EXHIBIT 10.68

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GROCERS CAPITAL COMPANY

 

$10,000,000

 

SECOND AMENDED AND RESTATED CREDIT AGREEMENT

 

Dated as of June 9, 2004

 

NATIONAL CONSUMER COOPERATIVE BANK

 

Agent

 

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TABLE OF CONTENTS

 

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ARTICLE I DEFINITIONS

   1

1.1

   Certain Defined Terms    1

1.2

   Accounting Terms; GAAP Changes    14

1.3

   Interpretation    14 ARTICLE II THE LOANS    15

2.1

   The Loans    15

2.2

   Borrowing Procedure    16

2.3

   Conversion or Continuation Requirements    16

2.4

   Eurodollar Costs.    17

2.5

   Illegality; Impossibility    18

2.6

   Inability to Determine Eurodollar Rate.    18

2.7

   Lending Offices    18

2.8

   Notes; Recordkeeping; Statements of Obligations    19

2.9

   Loans by Lenders    19

2.10

   Pro Rata Treatment    20

2.11

   Payments; Application    20

2.12

   Non-Receipt of Funds    20

2.13

   Termination of the Commitments; Repayment of the Loans    21

2.14

   Voluntary Commitment Reductions    21

ARTICLE III INTEREST, PAYMENTS, FEES AND TAXES

   21

3.1

   Interest    21

3.2

   Interest Payment Dates    21

3.3

   Fees    22

3.4

   Computation of Interest and Fees    22

3.5

   Highest Lawful Rate    22

3.6

   Increased Risk-Based Capital Cost    23

3.7

   Taxes    23

ARTICLE IV CONDITIONS PRECEDENT

   24

4.1

   Conditions Precedent to the Initial Loans and Maintenance of Amended and
Restated Credit Agreement Loans    24

4.2

   Conditions Precedent to All Loans.    26

ARTICLE V REPRESENTATIONS AND WARRANTIES

   27

5.1

   Representations and Warranties    27 ARTICLE VI COVENANTS    31

6.1

   Reporting Covenants    31

6.2

   Financial Covenants.    34

6.3

   Additional Affirmative Covenants.    34

6.4

   Negative Covenants    37

ARTICLE VII EVENTS OF DEFAULT

   41

7.1

   Events of Default    41

7.2

   Effect of Event of Default    43

ARTICLE VIII AGENT AND LENDER

   44

8.1

   Appointment and Powers of Agent    44

8.2

   Agent’s Reliance    44

8.3

   Defaults    45

8.4

   Rights as a Lender, Rights under NCB Loan Purchase Agreement    45

8.5

   Indemnification    45

 

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8.6

   Non-Reliance by Lenders    46

8.7

   Failure to Act    46

8.8

   Excess Payments    46

8.9

   Sharing of Setoffs    47

8.10

   Characterization Of Action    47

8.11

   Resignation by or Removal of Agent    47

8.12

   No Obligation of Borrower.    48 ARTICLE IX LENDERS’ REPRESENTATIONS    48

9.1

   Investment Representation    48 ARTICLE X EXPENSES AND INDEMNITEES    48

10.1

   Expenses    48

10.2

   Indemnity    48 ARTICLE XI MISCELLANEOUS    49

11.1

   Destruction of Borrower’s Documents    49

11.2

   Amendments, etc.    49

11.3

   Notices    50

11.4

   No Waiver; Cumulative Remedies    51

11.5

   Right of Set-Off    51

11.6

   Survival    51

11.7

   Benefits of Agreement    51

11.8

   Assignments and Participations    52

11.9

   GOVERNING LAW    53

11.10

   CONSENT TO VENUE    53

11.11

   WAIVER OF JURY TRIAL    53

11.12

   Demand, Protest, Notice    54

11.13

   Confidential Relationships    54

11.14

   Limitation on Liability    54

11.15

   Entire Agreement    54

11.16

   Interpretation    54

11.17

   Confidentiality    54

11.18

   Severability    55

11.19

   Counterparts    55

 

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SECOND AMENDED AND RESTATED CREDIT AGREEMENT

 

THIS SECOND AMENDED AND RESTATED CREDIT AGREEMENT (this “Agreement”), dated as
of June 9, 2004, is made among GROCERS CAPITAL COMPANY, a California corporation
(“Borrower”), the financial institutions listed on the signature pages of this
Agreement under the heading “Lenders” (each a “Lender” and, collectively, the
“Lenders”), and NATIONAL CONSUMER COOPERATIVE BANK, dba National Cooperative
Bank, a federally chartered banking corporation with principal offices located
in Washington, D.C. (“NCB”), as agent for the Lenders (NCB in such capacity and
any successor in such capacity is referred to herein as “Agent”).

 

RECITALS

 

WHEREAS, Borrower and NCB, as agent, entered into an Amended and Restated Credit
Agreement dated as of December 7, 2001 (as amended to the date hereof, the
“Amended and Restated Credit Agreement”);

 

WHEREAS, Borrower and the other parties to the Amended and Restated Credit
Agreement desire to amend and restate the Amended and Restated Credit Agreement
as set forth in this Agreement; and

 

WHEREAS, the Loans outstanding under the Amended and Restated Credit Agreement
(each an “Amended and Restated Credit Agreement Loan” and, collectively, the
“Amended and Restated Credit Agreement Loans”) shall remain outstanding as Loans
under, and subject to the terms of, this Agreement.

 

NOW, THEREFORE, for full and fair consideration, the parties hereto agree as
follows:

 

ARTICLE I

DEFINITIONS

 

1.1 Certain Defined Terms

 

As used in this Agreement, the following terms shall have the following
meanings:

 

“Additional Loan/Lease Receivables” means Deposit Fund Loans, Affiliate Loans,
Program Leases, subordinated Indebtedness up to a maximum aggregate amount of
$2,000,000, and, if designated as Additional Loan/Lease Receivables pursuant to
Section 6.4(l), New Lease/Loan Products.

 

“Affiliate” means any Person which, directly or indirectly, controls, is
controlled by or is under common control with another Person. For purposes of
the foregoing, “control,” “controlled by” and “under common control with” with
respect to any Person shall mean the possession, directly or indirectly, of the
power (i) to vote more than 10% of the securities having ordinary voting power
of the election of directors of such Person, or (ii) to direct or cause the
direction of the management and policies of such Person, whether through the
ownership of voting securities or by contract or otherwise. The mere fact that a
representative of a Unified Patron serves and acts as a director of Unified or
Borrower shall not cause such Unified Patron to be an Affiliate of Unified or
Borrower.

 

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“Affiliate Loans” means loans made by Borrower to wholly-owned, direct or
indirect, subsidiaries of Unified.

 

“Agent” has the meaning set forth in the introduction to this Agreement.

 

“Agent’s Account” means the account of Agent maintained at PNC Bank,
Philadelphia, Pennsylvania, ABA Number: 031000053, Account Number: 8501299449,
Account Name: NCB Clearing Account, Reference: GCC Credit Agreement or such
other account at such bank as the Agent from time to time shall designate in a
written notice to Borrower and the Lenders.

 

“Agent’s Expenses” means and includes, without duplication, all actual
out-of-pocket: (a) costs or expenses (including, without limitation, taxes and
insurance premiums), presently existing or arising hereafter, required to be
paid by Borrower under this Agreement, the Security Agreement or under any of
the Notes which are paid or advanced by Agent or any Lender; (b) filing,
recording, publication and search fees incurred or paid by Agent or any Lender
in connection with Agent’s and such Lender’s transactions with Borrower in
connection herewith; (c) all fees, costs and expenses incurred or paid by Agent
in connection with any audit during the existence of an Event of Default, and up
to $5,000 fees plus all out-of-pocket costs and expenses incurred or paid by
Agent in connection with not more than one (1) audit for each fiscal year which
is conducted absent an Event of Default; (d) costs and expenses (including
reasonable attorneys’ fees) incurred by Agent or any Lender in collecting the
Collateral (with or without suit), or in gaining possession, of, maintaining,
handling, preserving, storing, shipping, selling, preparing for sale or
advertising to sell the Collateral, whether or not a sale is consummated; (e)
costs and expenses incurred by Agent or any Lender in defending this Agreement,
the Notes, the Security Agreement and all other agreements, instruments, and
documents contemplated hereby and thereby, or any portion hereof or thereof,
whether or not suit is brought; (f) the cost of delivering the Notes to any
Lender pursuant to the provisions of this Agreement; and (g) the reasonable
costs and expenses (including reasonable attorneys’ fees and expenses, including
allocated fees and expenses of in-house counsel or local counsel of Agent)
incurred by Agent or any Lender in connection with any bankruptcy or other
insolvency proceeding, reorganization, workout, composition, or other creditor
arrangement of Borrower, or of any of Borrower’s Subsidiaries, provided,
however, that each Lender (other than Agent) agrees to instruct its counsel to
take reasonable steps to avoid duplication of effort with counsel to Agent.

 

“Alternative Use Receivables” means any Receivable from a Unified Patron other
than (a) an Additional Loan/Lease Receivable, (b) a Finance Receivable or (c)
any Receivable from an Expansion Loan.

 

“Amended and Restated Credit Agreement” has the meaning set forth in the first
WHEREAS clause of this Agreement.

 

“Amended and Restated Credit Agreement Loans” has the meaning set forth in the
third WHEREAS clause of this Agreement.

 

“Authorized Officer” means any individual authorized by Borrower to act on
Borrower’s behalf in connection with the Loan Documents as specified in a
certificate delivered pursuant to Section 4.1(e)(ii), or in the latest such
certificate delivered by Borrower to Agent to reflect any change in the
authorization of any such individual.

 

“Bank” means Union Bank of California, N.A.

 

“Bankruptcy Code” means the Bankruptcy Reform Act of 1978.

