Unsecured Credit Agreement

EXHIBIT 10.6
UNSECURED CREDIT AGREEMENT
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THIS AGREEMENT, dated as of the 17th day of April, 1995, is made by and between ASSOCIATED WHOLESALE GROCERS, INC., a Missouri corporation ("AWG"), GROCERS DAIRY COMPANY, INC., a Missouri corporation ("Dairy"), GROCER'S PURCHASING GROUP, INC., a Kansas corporation ("Purchasing"), MEMBERS SERVICES ASSOCIATION, INC., a Kansas corporation ("Members") SUPER MARKET DEVELOPERS, INC., a Missouri corporation ("Developers"), SUPERMARKET INSURANCE AGENCY, INC., a Kansas corporation ("Agency") SUPER MARKET INVESTMENT COMPANY, INC., a Missouri corporation ("Investment"), SUPERMARKET MANAGEMENT, INC., a Missouri corporation ("Management"), and VALU MERCHANDISERS COMPANY, a Kansas corporation ("VALU") (AWG, Benchmark, Dairy, Purchasing, Members, Developers, Agency, Investment, Management and Valu being sometimes collectively referred to herein as the "Borrowers" or individually as a "Borrower"), UMB BANK, N.A., Kansas City, Missouri, a national banking association ("UMB"), HARRIS TRUST AND SAVINGS BANK, Chicago, Illinois, an Illinois banking corporation ("Harris"), NBD BANK, Detroit, Michigan, a Michigan banking corporation ("NBD") (UMB, Harris and NBD being sometimes collectively referred to herein as the "Banks" or individually as a "Bank"), and UMB Bank, N.A., Kansas City, Missouri, a national banking association, as Agent for the Banks herein (in such capacity, the "Agent").


WHEREAS, the Borrowers have requested a total credit facility of up to $140,000,000 in revolving loans; and


WHEREAS, the Banks are willing to extend such credit facility to the Borrowers on the terms and conditions hereinafter set forth.


NOW, THEREFORE, in consideration of the premises and the mutual promises herein contained, the parties mutually agree as follows:


1. DEFINITIONS.
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1.1 ACCOUNTING TERMS. All accounting and financial terms used herein are used with the meanings such terms are given in accordance with generally accepted accounting principles, except as may be otherwise specifically provided in this Agreement.


1.2 DEFINED TERMS.
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"Adjusted LIBOR" means a rate per annum determined by the Agent
-------------- on behalf of the Banks in accordance with the following formula:


Adjusted LIBOR = LIBOR
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100%-Reserve percentage


"Advance" means a disbursement of proceeds of the Revolving Credit.


"Agent" means UMB Bank, N.A., Kansas City, Missouri, in its capacity as Agent for the Banks hereunder, and any successor Agent appointed pursuant to this Agreement.


"Agreement" means this Unsecured Credit Agreement, as amended from time to time.


"Application for Advance" or Application" means the written application of the Borrowers for an Advance, which Application shall be in the form of Exhibit A attached hereto.


"Authorized Officer" means any of Mike DeFabis, President of AWG, Douglas Carolan, Executive Vice President of AWG, and Joseph L. Campbell, Vice President, Secretary and Treasurer of AWG, or such other officer or employee of any of the Borrowers whose authority to perform acts to be performed only by an Authorized Officer under this Agreement is


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evidenced to the Banks by a certified copy of an appropriate resolution of the Board of Directors of the respective Borrower.


"Bank" and "Banks" have the meaning ascribed thereto in the
---- ----- preamble.
"Borrower" and "Borrowers" have the meaning ascribed thereto in
-------- --------- the preamble.


"Business Day" means any day other than a Saturday or Sunday on which any Bank is not authorized or required to close and, when used with respect to LIBOR Loans, a day on which any Bank is also dealing in United States Dollar deposits in London, England and/or Nassau, Bahamas.


"Commitment" means a Bank's Revolving Credit Commitment.
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"Consolidated Tangible Net Worth" means all assets of the Borrowers and all of their Subsidiaries less goodwill and any other intangible assets and less all of their liabilities except AWG's member's deposits and patronage certificates with maturities in excess of one year, deposit certificates and member's savings (all of which are subordinate to payment of all indebtedness incurred hereunder) and less AWG's minority interest in a subsidiary. For purposes of calculating Consolidated Tangible Net Worth the value of the Supply Agreement with Homeland Stores, Inc. will not be considered as part of goodwill.


"Current Assets" means the sum representing all assets of the Borrowers and all of their Subsidiaries which, in accordance with generally accepted accounting principles consistently applied, are required to be classified as current assets on the Borrowers' consolidated balance sheet.


