and construed in accordance with
the laws of the State of Michigan without regard to principles of conflict
laws.
SPARTAN STORES, INC.
By:_____________________________________
Name:________________________________
Title:_______________________________
-2-
<PAGE>
Exhibit III to
Credit Agreement
FORM OF REVOLVING NOTE
$[ ]<F1> Grand Rapids, Michigan
[ , 1996]<F2>
FOR VALUE RECEIVED, Spartan Stores, Inc., a Michigan corporation
(the "Borrower") hereby promises to pay to the order of [ ]<F3>
(the "Bank") in lawful money of the United States of America in immediately
available funds, at the office of Michigan National Bank located at 77
Monroe Center, Grand Rapids, Michigan 49503 or as otherwise designated
pursuant to the Agreement (as hereinafter defined), on the Revolving Loan
Maturity (or earlier as set forth in the Agreement), the principal sum of
[$ ]<F1> ( <F4> DOLLARS) or, if less, the unpaid
principal amount of the Revolving Loans made by the Bank pursuant to the
Agreement.
The Borrower also promises to pay interest on the unpaid
principal amount hereof in like money at said office from the date hereof
until paid at the rates and at the times provided in the Agreement.
This Note is one of the Revolving Notes referred to in the Credit
Agreement, dated as of December 23, 1996, among the Borrower, the Banks
listed therein, and Michigan National Bank, as Agent (as amended, amended
and restated, supplemented or otherwise modified in accordance with its
terms, the "Agreement"). Unless otherwise defined herein, capitalized
terms used herein have the meanings assigned to them in the Agreement and
are entitled to the benefits thereof and shall be subject to the provisions
thereof. As provided in the Agreement, this Note is subject to mandatory
and voluntary prepayment, in whole or in part. The terms and conditions of
the Agreement are incorporated herein by this reference, and any in the
event of any discrepancy between any term of this Note and a term of the
Agreement, the Agreement will control.
In case an Event of Default shall occur, the principal of and
accrued interest on this Note, together with any fees, costs and premiums
owing therewith, may be declared to be due and payable in the manner and
with the effect provided in the Agreement.
___________________________
<F1> Insert amount of Bank's Revolving Loan Commitment.
<F2> Insert date of Note.
<F3> Insert name of Bank.
<F4> Insert amount of Bank's Revolving Loan Commitment in words.
<PAGE>
Advances under this Note are subject to the terms and conditions
of the Agreement. Subject to the Agreement, all advances made hereunder
shall be charged to a loan account in Borrower's name on Bank's books, and
Bank shall debit to such account the amount of each advance made to, and
credit to such account the amount of each repayment made by the Borrower.
The Borrower hereby waives presentment, demand, protest or notice
of any kind in connection with this Note. Reference is made to the Credit
Agreement with respect to additional amounts that may be owing as a result
of prepayments of principal hereunder, which amounts may be imposed in the
event of a voluntary or involuntary prepayment.
Neither the failure of the holder hereof promptly to exercise its
right to declare the outstanding principal and accrued and unpaid interest
and other charges hereunder to be immediately due and payable, nor failure
to exercise any other right or remedy the holder may have for default, nor
the acceptance by the holder of late or partial payments, nor the failure
of the holder to demand strict performance of any obligation of the
Borrower or of any other person who may be liable hereunder, shall
constitute a waiver of any such rights while such default continues, nor a
waiver of any such rights in connection with any future default on the part
of the Borrower or any other person who may be liable for the indebtedness
evidenced hereby. Further, acceptance by the holder of partial payments
prior to or following due acceleration of the indebtedness evidenced hereby
shall not constitute a waiver by the holder of the acceleration of such
indebtedness or of Borrower's default or of any other right or remedy
otherwise available to the holder in such circumstance, all such partial
payments constituting payments on account only.
This Note shall be governed by and construed in accordance with
the laws of the State of Michigan without regard to principles of conflict
laws.
SPARTAN STORES, INC.