 

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“Base LIBOR” means, for any Interest Period, the rate for deposits in U.S.
Dollars with maturities comparable to the length of such Interest Period which
appears on the screen designated as page “LIBOR” on the appropriate display on
the Bloomberg Financial Markets System (or such other screen as may replace the
same on such service) at 11:00 A.M. (London Time), 2 Eurodollar Business Days
prior to the commencement of such Interest Period. If Base LIBOR does not appear
as contemplated in the preceding sentence, then Base LIBOR for such Interest
Period will be the same as Base LIBOR in effect during the immediately preceding
Interest Period for the applicable Eurodollar Rate Loan.

 

“Borrower” has the meaning set forth in the introduction to this Agreement.

 

“Borrower’s Account” means the account of Borrower maintained at Bank’s branch
located at 445 South Figueroa Street, Los Angeles, California 90071, bearing the
number 0700479994, or such other account as Borrower from time to time shall
designate in a written notice to Agent for the deposit of funds borrowed under
this Agreement.

 

“Borrowing” means a borrowing consisting of simultaneous Loans made at any one
time to Borrower from Lenders pursuant to Article II.

 

“Borrowing Base” means at any time the sum of (i) 75% of Eligible Collateral
consisting of Finance Receivables, plus (ii) 50% of Eligible Collateral
consisting of Additional Loan/Lease Receivables, plus (iii) a percentage
(determined by Agent in its sole discretion with respect to each such
Receivable) of Eligible Collateral consisting of Alternative Use Receivables,
but only if, with respect to any such Alternative Use Receivable, Agent has
given its prior written approval (in Agent’s sole discretion) to the inclusion
of such Alternative Use Receivable in the Borrowing Base, plus (iv) 75% of
Eligible Collateral consisting of Expansion Loans, provided that no Expansion
Loan shall under any circumstances remain in the Borrowing Base for more than
twelve months.

 

“Borrowing Base Certificate” means a certificate of the chief financial officer
or treasurer of Borrower, in substantially the form of Exhibit 1.1 B-1, with
such changes thereto as Agent or any Lender may from time to time reasonably
request.

 

“Business Day” means a day (i) other than Saturday or Sunday, and (ii) on which
commercial banks are open for business in Washington, D.C., and Los Angeles,
California.

 

“Capital Debt” means, as of any date of determination, any and all Indebtedness
of Borrower due more than one year from the date of determination which is (i)
owed to any Affiliate of Borrower, and (ii) by its terms expressly subordinated
to all Senior Debt and to any Subordinated Debt of Borrower on terms no less
favorable to the holders of such Senior Debt and Subordinated Debt than those
set forth in the Investment Agreement.

 

“Capital Lease” means, for any Person, any lease of property (whether real,
personal or mixed) which, in accordance with GAAP, would, at the time a
determination is made, be required to be recorded as a capital lease in respect
of which such Person is liable as lessee.

 

“Closing Date” means the date when all of the conditions set forth in Section
4.1 have been satisfied.

 

“Code” means the Internal Revenue Code of 1986, as amended, and any successor
statute thereto.

 

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“Collateral” means the property described in the Collateral Documents, and all
other property now existing or hereafter acquired which may at any time be or
become subject to a Lien in favor of Agent or Lenders pursuant to the Collateral
Documents or otherwise, securing the payment and performance of Obligations; but
in no event shall “Collateral” include Released Collateral.

 

“Collateral Documents” means the Security Agreement, any other agreement
pursuant to which Borrower or any other Person provides a Lien on its assets in
favor of Lenders or Agent for the benefit of Lenders and all financing
statements, fixture filings, patent, trademark and copyright filings,
assignments, acknowledgments and other filings, documents and agreements made or
delivered pursuant thereto.

 

“Collateral Procedures” means any procedures and documentation specified in
Section 3(b) of the Security Agreement for perfection of the first priority Lien
of Agent (on behalf of Lenders) on the Collateral.

 

“Commitment” means, when used with reference to any Lender at the time any
determination thereof is to be made, the amount set forth opposite the name of
such Lender on the signature pages of this Agreement, as such amount may be
reduced from time to time pursuant to Section 2.14, or, where the context so
requires, the obligation of such Lender to make Loans up to such amount, as such
amount may be reduced from time to time pursuant to Section 2.14, on the terms
and conditions set forth in this Agreement.

 

“Commitment Termination Date” means June 9, 2007.

 

“Compliance Certificate” means a certificate of the chief financial officer of
Borrower, in substantially the form of Exhibit 1.1 C-1, with such changes
thereto as Agent or any Lender may from time to time reasonably request.

 

“Consolidated” means, when used in connection with any financial statement or
financial term, that the statement or term has been prepared or determined on a
consolidated basis in accordance with GAAP for Unified and its Subsidiaries, or
for Borrower and its Subsidiaries, as the case may be.

 

“Consolidated Adjusted Tangible Net Worth” means, as of any date of
determination, Consolidated Total Assets plus the book value of NCB Stock plus
Capital Debt minus Consolidated Total Liabilities; provided, however, that there
shall be excluded from Consolidated Total Assets the following: (i) all assets
which would be classified as intangible assets in accordance with GAAP,
including goodwill, organizational expense, research and development expense,
patent applications, patents, trademarks, trade names, brands, copyrights, trade
secrets, customer lists, licenses, franchises and covenants not to compete; (ii)
all unamortized debt discount and expense; (iii) all treasury stock; (iv) all
receivables from and other obligations of directors (other than in their
capacities as Unified Patrons), employees or officers of Borrower; and (v) the
excess, if any, of (A) the aggregate balance of Receivables that are more than
90 days past due, over (B) reserves for loan losses.

 

“Consolidated EBIT” means, for any period, Consolidated net income, plus
Consolidated Interest Expense, plus income tax expense of Borrower and its
Subsidiaries on a Consolidated basis, as determined in accordance with GAAP;
provided, however, that for purposes of determining Consolidated EBIT there
shall be excluded from Consolidated net income any notes or other payment in
kind received by Borrower in payment of any obligations owing to it.

 

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“Consolidated Interest Expense” means, for any period, interest expense
(including that attributable to Capital Leases) of Borrower and its Subsidiaries
on a Consolidated basis, as determined in accordance with GAAP.

 

“Consolidated Tangible Net Worth” means, as of any date of determination,
Consolidated Total Assets minus Consolidated Total Liabilities; provided,
however, that there shall be excluded from Consolidated Total Assets the
following: (i) all assets which would be classified as intangible assets in
accordance with GAAP, including goodwill, organizational expense, research and
development expense, patent applications, patents, trademarks, trade names,
brands, copyrights, trade secrets, customer lists, licenses, franchises and
covenants not to compete; (ii) all unamortized debt discount and expense; (iii)
all treasury stock; and (iv) all receivables from and other obligations of
directors (other than in their capacities as Unified Patrons), employees or
officers of Borrower or Unified.

 

“Consolidated Total Assets” means, as of any date of determination, the total
assets of Borrower and its Subsidiaries on a Consolidated basis, as determined
in accordance with GAAP.

 

“Consolidated Total Liabilities” means, as of any date of determination, the
total liabilities of Borrower and its Subsidiaries on a Consolidated basis, as
determined in accordance with GAAP.

 

“Controlled Group” means all members of a controlled group of corporations and
all trades or businesses (whether or not incorporated) under common control
which, together with the Borrower, are treated as a single employer under
Section 414 of the Code.

 

“Default” means an Event of Default or an event or condition which with notice
or lapse of time or both would constitute an Event of Default.

 

“Deposit Fund Loans” means “Deposit Fund Loans” made to Unified Patrons by
Borrower in accordance with the GCC Loan Guidelines.

 

“Dollars” and “$” each means lawful money of the United States.

 

“Eligible Collateral” means at any time the aggregate amount of Receivables
arising in the ordinary course of Borrower’s business, excluding the following:

 

(i) Receivables for which Borrower’s right to receive payment has not been fully
earned by performance or is contingent upon the fulfillment of any condition
whatsoever or which otherwise do not arise from a bona fide completed
transaction with Borrower;

 

(ii) Receivables which have been disputed, or against which there have been
asserted any defenses, offsets, claims, counterclaims, or other defenses of any
nature, whether well-founded or otherwise, or which are otherwise conditional;

 

(iii) Receivables that do not comply with all applicable legal requirements,
including all laws, rules, regulations and orders of any Governmental Authority;

 

(iv) Receivables which are not owned by Borrower free and clear of all Liens and
rights of others (other than the Liens in favor of Agent on behalf of Lenders
and other than other Permitted Liens);

 

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(v) Receivables in which Agent on behalf of Lenders shall not have a valid and
perfected first-priority Lien;

 

(vi) Receivables owing by any officer, director (other than in his or her
capacity as a Unified Patron), employee, agent, partner, Subsidiary or Affiliate
of Borrower (other than Affiliate Loans);

 

(vii) Receivables owing by the United States or any department, agency or
instrumentality thereof or by a State or any department, agency, instrumentality
or political subdivision thereof;

 

(viii) Receivables denominated in a currency other than Dollars or owing by any
non-resident of the United States;

 

(ix) Receivables not complying with the GCC Loan Guidelines and other
documentation, credit and collection policies and practices of Borrower as in
effect from time to time;

 

(x) Receivables owing by any Receivable Debtor who, as of the end of the
previous collection period, has failed to make full payment within 90 days from
the due date on the Receivables or any portion thereof owing to Borrower by such
Receivable Debtor, except that if a good faith dispute exists as to any such
unpaid Receivables of a Receivable Debtor, only such unpaid Receivables shall be
excluded;

 

(xi) Receivables owing by any Receivable Debtor who is the subject of a case or
proceeding described in Section 7.l(e) or who takes any other action described
in Section 7.1(e);

 

(xii) Receivables which are subordinated to the prior payment of any other
obligations of the Receivable Debtor obligated in respect of such Receivable;

 

(xiii) Receivables with respect to which the terms or conditions prohibit or
restrict assignment or collection rights or which require the consent of the
Receivable Debtor, and such consent has not been obtained; and

 

(xiv) Receivables with respect to which Agent, in its reasonable discretion,
deems the creditworthiness or financial condition of the Receivable Debtor to be
unsatisfactory or the prospect of payment or performance to be impaired, and
other Receivables which, in Agent’s reasonable discretion, are otherwise
ineligible; provided that, with respect to Alternative Use Receivables, the
Agent may (in its sole discretion) waive any or all of preceding clauses (iv),
(v), (vi), (vii), (ix) and/or (xii).