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"Current Liabilities" means the sum representing all liabilities of the Borrowers and all of their Subsidiaries which, in accordance with generally accepted accounting principles consistently applied, are required to be classified as current liabilities on the Borrowers' consolidated balance sheet.


"Default" means any event specified in Section 10 which is not initially an Event of Default but which would, if uncured, become an Event of Default with the giving of notice or the passage of time or both.


"Event of Default" has the meaning set forth in Section 10.
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"Federal Funds Rate" means, for any day, an interest rate per annum equal to the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers on such day, as published for such day (or, if such day is not a Business Day, for the immediately preceding Business Day) by the Federal Reserve Bank of New York, or, if such rate is not so published for any day which is a Business Day, the average of the quotations at approximately 10 a.m. (Kansas City, Missouri time) on such day on such transactions received by the Agent from three Federal funds brokers of recognized standing selected by the Agent in its sole discretion.


"Fixed Charges" for any period means all rent expense for all leases, except intercompany leases and except leases covering real property which is subleased to a third party by any of the Borrowers other than capitalized leases having an original term in excess of one year, and all interest and all amortization of principal and interest on all indebtedness of any of the Borrowers and their Subsidiaries.


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"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, including, without limitation, any agency, body, commission, court or department thereof, whether federal, state, local or foreign.


"Harris" shall have the meaning ascribed in the preamble.
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"Indebtedness" means all liabilities, obligations and indebtedness of any and every kind or nature whatsoever, whether heretofore, or hereafter owing, arising, due or payable by the Borrowers or any of their Subsidiaries to any person or other entity and however evidenced, created, incurred, acquired or owing except obligations which are subordinated in right of payment to Obligations payable to the Banks and which are evidenced by patronage and deposit certificates issued by AWG.


"LIBOR" means, for each LIBOR Interest Period, (a) the LIBOR Index Rate for such LIBOR Interest Period, if such rate is available, and (b) if the LIBOR Index Rate cannot be determined, the arithmetic average of the rates of interest per annum (rounded upward, if necessary to the nearest 1/100th of l%) at which deposits in U.S. Dollars in immediately available funds are offered to any Bank at 11:00 A.M. (London, England time) two (2) Business Days before the beginning of such LIBOR Interest Period by three (3) or more major banks in the interbank Eurodollar market selected by any Bank for a period equal to such LIBOR Interest Period and in an amount equal or comparable to the applicable LIBOR Loan scheduled to be outstanding from the Bank during such LIBOR Interest Period.


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"LIBOR Index Rate" means, for any LIBOR Interest Period, the rate per annum (rounded upwards, if necessary, to the next higher one hundred-thousandth of a percentage point) for deposits in U.S. Dollars for a period equal to such LIBOR Interest Period, which appears on the Telerate Page 3750 as of 11:00 a.m. (London, England time) on the day two (2) Business Days before the commencement of such LIBOR Interest Period.


"LIBOR Interest Period" means, with respect to (a) any LIBOR Loan, the period commencing on, as the case may be, the creation, continuation or conversion date with respect to such LIBOR Loan and ending one (1) month thereafter as provided herein; provided that all of the foregoing provisions relating to LIBOR Interest Periods are subject to the following:


(i) if any LIBOR Interest Period would otherwise end on a day which is not a Business Day, that LIBOR Interest Period shall be extended to the next succeeding Business Day, unless in the case of a LIBOR Interest Period for a LIBOR Loan the result of such extension would be to carry such LIBOR Interest Period into another calendar month in which event such LIBOR Interest Period shall end on the immediately preceding Business Day;

(ii) no LIBOR Interest Period may extend beyond the final maturity date of the Note;


(iii) the interest rate to be applicable to each LIBOR Loan for each LIBOR Interest Period shall apply from and including the first day of such LIBOR Interest Period to but excluding the last day thereof; and

(iv) no LIBOR Interest Period may be selected if after giving effect thereto the Borrowers will be unable to make a principal payment scheduled to be


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made during such LIBOR Interest Period without paying part of a LIBOR Loan
on a date other than the last day of the LIBOR Interest Period applicable
thereto.


For purposes of determining a LIBOR Interest Period, a month means a period starting on one day in a calendar month and ending on a numerically corresponding day in the next calendar month, provided, however, if a LIBOR Interest Period begins on the last day of a month or if there is no numerically corresponding day in the month in which a LIBOR Interest Period is to end, then such LIBOR Interest Period shall end on the last Business Day of such month.


"LIBOR Loan" means, except as otherwise specifically provided herein, each amount borrowed under the Revolving Credit upon which interest is payable at the Optional Rate.