By:_____________________________________
Name:________________________________
Title:_______________________________
-2-
<PAGE>
Exhibit IV to
Credit Agreement
PROMISSORY NOTE
Note No. ___________________
Amount: $20,000,000 Grand Rapids, Michigan
Maturity: December 23, 1999 Dated: December 23, 1996
FOR VALUE RECEIVED, the undersigned (the "Borrower"), promises to
pay to the order of Michigan National Bank, a national banking association
(the "Bank"), at its office set forth below or at such other place as the
Bank may designate in writing, the principal sum of Twenty Million Dollars
($20,000,000.00) or such lesser sum as shall have been advanced by Bank to
Borrower under the Single Facility Loan Commitment, as that term is defined
in the Credit Agreement, dated even date herewith (the "Credit Agreement"),
among the Bank, the Borrower and the banks listed on the signature pages
thereof, plus interest as provided in the Credit Agreement, all in lawful
money of the United States of America. The unpaid principal balance of
this promissory note ("Note") shall bear interest at the rates and at the
times provided in the Credit Agreement. This Note shall mature, and all of
indebtedness evidenced hereby, including, without limitation, outstanding
principal and unpaid interest, shall be due and payable in full, upon the
Single Facility Loan Maturity, as that term is defined in the Credit
Agreement.
Advances under this Note are subject to the terms and conditions
of the Credit Agreement. All advances made hereunder shall be charged to a
loan account in Borrower's name on Bank's books, and Bank shall debit to
such account the amount of each advance made to, and credit to such account
the amount of each repayment made by Borrower.
This Note may be paid in full or in part at any time without
payment of any prepayment fee. All payments received shall, at the option
of the Bank, first be applied against accrued and unpaid interest and the
balance against principal. Borrower expressly assumes all risks of loss or
delay in the delivery of any payments made by mail, and no course of
conduct or dealing shall affect Borrower's assumption of these risks.
Upon the occurrence of any Event of Default, as that term is
defined in the Credit Agreement, at its option and without any further
notice to Borrower, the Bank may declare the entire unpaid principal
balance of this Note and all accrued interest, together with all other
indebtedness of Borrower to Bank, to be immediately due and payable.
<PAGE>
Upon the occurrence of any Event of Default, the unpaid principal
balance of this Note shall bear interest at a rate which is two percent
(2%) greater than the interest rate otherwise applicable hereunder.
Further, if any payment under this Note is not paid on or before the tenth
day after its date due, at the option of Bank a late charge of not more
than five cents ($.05) for each dollar of the installment past due may be
charged by Bank.
Acceptance by Bank of any payment in an amount less than the
amount then due shall be deemed an acceptance on account only, and Bank's
acceptance of any such partial payment shall not constitute a waiver of
Bank's right to receive the entire amount due. Borrower waives presentment
for payment, demand, notice of non-payment, notice of protest or protest of
this Note, and Bank diligence in collection or bringing suit, and consents
to any and all extensions of time, renewals, waivers, or modifications as
may be granted by Bank with respect to payment or any other provisions of
this Note. The liability of the Borrower under this Note shall be absolute
and unconditional, without regard to the liability of any other party.
This Note shall be deemed to have been executed in Michigan, and all rights
and obligations hereunder shall be governed by the laws of the State of
Michigan.
This Note is executed and delivered by the Borrower in
conjunction with the Credit Agreement, and is an integral part of the
transactions contemplated thereby. The terms and conditions of the Credit
Agreement are incorporated herein by his reference. Any capitalized term
that is not defined in this Note will have the meaning assigned to such
term in the Credit Agreement. In the event of any discrepancy between any
term of this Note and a term of the Credit Agreement, the Credit Agreement
will control.
This Promissory Note is executed and delivered by a duly
authorized officer of the Borrower on behalf of the Borrower on and as of
the date set forth above.
SPARTAN STORES, INC.
By:_____________________________________
Name:________________________________
Title:_______________________________
-2-
<PAGE>
Exhibit V to
Credit Agreement
MICHIGAN NATIONAL BANK
77 MONROE CENTER
P.O. BOX 1707
GRAND RAPIDS, Ml
ATTENTION: TOM STEVENS
RE: CREDIT AGREEMENT
DATED DECEMBER 1996
ENCLOSED PLEASE FIND:
1. CONSOLIDATED FINANCIAL STATEMENTS
2. COMPLIANCE SCHEDULES
I HEREBY STATE, THAT AS THE SENIOR VICE PRESIDENT OF BUSINESS DEVELOPMENT
AND FINANCE FOR SPARTAN STORES, INC., I HAVE REVIEWED THE PROVISIONS OF THE
CREDIT AGREEMENT DATED DECEMBER 1996, AND THE FINANCIAL STATEMENTS AND
SCHEDULES LISTED ABOVE.
I CERTIFY THAT NO DEFAULT OR EVENT OF DEFAULT EXISTED AS OF THE DATE OF
THESE FINANCIAL STATEMENTS, AND TO THE BEST OF MY KNOWLEDGE, NO DEFAULT OR
EVENT OF DEFAULT EXISTED DURING THE PERIOD COVERED BY THESE STATEMENTS, OR
AT THIS DATE.