 

“Environmental Laws” means all federal, state or local laws, statutes, common
law duties, rules, regulations, ordinances and codes, together with all
administrative orders, directives, requests, licenses, authorizations and
permits of, and agreements with, any Governmental Authorities, in each case
relating to or imposing liability or standards of conduct concerning
environmental protection matters, including the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, the Clean Air Act, the Federal
Water Pollution Control Act of 1972, the Solid Waste Disposal Act, the Federal
Resource Conservation and Recovery Act, the Toxic Substances Control Act, the
Emergency Planning and Community Right-to-Know Act, the California Hazardous
Waste Control Law, the California Solid Waste Management, Resource Recovery and
Recycling Act, the California Water Code and the California Health and Safety
Code.

 

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“Equipment Loans” means “Equipment Loans” made to Unified Patrons by Borrower in
accordance with the GCC Loan Guidelines or acquired by Borrower from URI or
Unified on or before the date of this Agreement.

 

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended
from time to time, including (unless the context otherwise requires) any rules
or regulations promulgated thereunder.

 

“Eurodollar Business Day” means any Business Day on which major commercial banks
are open for international business (including dealings in Dollar deposits) in
Los Angeles, California, Washington, D.C., and London, England.

 

“Eurodollar Rate” means the rate per annum (rounded upwards if necessary to the
nearest whole 1/100 of 1%), determined as the quotient of: (i) Base LIBOR;
divided by (ii) the number equal to 100% minus the LIBOR Reserve Percentage. The
Eurodollar Rate shall be adjusted automatically on the effective date of any
change in the LIBOR Reserve Percentage, such adjustment to affect any Eurodollar
Loans outstanding on such effective date to the extent such change is applied
retroactively to eurocurrency funding of a member bank in the Federal Reserve
System. Each determination of a Eurodollar Rate by Agent, including, but not
limited to, any determination as to the applicability or allocability of
reserves to eurocurrency liabilities or as to the amount of such reserves, shall
be conclusive and final in the absence of manifest error.

 

“Eurodollar Rate Loan” means any Loan bearing interest by reference to the
Eurodollar Rate pursuant to a designation by Borrower under Sections 2.2 or 2.3.

 

“Event of Default” has the meaning set forth in Section 7.1.

 

“Expansion Loan” has the meaning set forth in the NCB Loan Purchase Agreement.

 

“Federal Funds Rate” means, for any day, the rate per annum (rounded upward, if
necessary, to the nearest 1/100 of 1%), as determined by Agent, 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, as
published for any day of determination (or if such day of determination is not a
Business Day, for the next 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 for such day on such transactions
received by Agent from three Federal funds brokers of recognized standing
selected by Agent.

 

“Finance Receivables” means Store Development Loans, Equipment Loans, Inventory
Loans, and, if designated as Finance Receivables pursuant to Section 6.4(l), New
Lease/Loan Products.

 

“GAAP” means generally accepted accounting principles in the U.S. as in effect
from time to time.

 

“GCC Loan Guidelines” means the written guidelines of Borrower for provision of
financing to qualified Unified Patrons and the documentation thereof as in
effect from time to time and furnished to Agent and Lenders in accordance
herewith, described on Exhibit 1.1 G-1.

 

“Governmental Authority” means any federal, state, local or other governmental
department, commission, board, bureau, agency, central bank, court, tribunal or
other instrumentality or authority, domestic or foreign, exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government.

 

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“Guaranty” means that certain Second Amended and Restated Guaranty Agreement,
dated as of the date hereof, executed by Borrower in favor of NCB

 

“Guaranty Obligation” means, as applied to any Person, any direct or indirect
liability, contingent or otherwise, of that Person with respect to any
Indebtedness, lease, dividend, letter of credit or other obligation (the
“primary obligations”) of another Person (the “primary obligor”), including any
obligation of that Person (i) to purchase, repurchase or otherwise acquire such
primary obligations or any property constituting direct or indirect security
therefor, or (ii) to advance or provide funds (A) for the payment or discharge
of any such primary obligation, or (B) to maintain working capital or equity
capital of the primary obligor or otherwise to maintain the net worth or
solvency or any balance sheet item, level of income or financial condition of
the primary obligor, or (iii) to purchase property, securities or services
primarily for the purpose of assuring the owner of any such primary obligation
of the ability of the primary obligor to make payment of such primary
obligation, or (iv) otherwise to assure or hold harmless the holder of any such
primary obligation against loss in respect thereof.

 

“Hazardous Substances” means any toxic or hazardous substances, materials or
wastes, contaminants or pollutants, including asbestos, PCBs, petroleum products
and byproducts, substances defined or listed as “hazardous substances,”
“hazardous materials” or “toxic substances” (or similarly identified), regulated
under or forming the basis for liability under any applicable Environmental Law.

 

“Incremental Purchase” has the meaning set forth in the NCB Loan Purchase
Agreement and also includes similar purchases under any Third Party Loan
Purchase Agreement.

 

“Indebtedness” means, for any Person: (i) all indebtedness or other obligations
of such Person for borrowed money or for the deferred purchase price of property
or services; (ii) all obligations evidenced by notes, bonds, debentures or
similar instruments, including obligations so evidenced incurred in connection
with the acquisition of property, assets or businesses; (iii) all indebtedness
created or arising under any conditional sale or other title retention agreement
with respect to property acquired by such Person (even though the rights and
remedies of the seller or lender under such agreement in the event of default
are limited to repossession or sale of such property); (iv) all obligations
under Capital Leases; (v) all reimbursement or other obligations of such Person
under or in respect of letters of credit, bankers acceptances, interest rate
swaps, caps, floors and collars, currency swaps, or other similar financial
products; (vi) all Guaranty Obligations of such Persons; and (vii) all
indebtedness of another Person secured by any Lien upon or in property owned by
the Person for whom Indebtedness is being determined, whether or not such Person
has assumed or become liable for the payment of such indebtedness of such other
Person.

 

“Interest Period” means, with respect to each Eurodollar Rate Loan, the period
commencing on the date of such Eurodollar Rate Loan and ending one (1) or three
(3) months thereafter, as Borrower may elect pursuant to the applicable Notice
of Borrowing or Notice of Conversion or Continuation; provided, however, that:

 

(i) any Interest Period which would otherwise end on a day which is not a
Eurodollar Business Day shall be extended to the next succeeding Eurodollar
Business Day unless such Eurodollar Business Day falls in another calendar month
in which case such Interest Period shall end on the next preceding Eurodollar
Business Day;

 

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(ii) any Interest Period which begins on the last Eurodollar Business Day of the
calendar month (or on a day for which there is no numerically corresponding day
in the calendar month at the end of such Interest Period) shall end on the last
Eurodollar Business Day of the calendar month in which it would have ended if
there were a numerically corresponding day in such calendar month; and

 

(iii) no Interest Period may extend beyond the Commitment Termination Date.

 

“Internal Revenue Code” means the Internal Revenue Code of 1986, including
(unless the context otherwise requires) any rules or regulations promulgated
thereunder.

 

“Inventory Loans” means “Inventory Loans” and secured “Inventory Deferred Loans”
made to Unified Patrons by Borrower in accordance with the GCC Loan Guidelines
or acquired by Borrower from URI or Unified on or before the date of this
Agreement.

 

“Investment Agreement” means that certain Third Amended and Restated Investment
Agreement, dated as of October 2, 2000, between Borrower and Unified, as may be
from time to time amended, supplemented or restated.

 

“IRS” means the Internal Revenue Service, or any successor thereto.

 

“Lender” and “Lenders” each has the meaning set forth in the introduction of
this Agreement.

 

“Lending Office” has the meaning set forth in Section 2.7.

 

“LIBOR Reserve Percentage” means, for any Interest Period of any Eurodollar Rate
Loan, the daily average of the stated maximum rate (rounded upward to the
nearest 1/100 of 1%), as determined by Agent in accordance with its usual
procedures (which determination shall be conclusive in the absence of manifest
error), at which reserves are required to be maintained during such Interest
Period (including supplemental, marginal, and emergency reserves) under
Regulation D by Agent or Majority Lenders against “eurocurrency liabilities” (as
such term is defined in Regulation D), but without benefit or credit of
proration, exemptions, or offsets that might otherwise be available to Agent or
any Lender from time to time under Regulation D. Without limiting the generality
of the foregoing, “LIBOR Reserve Percentage” shall include any other reserves
required by law to be maintained by Agent or Majority Lenders against (i) any
category of liabilities that includes deposits by reference to which the
Eurodollar Rate for a Eurodollar Rate Loan is being determined and (ii) any
category of extension of credit or other assets that includes Eurodollar Rate
Loans.

 

“Lien” means any mortgage, deed of trust, pledge, security interest, assignment,
deposit arrangement, charge or encumbrance, lien (statutory or other), or other
preferential arrangement (including any conditional sale or other title
retention agreement, any financing lease having substantially the same economic
effect as any of the foregoing or any agreement to give any security interest).