"Loan Documents" means this Agreement, the Notes and any other documents or instruments now or hereafter executed and delivered by or on behalf of the Borrowers to the Banks or to the Agent to further evidence or govern the Obligations.


"Loans" means loans pursuant to the Revolving Credit.

"NBD" shall have the meaning ascribed in the preamble.

"Notes" means the Revolving Credit Notes.


"Net Income" shall mean all income of the Borrowers and all of their Subsidiaries before deduction of income taxes, minority interests in Subsidiaries and fiscal year end patronage distributions.


"Obligations" means (i) all obligations of the Borrowers to the Banks of every type and description, direct or indirect, absolute or contingent, due or to become due, now existing or hereafter arising, on account of the Loans, including, without limitation, any Advances made pursuant to any discretionary extension of the Commitments by the Banks beyond the Revolving


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Credit Maturity Date or pursuant to any other amendment of the Loan Documents, and whether or not contemplated by the Borrowers or the Banks as of the date of this Agreement; and (ii) all other obligations arising under the Loan Documents including, without limitation, all costs of collection and enforcement of any and all of the Loan Documents, including reasonable attorneys' fees and expenses (to, the extent Permitted by applicable law).


"Optional Rate" has the meaning ascribed in Section 3.1.
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"Person" means and includes an individual, a partnership, a joint venture, a corporation, a limited liability company, a trust, an unincorporated organization and a Governmental Authority.


"Pro Rata Share" means, for any Bank, when used with reference to any aggregate or total amount, an amount equal to the product of (i) such aggregate or total amount, times (ii) a fraction the numerator of which shall be such Bank's Commitment and the denominator of which shall be the aggregate of all Commitments.


"Reserve Percentage" means, for the purpose of computing Adjusted LIBOR, the maximum rate of all reserve requirements (including, without limitation, any marginal, emergency, supplemental or other special reserves) imposed by the Board of Governors of the Federal Reserve System (or any successor) under Regulation D on Eurocurrency liabilities (as such term is defined in Regulation D) for the applicable LIBOR Interest Period as of the first day of such LIBOR Interest Period, but subject to any amendments to such reserve requirement by such Board or its successor, and taking into account any transitional adjustments thereto becoming effective during such LIBOR Interest Period. For purposes of this definition, LIBOR Loans shall be deemed to be Eurocurrency liabilities as defined in Regulation D without benefit of or credit for prorations,


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exemptions or offsets under Regulation D. The Reserve Percentage as of the date of the first advance under this Agreement shall be zero.


"Revolving Credit Commitments" means the individual revolving credit commitments of each of the Banks for which they are not jointly and severally obligated in the respective amounts of (i) Forty-Seven Million Dollars ($47,000,000) in the case of UMB, (ii) Forty-Six Million Five Hundred Thousand Dollars ($46,500,000) in the case of Harris, and (iii) Forty-Six Million Five Hundred Thousand Dollars ($46,500,000) in the case of NBD; or as otherwise reduced pursuant to the terms hereof.


"Revolving Credit Maturity Date" means May 1, 1998, or as otherwise extended, if extended.


"Revolving Credit Notes" has the meaning ascribed in Section 2 and shall be deemed to include any extensions or renewals thereof.


"Subsidiary" shall mean any corporation of which any of the Borrowers now or at any time hereafter owns or controls, on an aggregate basis, at least fifty percent (50%) of the outstanding capital stock of such corporation or of which any of the Borrowers controls a majority of the board of directors, specifically including but not limited to all those corporations listed on Exhibit B attached hereto which are subsidiaries of AWG. For purposes hereof, "control" means the possession, directly or indirectly, of the power to direct or cause the direction of management and policies, whether through the ownership of voting securities, by contract or otherwise.


"Telerate Page 3750" means the display designated as "Page 3750" on the Telerate Service (or such other page as may replace Page 3750 on that service or such other service as may be nominated by the British Bankers' Association as the information vendor for the purpose


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of displaying British Bankers' Association Interest Settlement Rates for U.S. Dollar deposits). Each determination of LIBOR made by the Agent on behalf of the Banks shall be conclusive and binding absent manifest error.


"UMB" shall have the meaning ascribed in the preamble.


"Working Capital" shall mean all of the Borrowers' and all of their Subsidiaries' Current Assets minus all of the Borrowers' and all of their Subsidiaries' Current Liabilities.

1.3 SINGULAR AND PLURAL. The foregoing definitions shall be equally applicable to both the singular and plural forms of the defined terms.