I ALSO CERTIFY THE FINANCIAL STATEMENTS AND SCHEDULES LISTED ABOVE WERE
PREPARED IN ACCORDANCE WITH GENERALLY ACCEPTED ACCOUNTING PRINCIPLES, AND
THEY ARE COMPLETE AND CORRECT.
SINCERELY,
CHARLES B. FOSNAUGH
SENIOR VICE PRESIDENT
BUSINESS DEVELOPMENT AND FINANCE
<PAGE>
COMPLIANCE SCHEDULE
Quarter Ended
___________________________________________________________________________
MINIMUM NET WORTH $
REQUIRED MINIMUM NET WORTH $95,000,000
___________________________________________________________________________
COMPLIANCE PER SECTION 5.4.2
CONSOLIDATED FUNDED DEBT $
CONSOLIDATED STOCKHOLDERS EQUITY $
FUNDED DEBT/EQUITY RATIO TO 1.00
LIMITATION ON CONSOLIDATED FUNDED DEBT:
FUNDED DEBT/EQUITY RATIO MUST BE LESS THAN 1.25 TO 1.00
___________________________________________________________________________
COMPLIANCE PER SECTION 5.4.3
CONSOLIDATED CURRENT ASSETS $
CONSOLIDATED CURRENT LIABILITIES $
CONSOLIDATED CURRENT RATIO TO 1.00
LIMITATION ON CONSOLIDATED CURRENT RATIO:
CURRENT RATIO MUST BE GREATER THAN 1.25 TO 1.00
<PAGE>
COMPLIANCE SCHEDULE
Quarter Ended
___________________________________________________________________________
COMPLIANCE PER SECTION 5.4.4
RENTALS $
INTEREST EXPENSE $______________
FIXED CHARGES $
LIMITATION:
CONSOLIDATED NET INCOME $
TAXES ON INCOME $
MICHIGAN SINGLE BUSINESS TAX $
RENTALS $
INTEREST EXPENSE $
NON CASH REBATES $______________
INCOME AVAILABLE FOR FIXED CHARGES: $
FIXED CHARGE RATIO TO 1.00
LIMITATION ON FIXED CHARGES:
INCOME AVAILABLE/FIXED CHARGE RATIO
MUST BE GREATER THAN 1.25 TO 1.00
<PAGE>
COMPLIANCE SCHEDULE
Quarter Ended
___________________________________________________________________________
COMPLIANCE PER SECTION 6.1 (a)(b)
RESTRICTED DEBT OF SUBSIDIARIES $
SECURED DEBT OF PARENT COMPANY $________________________
PRIORITY DEBT AMOUNT $
LIMITATION ON PRIORITY DEBT AMOUNT:
CONSOLIDATED TANGIBLE ASSETS $
@ 15% $
___________________________________________________________________________
COMPLIANCE PER SECTION 6.7.1 (d)
NET BOOK VALUE OF ASSETS SOLD DURING
THE PAST FOUR QUARTERS $
LIMITATION OF ASSETS SOLD:
CONSOLIDATED ASSETS $
@ 15% $
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND> THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS OF SPARTAN
STORES, INC. AND SUBSIDIARIES FOR THE PERIOD ENDED JANUARY 4,
1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> OTHER<F1>
<FISCAL-YEAR-END> MAR-29-1997
<PERIOD-START> MAR-31-1996
<PERIOD-END> JAN-04-1997
<CASH> 33,804
<SECURITIES> 15,731
<RECEIVABLES> 69,153
<ALLOWANCES> (2,653)
<INVENTORY> 87,707
<CURRENT-ASSETS> 217,548
<PP&E> 301,403
<DEPRECIATION> (133,818)
<TOTAL-ASSETS> 393,150
<CURRENT-LIABILITIES> 167,908
<BONDS> 113,913
<COMMON> 23,985
0
0
<OTHER-SE> 82,319
<TOTAL-LIABILITY-AND-EQUITY> 393,150
<SALES> 1,891,932
<TOTAL-REVENUES> 1,891,932
<CGS> 1,749,743
<TOTAL-COSTS> 1,749,743
<OTHER-EXPENSES> 123,282
<LOSS-PROVISION> 817
<INTEREST-EXPENSE> 4,169<F2>
<INCOME-PRETAX> 13,921
<INCOME-TAX> 4,900
<INCOME-CONTINUING> 9,021
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 9,021
<EPS-PRIMARY> 7.38
<EPS-DILUTED> 7.38
<FN>
<F1>40-week period
<F2>Net of interest income of $3,527
</FN>
</TABLE>