 

“Loan” has the meaning set forth in Section 2.1(a).

 

“Loan Documents” means this Agreement, the Notes, the Collateral Documents and
all other certificates, documents, agreements and instruments delivered to Agent
and Lenders under or in connection with this Agreement.

 

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“Loan Purchase Agreements” means the NCB Loan Purchase Agreement and any Third
Party Loan Purchase Agreement.

 

“Majority Lenders” means at any time Lenders holding at least 51% of the then
aggregate unpaid principal amount of the Loans, or, if no such principal amount
is then outstanding, Lenders having at least 51% of the aggregate Commitments at
such time.

 

“Material Adverse Effect” means any event, matter, condition or circumstance
which (i) has or would reasonably be expected to have a material adverse effect
on the business, properties, results of operations or condition (financial or
otherwise) of Borrower or any of its Subsidiaries, or Unified and its
Subsidiaries taken as a whole; (ii) would materially impair the ability of
Borrower or any other Person to perform or observe its obligations under or in
respect of the Loan Documents; or (iii) affects the legality, validity or
enforceability of any of the Loan Documents or the perfection or priority of any
Lien granted to Lenders or Agent for the benefit of Lenders under any of the
Collateral Documents.

 

“NCB” means National Consumer Cooperative Bank, dba National Cooperative Bank, a
federally chartered banking corporation with principal offices located in
Washington, D.C.

 

“NCB Loan Purchase Agreement” means that certain Second Amended and Restated
Loan Purchase and Servicing Agreement, dated as of the date hereof, between
Borrower, as seller and servicer, and NCB, as buyer, as amended or restated from
time to time.

 

“NCB Stock” shall have the meaning given to such term in Section 6.3(k).

 

“New Lease/Loan Products” means new lease and loan products entered into or made
to Unified Patrons under new lease or loan programs in accordance with the GCC
Loan Guidelines.

 

“Note” means a promissory note of Borrower payable to the order of a Lender with
respect to such Lender’s Commitment, in substantially the form of Exhibit 1.1
N-1.

 

“Notice of Borrowing” means an irrevocable notice from Borrower to Agent of
Borrower’s intention to borrow, substantially in the form of Exhibit 1.1 N-2.

 

“Notice of Conversion or Continuation” means a written notice given pursuant to
the terms of Section 2.3, substantially in the form of Exhibit 1.1 N-3.

 

“Obligations” means the indebtedness, liabilities and other obligations of
Borrower to Agent or any Lender under or in connection with this Agreement, the
Notes or any other Loan Documents, including all Loans, all interest accrued
thereon, all fees due under this Agreement and all other amounts payable by
Borrower to Agent or any Lender thereunder or in connection therewith, whether
now or hereafter existing or arising, and whether due or to become due, absolute
or contingent, liquidated or unliquidated, determined or undetermined.

 

“Operating Agreement” means that certain Third Amended and Restated Operating
Agreement dated as of October 2, 2000, between Borrower and Unified, as may be
from time to time amended, supplemented or restated.

 

“Operating Lease” means, for any Person, any lease of any property of any kind
by that Person as lessee which is not a Capital Lease.

 

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“PBGC” means the Pension Benefit Guaranty Corporation, or any successor thereto.

 

“Permitted Investments” means any of the following investments denominated and
payable in Dollars, maturing within one year from the date of acquisition,
selected by Borrower: (i) marketable direct obligations issued or
unconditionally guaranteed by the United States government or issued by any
agency thereof and backed by the full faith and credit of the United States;
(ii) marketable direct obligations issued by any state of the United States or
any political subdivision of any such state or any public instrumentality
thereof and, at the time of acquisition, having the highest credit rating
obtainable from either Standard & Poor’s Ratings Services, a division of the
McGraw Hill Companies, Inc. (“S&P”), or Moody’s Investors Service, Inc.
(“Moody’s”); (iii) commercial paper or corporate promissory notes bearing at the
time of acquisition the highest credit rating either of S&P or Moody’s issued by
United States, Australian, Canadian, European or Japanese bank holding companies
or industrial or financial companies; (iv) certificates of deposit issued by and
bankers acceptances of and interest bearing deposits with any Lender, or with
any United States, Australian, Canadian, European or Japanese commercial banks
having combined capital and surplus of at least $1,000,000,000 or the equivalent
and which has (or the parent of which has) long-term debt term securities
bearing a credit rating from S&P of “AA” or better or from Moody’s of “Aa2 “ or
better; and (v) money market funds organized under the laws of the United States
or any state thereof that invest predominantly in any of the foregoing
investments permitted under clauses (i), (ii), (iii) and (iv).

 

“Permitted Liens” means:

 

(i) Liens in favor of Lenders or Agent for the benefit of Lenders to secure the
Obligations;

 

(ii) the existing Liens listed in Schedule 1.1 P-1 or incurred in connection
with the extension, renewal or refinancing of the Indebtedness secured by such
existing Liens, provided that any extension, renewal or replacement Lien shall
be limited to the property encumbered by the existing Lien and the principal
amount of the Indebtedness being extended, renewed or refinanced does not
increase;

 

(iii) Liens for taxes, fees, assessments or other governmental charges or
levies, either not delinquent or being contested in good faith by appropriate
proceedings and which are adequately reserved for in accordance with GAAP;

 

(iv) Liens of materialmen, mechanics, warehousemen, carriers or employees or
other like Liens arising in the ordinary course of business and securing
obligations either not delinquent or being contested in good faith by
appropriate proceedings and which are adequately reserved for in accordance with
GAAP and which do not in the aggregate materially impair the use or value of the
property subject thereto or risk the loss or forfeiture of title thereto;

 

(v) Liens consisting of deposits or pledges to secure the payment of worker’s
compensation, unemployment insurance or other social security benefits or
obligations, or to secure the performance of bids, trade contracts, leases,
public or statutory obligations, surety or appeal bonds or other obligations of
a like nature incurred in the ordinary course of business (other than for
Indebtedness or any Liens arising under ERISA);

 

(vi) easements, rights of way, servitudes or zoning or building restrictions and
other minor encumbrances on real property and irregularities in the title to
such property which do not in the aggregate materially impair the use or value
of such property or risk the loss or forfeiture of title thereto;

 

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(vii) statutory landlord’s Liens under leases to which Borrower or any of its
Subsidiaries is a party;

 

(viii) any judgment, attachment or similar Lien, unless the judgment it secures
is not fully covered by insurance and has not been discharged or execution
thereof effectively stayed pending appeal within 20 days of the entry thereof,
or shall not have been discharged within 20 days of the expiration of any such
stay;

 

(ix) Liens in favor of NCB on the NCB Stock; and

 

(x) Liens granted under the Loan Purchase Agreements, so long as such Liens
attach only to the Released Collateral or to any Separate Account or Servicing
Account (each as defined in the NCB Loan Purchase Agreement).

 

“Person” means an individual, corporation, partnership, joint venture, trust,
unincorporated organization or any other entity of whatever nature or any
Governmental Authority.

 

“Plan” means any employee pension benefit plan covered by Title IV of ERISA or
subject to the minimum funding standards under Section 412 of the Code that
either (a) is maintained by a member of the Controlled Group for employees of a
member of the Controlled Group or (b) is maintained pursuant to a collective
bargaining agreement or any other arrangement under which more than one employer
makes contributions and to which a member of the Controlled Group is then making
or accruing an obligation to make contributions or has within the preceding 5
plan years made contributions.

 

“Premises” means any and all real property, including all buildings and
improvements now or hereafter located thereon and all appurtenances thereto, now
or hereafter owned, leased, occupied or used by Borrower or any of its
Subsidiaries.

 

“Prime Rate” means the higher of: (i) the Federal Funds Rate plus 0.25%; and
(ii) the variable rate of interest, per annum, most recently announced by Agent
at its principal office in Washington, D.C., as its “prime rate,” with the
understanding that the Agent’s “prime rate” is one of its base rates and serves
as a basis upon which effective rates of interest are calculated for loans
making reference thereto and may not be the lowest of the Agent’s base rates.

 

“Prime Rate Loan” means any Loan bearing interest by reference to the Prime Rate
pursuant to the designation by Borrower under Sections 2.2 or 2.3.

 

“Program Leases” means leases entered into by Borrower with Unified Patrons
under Borrower’s “Lease Financing Program” in accordance with the GCC Loan
Guidelines.

 

“Purchase Notice” has the meaning set forth in the Security Agreement.

 

“Receivable Debtor” means any Person obligated on a Receivable.

 

“Receivables” means all present and future rights, interests and claims of
Borrower under and in respect of Finance Receivables, Additional Loan/Lease
Receivables, Expansion Loans and Alternative Use Receivables, including all
rights of Borrower to receive moneys due or to become due with respect thereto,
other than such rights, interest and claims in any Released Collateral or
proceeds thereof.

 

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“Regulation D” means Regulation D of the Board of Governors of the Federal
Reserve System.

 

“Release” has the meaning set forth in the Security Agreement.

 

“Released Collateral” means (i) such of the Finance Receivables, Additional
Loan/Lease Receivables, Alternative Use Receivables, Expansion Loans and any
related assets of Borrower constituting Property (as defined in the NCB Loan
Purchase Agreement or as similarly defined in any Third Party Loan Purchase
Agreement, as applicable), for which Borrower has duly executed and delivered to
Agent a Purchase Notice, and Agent has duly executed and delivered a Release
pursuant to Section 3(d)(ii) of the Security Agreement, (ii) each of the
“Amended and Restated Loans” and related “Property” sold to NCB prior to the
“Effectiveness Date” (as each such term is defined in the NCB Loan Purchase
Agreement).

 

“Security Agreement” means that certain Second Amended and Restated Security
Agreement between Borrower and Agent, of even date herewith, securing the
Obligations, and any amendments, supplements or restatements thereto or thereof.