2. REVOLVING CREDIT/PAYMENTS.


2.1 THE REVOLVING CREDIT. Subject to all terms and conditions hereof, each Bank agrees to lend to the Borrowers during the period of time beginning on the date hereof and ending on May 1, 1998, such amount or amounts as the Borrowers may from time to time request to borrow up to and including, but not exceeding at any time, each Bank's Commitment for an outstanding aggregate principal amount owing to all Banks of up to, but not exceeding at any time, $140,000,000.00 (the "Revolving Credit"). The Borrowers may, except with respect to LIBOR Loans which may be paid only on the last day of the applicable LIBOR Interest Period, prepay all or any part of the Indebtedness outstanding hereunder at any time, without notice and without penalty. Any prepayment of the full amount of such Indebtedness shall include accrued interest thereon. Upon any payment prior to May 1, 1998, of the Indebtedness under this Agreement, the Banks agree to loan the Borrowers from time to time during the period beginning upon the execution of this Agreement and ending on the Revolving Credit Maturity Date, an aggregate


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principal amount not to exceed the difference between (i) the then outstanding aggregate principal amount of the Borrowers' aggregate indebtedness hereunder, and (ii) $140,000,000.00; provided, however, that the Banks shall have no obligation to make any such Loan if a Default or an Event of Default has occurred and is then continuing.


At the time of execution hereof, any two Authorized Officers of each of the Borrowers shall execute promissory notes in the form of Exhibits C-1, C-2 and C- 3 attached hereto and incorporated herein by reference (the "Revolving Credit Notes"). The Revolving Credit Notes payable to each of the Banks shall be due and payable in full on the Revolving Credit Maturity Date. As the Borrowers desire to obtain Loans pursuant to the Revolving Credit hereunder, AWG, as agent for the Borrowers and which is hereby designated as agent for the Borrowers for such purpose and for all other purposes hereunder, shall give the Agent notice of the Borrowers' intention to borrow pursuant to the Revolving Credit Commitments for other than LIBOR Loans by not later than 10.00 A.M. (Kansas City, Missouri time) on the proposed date of borrowing and for LIBOR Loans notice shall be given pursuant to Section 3.3(iii) hereof. As soon as practicable after receipt of a borrowing notice but in no event later than 11:00 A.M. on the date of notice (Kansas City, Missouri time), for other than LIBOR Loans and by 3:00 p.m. (Kansas City, Missouri time) on the date of notice for LIBOR Loans, the Agent shall give the Banks telephonic notice of the same. By 2:00 p.m. (Kansas City, Missouri time) on each borrowing date, each Bank severally agrees to make its Pro Rata Share of the Advance of the Loan under the Revolving Credit then being made to the Borrowers by making it available to the Agent, either by wire transfer to Agent's main office in Kansas City, Missouri, or by deposit to any correspondent account, if any, which Agent may maintain with such Bank pursuant to instructions of AWG. The Agent will make the funds so


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received from the Banks immediately available to the Borrowers in the manner provided below. Each Advance under the Revolving Credit will be conditioned upon delivery (which delivery may be made by telex, telecopier or facsimile transmission) to the Agent by AWG of an Application for Advance provided that the Agent may, in its sole discretion, make a disbursement upon the verbal request of AWG made telephonically by an Authorized Officer. The Agent and the Banks may rely on any such verbal request which shall have been received by it in good faith from a Person reasonably believed to be an Authorized Officer. Each such verbal request shall be promptly confirmed by a duly executed Application for Advance. Subject to the provisions of Sections 3.1 and 3.3, all borrowings and reborrowings shall be in amounts of not less than Six Hundred Thousand Dollars ($600,000). Repayments may be in any amount except (i) mandatory prepayment of Loans under the Revolving Credit as required by Section 2.1 and (ii) repayment of LIBOR Loans which must be in the full amount of each such loan. Upon compliance with all conditions of lending stated in this Agreement applicable to the Revolving Credit, the Agent shall disburse the amount of the requested Advance to AWG by depositing the same in AWG's account number 9800000124 at UMB, and the Borrowers hereby authorize the disbursement of Advances of Loans under the Revolving Credit in such manner. All Advances by the Banks and payments by the Borrowers shall be recorded by the Banks on their books and records, current copies of which shall be supplied by the Banks to the Agent at all times upon request therefore, and the principal amount outstanding from time to time, plus interest payable thereon, shall be determined by reference to the books and records of the Agent. Such books and records shall be rebuttably presumed to be correct as to such matters. In the event of any conflict between the terms of the Revolving Credit Notes executed hereunder and the terms of this Agreement, the terms of the Revolving Credit Notes


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shall control. All indebtedness of the Borrowers under the Revolving Credit shall be reduced by the Borrowers to zero on the Revolving Credit Maturity Date.