 

“Senior Debt” means the obligations and any and all other Indebtedness (if any)
of the types referred to in clauses (i), (ii) and (iv) of the definition of
Indebtedness in this Section 1.1 other than Capital Debt and Subordinated Debt.

 

“Solvent” means, with respect to any Person on the date any determination
thereof is to be made, that on such date: (a) the present fair valuation of the
property and assets of such Person is greater than such Person’s probable
liability in respect of existing Indebtedness; (b) such Person does not intend
to, and does not believe that it will, incur Indebtedness beyond such Person’s
ability to pay as such Indebtedness matures; and (c) such Person is not engaged
in business or a transaction, and is not about to engage in business or a
transaction, which would leave such Person with property and assets remaining
which would constitute unreasonably small capital after giving effect to the
nature of the particular business or transaction. For purposes of this
definition (i) the “fair valuation” of any property or assets means the amount
realizable within a reasonable time, either through collection or sale of such
property or assets at their regular market value, which is the amount obtainable
by a capable and diligent Person from an interested buyer willing to purchase
such property or assets within a reasonable time under ordinary circumstances;
and (ii) the term “Indebtedness” includes any payment obligation, whether or not
reduced to judgment, equitable or legal, matured or unmatured, liquidated or
unliquidated, disputed or undisputed, secured or unsecured, absolute, fixed or
contingent.

 

“Store Development Loans” means “Store Development Loans” (also referred to as
“Buy/Sell Loans”) made to Unified Patrons by Borrower in accordance with the GCC
Loan Guidelines or acquired by Borrower from URI or Unified on or before the
date of this Agreement.

 

“Subordinated Debt” means any Indebtedness of Borrower due more than one year
from the date of determination which is (A) owed to any Person other than an
Affiliate of Borrower, and (B) by its terms expressly subordinated to the Senior
Debt on terms satisfactory to the Majority Lenders.

 

“Subsidiary” means, with respect to any Person, any corporation, association,
partnership, joint venture or other business entity of which more than 50% of
the voting stock or other equity interest is owned directly or indirectly by any
Person or one or more of the other Subsidiaries of such Person or a combination
thereof.

 

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“Taxes” has the meaning set forth in Section 3.7(a).

 

“Buyer” means the buyer under any Third Party Loan Purchase Agreement.

 

“Third Party Loan Purchase Agreement” means any agreement, other than this
Agreement, between a third party, as buyer, and Borrower, as seller and
servicer, providing for the acquisition of Receivables in an aggregate amount
not to exceed $20,000,000.

 

“UCC” means the Uniform Commercial Code of the jurisdiction the law of which
governs the Loan Document in which such term is used or the attachment,
perfection or priority of the Lien on any Collateral.

 

“Unified” means Unified Western Grocers, Inc., a California corporation.

 

“Unified Loan Agreement” means the Credit Agreement, dated as of December 5,
2003, by and among Unified, the lenders named therein and Harris Trust and
Savings Bank, as Administrative Agent, as the same may be amended, supplemented
or replaced from time to time.

 

“Unified Patron” means a member-patron or associate patron of Unified.

 

“United States” and “U.S.” each means the United States of America.

 

“URI” means United Resources, Inc., an Oregon corporation.

 

“Welfare Plan” means a “welfare plan” as defined in Section 3(1) of ERISA.

 

1.2 Accounting Terms; GAAP Changes

 

(a) Accounting Terms. Unless otherwise defined or the context otherwise
requires, all accounting terms used herein shall be construed in accordance with
GAAP, and, except where otherwise specified, all financial data required to be
delivered hereunder shall be prepared in accordance with GAAP.

 

(b) GAAP Changes. If any changes in GAAP from those used in the preparation of
the financial statements referred to in Section 6.1(a) (“GAAP Changes”)
hereafter occasioned by the promulgation of rules, regulations, pronouncements
and opinions by or required by the Financial Accounting Standards Board of the
American Institute of Certified Public Accountants (or successors thereto or
agencies with similar functions) result in a change in the method of calculation
of any of the financial covenants, standards or other terms or conditions found
in this Agreement, the parties hereto agree to enter into negotiations to amend
such provisions so as to reflect equitably such GAAP Changes with the desired
result that the criteria for evaluating the financial condition and performance
of Borrower and its Subsidiaries shall be the same after such GAAP Changes as if
such GAAP Changes had not been made.

 

1.3 Interpretation

 

In this Agreement and the other Loan Documents, except to the extent the context
otherwise requires:

 

(i) Any reference to an Article, a Section, a Schedule or an Exhibit is a
reference to an article or Section of the particular agreement in which the
reference appears, or a schedule or an exhibit to the particular agreement in
which the reference appears, respectively, and to a subsection or a clause is,
unless otherwise stated, a reference to a subsection or a clause of the Section
or subsection in which the reference appears.

 

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(ii) The words “hereof,” “herein,” “hereto,” “hereunder” and the like mean and
refer to this Agreement or any other Loan Document as a whole and not merely to
the specific Article, Section, subsection, paragraph or clause in which the
respective word appears.

 

(iii) The meaning of defined terms shall be equally applicable to both the
singular and plural forms of the terms defined.

 

(iv) The words “including,” “includes” and “include” shall be deemed to be
followed by the words “without limitation.”

 

(v) References to agreements and other contractual instruments shall be deemed
to include all subsequent amendments and other modifications thereto, but only
to the extent such amendments and other modifications are not prohibited by the
terms of the Loan Documents.

 

(vi) References to statutes or regulations are to be construed as including all
statutory and regulatory provisions consolidating, amending or replacing the
statute or regulation referred to.

 

(vii) Any table of contents, captions and headings are for convenience of
reference only and shall not affect the construction of this Agreement or any
other Loan Document.

 

ARTICLE II

THE LOANS

 

2.1 The Loans

 

(a) Borrowing Availability. Each Lender severally agrees, on the terms and
conditions hereinafter set forth, to make revolving loans (each a “Loan” and,
collectively, the “Loans”) to Borrower from time to time from the Closing Date
up to but not including the Commitment Termination Date, in an aggregate
principal amount up to but not exceeding at any time such Lender’s Commitment;
provided, however, that immediately after giving effect to such Loans the
aggregate principal amount of Loans then outstanding shall not exceed the
Borrowing Base. Within the foregoing limits, during such period Borrower may
borrow, repay the Loans in whole or in part, and reborrow, all in accordance
with the terms and conditions hereof. Without limiting the generality of the
foregoing, for all purposes hereof, “Loan” shall include each Amended and
Restated Credit Agreement Loan and “Loans” shall include all Amended and
Restated Credit Agreement Loans. The Amended and Restated Credit Agreement Loans
consisting of Prime Rate Loans (if any) shall no longer be characterized as
Amended and Restated Credit Agreement Loans on and after the Closing Date. The
Amended and Restated Credit Agreement Loans consisting of Eurodollar Rate Loans
(if any) shall, upon the expiration of the Interest Period applicable thereto on
the Closing Date, no longer be characterized as Amended and Restated Credit
Agreement Loans.

 

(b) Payment of Overadvance. All Loans shall be added to and be deemed part of
the Obligations when made or extended. If, at any time and for any reason, the
aggregate amount of the Loans exceeds the percentages or limitations set forth
in Section 2.l(a), Borrower shall immediately pay to Agent, on behalf of
Lenders, in immediately available Dollars, the amount of such excess.

 

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2.2 Borrowing Procedure

 

(a) Date of Borrowing. Each Borrowing of a Prime Rate Loan shall be made on a
Business Day and each Borrowing of a Eurodollar Rate Loan shall be made on a
Eurodollar Business Day.

 

(b) Notice of Borrowing. Each Borrowing shall be made upon written notice by way
of a Notice of Borrowing, given by telex, telecopy, mail, or personal service,
delivered to Agent at Agent’s office located at 1725 Eye Street NW, Suite 600,
Washington, D.C. 20006, setting forth the amount of the requested Loan in
accordance with Section 2.1(a), the date on which the requested Loan is to be
made, whether the Borrowing is of a Prime Rate Loan or a Eurodollar Rate Loan,
and, in the latter case, the requested Interest Period. If for a Prime Rate
Loan, Agent shall be given notice no later than 2:00 p.m., Washington, D.C.
time, on the day on which such Prime Rate Loan is to be made, and, if for a
Eurodollar Rate Loan, Agent shall be given notice at least 3 Eurodollar Business
Days prior to the day on which such Eurodollar Rate Loan is to be made, and such
notice shall state the amount thereof (subject to the provisions of this Article
II).

 

2.3 Conversion or Continuation Requirements

 

(a) Option to Convert or Continue. Borrower shall have the option to: (i)
convert, at any time, all or any part of the outstanding Loans equal to One
Million Dollars ($1,000,000), and integral multiples of $100,000 in excess of
such amount, from a Prime Rate Loan to a Eurodollar Rate Loan and vice-versa; or
(ii) upon the expiration of any Interest Period applicable to a Eurodollar Rate
Loan, to continue all or any portion of the Eurodollar Rate Loan as a Eurodollar
Rate Loan, with the succeeding Interest Period(s) of such continued Eurodollar
Rate Loan commencing on the expiration date of the Interest Period previously
applicable thereto; provided, however, that a Eurodollar Rate Loan may only be
converted into a Prime Rate Loan or continued as a Eurodollar Rate Loan on the
expiration date of the Interest Period applicable thereto; provided further,
however, that no outstanding Loan may be continued as, or be converted into, a
Eurodollar Rate Loan in the event that, on the earlier of the date of the
delivery of the Notice of Conversion or Continuation or the telephonic notice in
respect thereof, any Default has occurred and is continuing; provided further,
however, that if Borrower fails to deliver the appropriate Notice of Conversion
or Continuation or the telephonic notice in respect thereof, pursuant to the
required notice period, before the expiration of the Interest Period of a
Eurodollar Rate Loan, such Eurodollar Rate Loan shall automatically be converted
to a Prime Rate Loan.

 

(b) Notice of Conversion or Continuation. Borrower shall deliver a Notice of
Conversion or Continuation, given by telex, telecopy, mail, or personal service,
delivered to Agent at 1725 Eye Street NW, Suite 600, Washington, D.C. 20006, no
later than 2:00 p.m., Washington, D.C. time, on the proposed conversion date (in
the case of a conversion to a Prime Rate Loan), and at least 3 Eurodollar
Business Days in advance of the proposed conversion or continuation date (in the
case of a conversion to, or a continuation of, a Eurodollar Rate Loan). If such
Notice of Conversion or Continuation is received by Agent not later than 2:00
p.m., Washington, D.C. time, on a Eurodollar Business Day such day shall be
treated as the first Eurodollar Business Day of the required notice period. In
any other event, such notice will be treated as having been received at the
opening of business of the next Eurodollar Business Day. A Notice of Conversion
or Continuation shall specify: (1) the proposed conversion or continuation date
(which shall be a Business Day or a Eurodollar Business Day, as applicable); (2)
the amount of the Loan to be converted or continued; (3) the nature of the
proposed conversion or continuation; and (4) in the case of a conversion to, or
continuation of, a Eurodollar Rate Loan, the requested Interest Period.

 

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(c) [Intentionally Omitted]

 

(d) Irrevocable Notice. Any Notice of Continuation or Conversion (or telephonic
notice in respect thereof) shall be irrevocable and Borrower shall be bound to
convert or continue in accordance therewith.

 

(e) Notice to Lenders. Upon receipt of a Notice of Continuation or Conversion
(or telephonic notice in respect thereof), the Agent shall promptly notify each
Lender of the contents thereof.

 

(f) Amended and Restated Credit Agreement Loans. (i) That portion, if any, of
the Amended and Restated Credit Agreement Loans consisting of Prime Rate Loans
(as defined in the Amended and Restated Credit Agreement) shall, on the Closing
Date, be maintained hereunder as Prime Rate Loans. Thereafter, the Borrower may,
subject to the terms and conditions of this Agreement, maintain such Loans as
Prime Rate Loans or convert all or a portion of such Loans to Eurodollar Rate
Loans. (ii) That portion, if any, of the Amended and Restated Credit Agreement
Loans consisting of Eurodollar Rate Loans shall, on and after the Closing Date,
be maintained hereunder as Eurodollar Rate Loans until the expiration of the
Interest Period(s) applicable thereto. Thereafter, the Borrower may, subject to
the terms and conditions of this Agreement, continue such Loans as Eurodollar
Rate Loans or convert such Loans to Prime Rate Loans.

 

2.4 Eurodollar Costs.

 

(a) Borrower shall reimburse Agent or Lenders for any increase in their costs
(which shall include, but not be limited to, taxes, other than taxes imposed on
the overall net income of Agent or Lenders, fees or charges), or any loss or
expense (including, without limitation, any loss or expense incurred by reason
of the liquidation or re-employment of deposits or other funds acquired by Agent
or Lenders to fund or maintain outstanding the principal amount of the Loans)
incurred by them directly or indirectly resulting from the making of any
Eurodollar Rate Loan due to: (i) the modification, adoption, new application or
enactment of any law, regulation or treaty or the interpretation thereof by any
governmental or other authority (whether or not having the force of law); (ii)
compliance by Agent or Lenders with any request or directive (whether or not
having the force of law) of any monetary or fiscal agency or authority; (iii)
violations by Borrower of the terms of this Agreement; or (iv) any prepayment of
a Eurodollar Rate Loan at any time prior to the end of the applicable Interest
Period.

 

(b) The amount of such costs, losses, or expenses shall be determined solely by
Agent or any Lender asserting such claim for reimbursement based upon the
assumption that Agent or any such Lender funded 100% of each Eurodollar Rate
Loan in the Eurodollar market. In attributing Agent’s or any such Lender’s
general costs relating to its eurocurrency operations to any transaction under
this Agreement, or averaging any costs over a period of time, Agent or such
Lender may use any reasonable attribution or averaging methods which it deems
appropriate and practical. Agent or such Lender shall notify Borrower of the
amount due Agent or such Lender pursuant to this Section 2.4 in respect of any
Eurodollar Rate Loan as soon as practicable but in any event within 45 days
after the last day of the Interest Period of such Loan and Borrower shall pay to
Agent or such Lender the amount due within 15 days of its receipt of such
notice. A certificate as to the amounts payable pursuant to the foregoing
sentence, together with whatever detail is reasonably available to Agent or such
Lender, shall be submitted by Agent or such Lender to Borrower. Such
determination shall, if

 

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not objected to within 10 days, be conclusive and binding upon Borrower in the
absence of manifest error. If Agent or any Lender claim increased costs, losses
or expenses pursuant to this Section 2.4, then Agent or such Lender, if
requested by Borrower, will use reasonable efforts to take such steps, that
Borrower reasonably requests, including designating different lending offices,
as would eliminate or reduce the amount of such increased costs, losses or
expenses, so long as taking such steps would not, in the judgment of Agent or
such Lender, otherwise be disadvantageous to Agent or such Lender. Any recovery
by Agent or any Lender or their Lending Offices of amounts previously borne by
Borrower pursuant to this Section 2.4 shall be promptly remitted, without
interest (unless the affected Lender received interest on such recovered
amounts), to Borrower by Agent or any such Lender.

 

2.5 Illegality; Impossibility

 

In the event that any change in circumstances or any law, regulation, treaty or
directive, or any change therein or in the interpretation or application
thereof, shall at any time in the reasonable opinion of Agent or Majority
Lenders make it unlawful or impractical for Agent or Majority Lenders to fund or
maintain a Eurodollar Rate Loan in the Eurodollar market or to continue such
funding or maintaining, or to determine or charge interest rates based upon any
appropriate Eurodollar Rate, Agent shall give notice of such circumstances to
Borrower and (i) in the case of any Eurodollar Rate Loan which is outstanding,
Borrower shall, if requested by Agent, prepay such Eurodollar Rate Loan on or
before the date specified in such request, together with interest accrued
thereon and any amounts due pursuant to Section 2.4, and concurrently with any
such prepayment, Lenders shall make a Prime Rate Loan to Borrower in a principal
amount equal to the principal amount of the Eurodollar Rate Loan so prepaid, and
(ii) Lenders shall not be obligated to make any further Eurodollar Rate Loans to
Borrower until Agent or Majority Lenders shall determine that it would no longer
be unlawful or impractical to do so. If Agent or Majority Lenders shall give any
notice pursuant to this Section 2.5, then Agent or Majority Lenders, if
requested by Borrower, will use reasonable efforts to take such steps, that
Borrower reasonably requests, including designating different Lending Offices,
as would avoid the illegality or impracticality which is the subject of such
notice, so long as taking such steps would not, in the judgment of Agent or
Majority Lenders, otherwise be disadvantageous to Agent or such Lenders.

 

2.6 Inability to Determine Eurodollar Rate.

 

Notwithstanding anything herein to the contrary, if Agent reasonably determines
(which determination shall be conclusive) that (a) Agent is unable to determine
the Eurodollar Rate with respect to any Notice of Borrowing or Notice of
Conversion or Continuation selecting the Eurodollar Rate because quotations of
interest rates for the relevant deposits are not being provided in the relevant
amounts or for the relative maturities or (b) the Eurodollar Rate will not
adequately reflect the cost to Majority Lenders of making or funding Eurodollar
Rate Loans, then (i) the right of Borrower to select the Eurodollar Rate shall
be suspended until Agent notifies Borrower that the circumstances causing such
suspension no longer exist, and (ii) Borrower shall repay in full the then
outstanding principal balance of all Eurodollar Rate Loans, together with
interest accrued thereon, on the last day of the Interest Period applicable to
each such Eurodollar Rate Loan.

 

2.7 Lending Offices

 

The Loans made by each Lender may be made from and maintained at such offices
(each a “Lending Office”) of such Lender or its Affiliates as such Lender may
from time to time designate (whether or not such office or Affiliate is
specified on the signature pages hereof). A Lender shall not elect a Lending
Office that, at the time of making such election, increases the amounts which
would have been payable by Borrower to such Lender under this Agreement in the
absence of such

 

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election. With respect to Eurodollar Rate Loans made from and maintained at any
Lender’s foreign offices or Affiliates, the obligation of Borrower to repay such
Eurodollar Rate Loans shall nevertheless be to such Lender and shall, for all
purposes of this Agreement (including for purposes of the definition of the term
“Majority Lenders”) be deemed made or maintained by it, for the account of any
such office or Affiliate.

 

2.8 Notes; Recordkeeping; Statements of Obligations

 

(a) Notes. As additional evidence of the Indebtedness of Borrower to each Lender
resulting from the Loans made by such Lender, Borrower shall execute and deliver
for the account of each Lender, a Note, dated the Closing Date, setting forth
such Lender’s Commitment as the maximum principal amount thereof.

 

(b) Recordkeeping. Each Lender shall record in its internal records the date and
amount of each Loan made, each conversion to a different interest rate, each
relevant Interest Period, the amount of principal and interest due and payable
from time to time hereunder, each payment thereof and the resulting unpaid
principal balance of such Loan. Any such recordation shall be rebuttable
presumptive evidence of the accuracy of the information so recorded. Any failure
so to record or any error in doing so shall not, however, limit or otherwise
affect the obligations of Borrower hereunder and under any Note to pay the
principal of and interest on the Loans.