2.2 PAYMENTS, MANDATORY PREPAYMENT OF REVOLVING CREDIT. All payments of principal and interest on Loans pursuant to the Revolving Credit shall be made by AWG on behalf of the Borrowers to the Agent at its main office in Kansas City, Missouri, by 10:00 A.M. (Kansas City, Missouri time) on the date when due, and shall be applied by the Agent pro rata between the Banks in accordance with the outstanding principal balance of the Revolving Credit Notes held by them. Each payment delivered to the Agent for the account of any Bank shall be delivered by the Agent for the account of such Bank no later than 12:00 Noon (Kansas City, Missouri time) on the same day.


In the event that the maximum principal amount of indebtedness which is outstanding under this Agreement is at any time greater than the maximum amount which is then authorized to be outstanding hereunder, the Borrowers will immediately, upon written notice from the Agent, pay to the Agent on behalf of the Banks the difference between the outstanding principal amount and the principal amount then authorized to be outstanding hereunder plus all accrued interest thereon.


2.3 REDUCTION OF COMMITMENTS. Notwithstanding anything stated in this Agreement to the contrary, the Borrowers may on any one occasion on or after June 1, 1996, and on only one occasion elect, by giving 10 prior Business Days notice to the Banks, to reduce the aggregate Commitment of the Banks by a sum of $25,000,000 or more. Once elected by the Borrowers, the Commitments of each of the Banks shall thereafter permanently be reduced by each Bank's Pro Rata Share of the aggregate amount by which the Borrowers elected to reduce the


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Commitments and the amount of the Borrowers' obligations under Section 3.5 to pay a commitment fee shall thereafter be calculated on the basis of the reduced Commitments.


3. INTEREST/REPAYMENT/FEES.
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3.1 INTEREST RATE. The principal amount of all borrowings under the Revolving Credit Notes shall bear interest at a rate equal to 150 basis points over the Federal Funds Rate, adjusted daily, except that at the option of AWG on behalf of the Borrowers on each advance of Three Million Dollars ($3,000,000.00) or more, exercised as provided in Section 3.3, interest may accrue at a rate equal to 100 basis points over Adjusted LIBOR (the "Optional Rate") during LIBOR Interest Periods. At the expiration of each applicable LIBOR Interest Period, unless AWG exercises the Optional Rate as provided in Section 3.3, interest on any such advance for which the Optional Rate was elected shall again accrue at a rate equal to 150 basis points over the Federal Funds Rate, adjusted daily.


3.2 CALCULATION OF INTEREST. Interest shall be computed on the basis of days elapsed and assuming a 360-day year.


3.3 OPTIONAL RATE PROVISIONS. The Optional Rate may be elected only in accordance with the following procedures and subject to the following conditions:
(i) The Optional Rate may not be elected at any time a Default or an Event of Default shall have occurred and is continuing.


(ii) The Optional Rate may not be elected for any advance of less than Three Million Dollars ($3,000,000).


(iii) AWG, as agent for the Borrowers, shall notify the Agent of its election of the Optional Rate prior to 12:00 P.M. (Kansas City, Missouri


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time) not less than two (2) Business Days prior to the commencement of a LIBOR Interest Period.


(iv) An election of the Optional Rate may be communicated to the Agent only by an Authorized Officer of AWG as agent for the Borrowers. Such election may be communicated by telephone or by telex, facsimile machine or other form of written electronic communication, or by a writing delivered to the agent. AWG shall confirm in writing any election communicated by telephone and such written confirmation shall be signed by an Authorized Officer of AWG as Agent for the Borrowers. The Agent shall be entitled to rely on any oral communication of the election of the Optional Rate which is received by a designated employee of the Agent from anyone reasonably believed in good faith by such employee to be an Authorized Officer of AWG.


(v) Notwithstanding any other provision of this Agreement, in the event that by reason of circumstances affecting the interbank European market, adequate and reasonable means do not exist for ascertaining the LIBOR for any LIBOR Interest Period, the Agent shall forthwith give notice of such determination, confirmed in writing, to AWG. If such notice is given, then all borrowings under the Revolving Credit Notes shall bear interest at a rate equal to 150 basis points over the Federal Funds Rate, adjusted daily.


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(vi) If any law or any governmental regulation, guideline or order or interpretation or application thereof by any Governmental Authority charged with the interpretation or administration thereof or compliance with any request or directive of any central bank or other Governmental Authority whether or not having the force of law (i) imposes, modifies or deems applicable any reserve, special deposit or similar requirement against assets held by, credit extended by, deposits with or for the account of, or other acquisition of funds by, the Banks ...