 

(c) Monthly Statements. Agent shall render monthly statements of the
Obligations, including statements of all principal, interest, and Agent’s
Expenses owing, and such statements shall be presumed to be correct and accurate
and constitute an account stated between Borrower and Agent unless, within 30
days after receipt thereof by Borrower, Borrower shall deliver to Agent, in
accordance with Section 11.3, written objection thereof specifying the error or
errors, if any, contained in any such statement.

 

2.9 Loans by Lenders

 

(a) Pro Rata Loans by Lenders. Agent shall promptly notify each Lender of that
Lender’s pro rata portion of a Borrowing requested pursuant to Section 2.2. Not
later than 2:00 p.m., Washington, D.C. time, on the date specified by Agent,
which shall be at least weekly, each Lender, subject to the terms and conditions
hereof, shall make its pro rata portion (as advised by Agent) of the Borrowing
available, in immediately available Dollars, to Agent at Agent’s office located
at 1725 Eye Street NW, Suite 600, Washington, D.C. 20006, together with interest
thereon accrued from the date of such Borrowing to the date on which Lender
initiates payment to Agent at the Prime Rate.

 

(b) Lender’s Failure to Fund. Each Lender’s obligation to make any Loan pursuant
hereto is several, and not joint or joint and several, and is not conditioned
upon the performance by each, any, or all of the other Lenders of their
obligations to make Loans. The failure by any Lender to perform its obligation
to make Loans will not affect or increase any other Lender’s share of the
Commitment. Agent shall notify Lenders of the failure by any Lender to perform
its obligation to make a Loan required to be made by it hereunder and any Lender
(other than a Lender that has failed to perform its obligation to make its Loan)
may, if it desires, assume, in such proportion as Agent may determine, the
obligation to make Loans of the nonperforming Lender or Lenders, but no Lender
shall be obligated to do so.

 

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2.10 Pro Rata Treatment

 

Except as otherwise provided in this Agreement, each Borrowing hereunder, each
payment (including each prepayment) by Borrower on account of the principal of
and interest on the Loans and on account of any upfront fee or commitment fee,
and each conversion or continuation of Loans, shall be made ratably in
accordance with the Commitments.

 

2.11 Payments; Application

 

(a) Payments by Borrower. Borrower shall make each payment hereunder or under
the Notes by making, or causing to be made, the amount thereof available to
Agent, for the account of each Lender, in immediately available Dollars, by
deposit to Agent’s Account (or at such other location as Agent may designate, in
writing, from time to time), not later than 2:00 p.m., Washington, D.C. time, on
the date when due.

 

(b) Payments from Account Debtors. Unless and until Agent gives Borrower other
written instructions, Borrower shall instruct all Receivable Debtors and other
account debtors of Borrower to remit all payments as contemplated under the
Operating Agreement. Upon the occurrence of an Event of Default, Agent may
instruct Receivable Debtors and other account debtors, in each case with respect
to Receivables generated by Borrower, to remit all payments to post office boxes
which have been established as lock boxes by Agent and Borrower, and, in such
event, all checks and other payments received by Agent shall be applied by
Agent, in accordance with the provisions of Section 2.11(c), in reduction of the
Obligations. The receipt of any check or other payment by Agent shall not be
considered a payment on account until such check or other payment is honored
when presented for payment by Agent and has been paid to Agent.

 

(c) Application of Payments. In the event of receipt of direct collections by
Agent, all checks and other instruments received by Agent in payment of or on
account of the Obligations constitute only conditional payment until such items
are actually paid to Agent. Agent will credit Borrower with any such payments
made by check or other instruments on the same day that such items are credited
to Agent by their depositary bank. All such payments shall be deemed made to
each Lender and shall constitute satisfaction of Borrower’s obligations to each
Lender with respect to the Loans so repaid on the same day that such items are
credited to Agent by their depositary bank in compliance with the terms of this
Section 2.11(c). Borrower waives the right to direct the application of, any and
all payments at any time or times hereafter received by Agent on account of the
Obligations and Borrower agrees that Agent shall have the continuing exclusive
right to apply and reapply such payments in any manner as Agent may deem
advisable, notwithstanding any entry by Agent upon its books.

 

(d) Payments to Lenders. Agent will promptly distribute to each Lender its
ratable share of each payment received by Agent for the account of Lenders.

 

2.12 Non-Receipt of Funds

 

Unless Agent shall have received notice from Borrower prior to the date on which
any payment is due to any Lender hereunder that Borrower shall not make such
payment in full, Agent may assume that Borrower has made such payment in full to
Agent on such date and Agent may, in reliance upon such assumption, cause to be
distributed to each Lender on such due date an amount equal to the amount then
due such Lender. If and to the extent Borrower shall not have so made such
payment in full to Agent, each Lender shall repay to Agent forthwith on demand
such amount distributed to such Lender together with interest thereon, for each
day from the date such amount is distributed to such Lender until the date such
Lender repays such amount to Agent, at the Federal Funds Rate.

 

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2.13 Termination of the Commitments; Repayment of the Loans

 

The Commitments shall terminate on the Commitment Termination Date. Borrower
shall repay to Lenders in full on the Commitment Termination Date the aggregate
principal amount of the Loans outstanding on such date plus all accrued but
unpaid interest thereon.

 

2.14 Voluntary Commitment Reductions

 

Prior to the Commitment Termination Date, Borrower shall have the right, at any
time and from time to time, subject to Section 2.4, to voluntarily reduce
permanently the unfunded and unused portion of the Commitments. Borrower shall
give Agent not less than 10 Business Days’ prior written notice designating the
date (which shall be a Business Day) of such reduction and the amount of such
reduction. Such reduction shall be effective on the date specified in Borrower’s
notice given in compliance herewith. Any reduction shall be in a minimum amount
of $5,000,000 and, thereafter, in any integral multiple of $1,000,000, divided
among the Lenders on a pro-rata basis.

 

ARTICLE III

INTEREST, PAYMENTS, FEES AND TAXES

 

3.1 Interest

 

(a) Rates. Borrower shall pay interest on the unpaid principal amount of each
Loan at the following rates:

 

(i) in respect of each Prime Rate Loan, at a per annum rate equal at all times
to the Prime Rate; and

 

(ii) in respect of each Eurodollar Rate Loan, at a per annum rate equal at all
times during each Interest Period for such Eurodollar Rate Loan to the
Eurodollar Rate for such Interest Period plus 2.25%.

 

Unless otherwise requested by Borrower, all Loans shall bear interest at the
rate specified in Section 3.1(a)(i).

 

(b) Overdue Payment Rate. In the event that any amount of principal of or
interest on any Loan, or any other amount payable hereunder or under the Notes,
is not paid in full when due (whether at stated maturity, by acceleration or
otherwise), Borrower agrees to pay interest on such unpaid principal, interest
or other amount, from the date such amount becomes due until the date such
amount is paid in full, payable on demand, at a per annum rate equal at all
times to 2% in excess of the rates otherwise applicable thereto.

 

3.2 Interest Payment Dates

 

Except as otherwise provided in Section 3.1(b), and, unless sooner accelerated
pursuant to Section 7.2, interest on the Loans shall be payable in arrears on
the following dates:

 

(a) Prime Rate Loans. Interest on each Prime Rate Loan (including any Amended
and Restated Credit Agreement Loans consisting of Prime Rate Loans (as defined
in the

 

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Amended and Restated Credit Agreement)) shall be payable (i) monthly on the
first Business Day of each month commencing on July 1, 2004 (ii) on the date of
any prepayment or conversion of any such Prime Rate Loan, and (iii) on the
Commitment Termination Date;

 

(b) Eurodollar Rate Loans. Interest on each Eurodollar Rate Loan (including any
Amended and Restated Credit Agreement Loans consisting of Eurodollar Rate Loans)
shall be payable (i) on the last day of each Interest Period for such Eurodollar
Rate Loan, and (ii) on the Commitment Termination Date; provided that if any
prepayment, conversion or continuation is effected other than on the last day of
such Interest Period, accrued interest on such Eurodollar Rate Loan shall be due
on such prepayment, conversion or continuation date as to the principal amount
of such Eurodollar Rate Loan prepaid, converted or continued.

 

(c) Holidays. Any payment (other than in respect of a Eurodollar Rate Loan)
which would otherwise become due on a day other than a Business Day, shall
instead become due on the next succeeding Business Day and such extension shall
be reflected in the computation of any payments hereunder on such adjusted date.

 

3.3 Fees

 

(a) Unused Line Fee. Borrower agrees to pay to Agent for the account of each
Lender an unused line fee on the average daily unused portion of such Lender’s
Commitment as in effect from time to time from the Closing Date until the
Commitment Termination Date at the rate of 0.125% per annum, payable (i)
quarterly in arrears on the first Business Day of each April, July, October and
January, commencing on the first such date after the Closing Date, and (ii) on
the Commitment Termination Date.

 

(b) Agent’s Fee. Borrower agrees to pay to Agent an annual fee in the amount of
$25,000, payable (i) in arrears, in quarterly installments of $6,250 each on the
first Business Day of each of April, July, October and January, commencing on
the first such date after the Closing Date and (ii) on the Commitment
Termination Date, at which time a final installment of $6,250 shall be due and
payable.

 

(c) Audit Expenses. Borrower agrees to pay to Agent and Lenders, upon demand
therefor, all out of pocket audit expenses actually incurred by Agent and/or
Lenders in connection with each audit conducted pursuant to Section 6.3(e),
regardless of frequency of such audits.

 

3.4 Computation of Interest and Fees

 

All computations of interest and unused line fees for any period shall be
calculated on the basis of a year of 360 days for the actual days elapsed in
such period. Interest shall accrue from the first day of the making of a Loan to
the date of repayment of such Loan in accordance with the provisions of this
Agreement; provided, however, that if a Loan is repaid on the same day on which
it is made, then one day’s interest shall be paid on that Loan. Any and all
interest not paid when due shall thereafter be deemed to be a Prime Rate Loan
made under Section 2.1 and shall bear interest thereafter as provided for in
Section 3.1(a)(i) to the greatest extent permitted by law.

 

3.5 Highest Lawful Rate

 

Anything herein to the contrary notwithstanding, if during any period for which
interest is computed hereunder, the applicable interest rate, together with all
fees, charges and other payments which are treated as interest under applicable
law, as provided for herein or in any other

 

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Loan Document, would exceed the maximum rate of interest which may be charged,
contracted for, reserved, received or collected by any Lender in connection with
this Agreement under applicable law (the “Maximum Rate”), Borrower shall not be
obligated to pay, and such Lender shall not be entitled to charge, collect,
receive, reserve or take, interest in excess of the Maximum Rate, and during any
such period the interest payable hereunder shall be limited to the Maximum Rate.

 

3.6 Increased Risk-Based Capital Cost

 

If the amount of capital required or expected to be maintained by any Lender or
any Person directly or indirectly owning or controlling such Lender (each a
“Control Person”), shall be affected by:

 

(i) the introduction or phasing in of any law, rule or regulation after the date
hereof,

 

(ii) any change after the date hereof in the interpretation of any existing law,
rule or regulation by any central bank or United States or foreign governmental
authority charged with the administration thereof, or

 

(iii) compliance by such Lender or such Control Person with any directive,
guideline or request from any central bank or United States or foreign
governmental authority (whether or not having the force of law) promulgated or
made after the date hereof, and such Lender shall have reasonably determined
that such introduction, phasing in, change or compliance shall have had or will
thereafter have the effect of reducing (x) the rate of return on such Lender’s
or such Control Person’s capital, or (y) the asset value to such Lender or such
Control Person of the Loans made or maintained by such Lender, in either case to
a level below that which such Lender or such Control Person could have achieved
or would thereafter be able to achieve but for such introduction, phasing in,
change or compliance (after taking into account such Lender’s or such Control
Person’s policies regarding capital), in either case by an amount which such
Lender in its reasonable judgment deems material, then, promptly upon demand by
such Lender given concurrently to Agent and Borrower, Borrower shall pay to such
Lender or such Control Person such additional amount or amounts as shall be
sufficient to compensate such Lender or such Control Person, as the case may be,
for such reduction. Each Lender shall use its commercial best efforts to notify
Agent and Borrower within 45 days of such Lender obtaining notice that amounts
will be due under this Section 3.6; provided, however, any failure by any Lender
to so notify Agent or Borrower, shall not limit or otherwise affect the
obligations of Borrower hereunder to pay such amounts.

 

3.7 Taxes

 

(a) No Reduction of Payments. Borrower shall pay all amounts of principal,
interest, fees and other amounts due hereunder free and clear of, and without
reduction for or on account of, any present and future taxes, levies, imposts,
duties, fees, assessments, charges, deductions or withholdings and all
liabilities with respect thereto excluding in the case of each Lender and Agent,
income and franchise taxes imposed on it by the jurisdiction under the laws of
which such Lender or Agent is organized or in which its principal executive
offices may be located or any political subdivision or taxing authority thereof
or therein, and by the jurisdiction of such Lender’s Lending Office and any
political subdivision or taxing authority thereof or therein (all such
nonexcluded taxes, levies, imposts, duties, fees, assessments, charges,
deductions, withholdings and liabilities being hereinafter referred to as
“Taxes”). If any Taxes shall be required by law to be deducted or withheld from
any payment, Borrower shall increase the amount paid so that the respective
Lender receives, or Agent receives, when due (and is entitled to retain), after
deduction or withholding for or on account of such Taxes (including deductions
or withholdings applicable to additional sums payable under this Section 3.7),
the full amount of the payment provided for in this Agreement.

 

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(b) Deduction or Withholding; Tax Receipts. If Borrower makes any payment
hereunder in respect of which it is required by law to make any deduction or
withholding, it shall pay the full amount to be deducted or withheld to the
relevant taxation or other authority within the time allowed for such payment
under applicable law and promptly thereafter shall furnish to Agent (for itself
or for redelivery to the Lender to or for the account of which such payment was
made) an original or certified copy of a receipt evidencing payment thereof,
together with such other information and documents as Agent or any Lender
(through Agent) may reasonably request.

 

(c) Indemnity. If any Lender or Agent is required by law to make any payment on
account of Taxes, or any liability in respect of any Tax is imposed, levied or
assessed against any Lender or Agent, Borrower shall indemnify Agent and Lenders
for and against such payment or liability, together with any incremental taxes,
interest or penalties, and all costs and expenses, payable or incurred in
connection therewith, including Taxes imposed on amounts payable under this
Section 3.7, whether or not such payment or liability was correctly or legally
asserted. A certificate of Agent or any Lender as to the amount of any such
payment shall, in the absence of manifest error, be conclusive and binding for
all purposes.

 

(d) Forms 1001 and 4224. Each Lender that is incorporated under the laws of any
jurisdiction outside the United States agrees to deliver to Agent and Borrower
on or prior to the Closing Date, and in a timely fashion thereafter, Form 1001,
Form 4224 or such other documents and forms of the United States Internal
Revenue Service, duly executed and completed by such Lender, as are required
under United States law to establish such Lender’s status for United States
withholding tax purposes.

 

(e) Mitigation. Each Lender agrees that as promptly as practicable after it
becomes aware of the occurrence of an event that would cause Borrower to make
any payment in respect of Taxes to such Lender or a payment in indemnification
with respect to any Taxes, and in any event if so requested by Borrower
following such occurrence, each Lender shall use reasonable efforts to make,
fund or maintain its affected Loan (or relevant part thereof) through another
Lending Office if as a result thereof the additional amounts so payable by
Borrower would be avoided or materially reduced and if, in the reasonable
opinion of such Lender, the making, funding or maintaining of such Loan (or
relevant part thereof) through such other Lending Office would not in any
material respect be disadvantageous to such Lender or contrary to such Lender’s
normal banking practices.

 

ARTICLE IV

CONDITIONS PRECEDENT

 

4.1 Conditions Precedent to the Initial Loans and Maintenance of Amended and
Restated Credit Agreement Loans

 

The obligations hereunder of each Lender, including the obligation to make its
initial Loan(s) hereunder and to maintain any Amended and Restated Credit
Agreement Loan hereunder, shall be subject to the satisfaction of each of the
following conditions precedent on or before the Closing Date:

 

(a) Fees. Borrower shall have paid all fees then due in accordance with Section
3.3.

 

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(b) Loan Documents. Agent shall have received (i) this Agreement and the Notes,
duly executed by Borrower; and (ii) the Collateral Documents duly executed by
each of the respective parties thereto.

 

(c) UCC Search. Agent shall have received the results, dated as of a recent date
prior to the Closing Date, of searches conducted in the UCC filing records in
each of the governmental offices in each jurisdiction in which personal property
and fixture Collateral is located, which shall have revealed no Liens with
respect to any of the Collateral except Permitted Liens.

 

(d) Additional Closing Documents. Agent shall have received the following, in
form and substance satisfactory to it:

 

(i) a certificate of the chief financial officer of Borrower, dated the Closing
Date, certifying copies of the Investment Agreement (setting forth such terms
and conditions as Agent shall require and otherwise in form and substance
satisfactory to Agent and its counsel), the Operating Agreement (setting forth
such terms and conditions as Agent shall require and otherwise in form and
substance satisfactory to Agent and its counsel), the GCC Loan Guidelines
(including therein descriptions of Program Leases) and all agreements and
documents relating to outstanding Subordinated Debt and Capital Debt;

 

(ii) certificates of one or more nationally recognized insurance brokers or
other insurance specialists acceptable to Agent, dated as of a recent date prior
to the Closing Date, evidencing that all insurance with respect to Borrower
required under this Agreement and the Collateral Documents is in full force and
effect, naming Agent as loss payee with respect to casualty coverages and as
additional insured with respect to all general liability coverages;

 

(iii) evidence that all (A) authorizations or approvals, and all material
licenses, permits or authorizations, of any Governmental Authority and (B)
approvals or consents of any other Person, required in connection with the
execution, delivery and performance of the Loan Documents or the operation and
conduct of Borrower’s business and ownership of its properties shall have been
obtained and shall be in full force and effect;

 

(iv) (in sufficient copies for Lenders) the unaudited Consolidated financial
statements of Borrower and its Subsidiaries as at December 31, 2003;

 

(v) a completed Borrowing Base Certificate as of April 30, 2004, together with
the related collateral reports and information, also as of such date, specified
in Section 6.1(a)(vii);

 

(vi) a certificate of the chief financial officer of Borrower, dated the Closing
Date, stating that (A) the representations and warranties contained in Article V
and in the other Loan Documents are true and correct on and as of the date of
such certificate as though made on and as of such date, (B) on and as of the
Closing Date, no Default shall have occurred and be continuing or shall result
from the initial Borrowing or the maintenance of the Amended and Restated Credit
Agreement Loans, (C) no Material Adverse Effect has occurred and is continuing
and (D) no “Event of Default” under (and as defined in) the Unified Loan
Agreement shall have occurred and be continuing or shall result from the initial
Borrowing or the maintenance of the Amended and Restated Credit Agreement Loans;

 

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(vii) a certificate of the chief financial officer of Borrower, attesting that
both before and after giving effect to the transactions contemplated by this
Agreement, Borrower is and will be Solvent; and

 

(viii) a certificate of the chief financial officer of Borrower, attesting that
there is no pending or threatened litigation, proceeding, inquiry or other
action seeking an injunction, restraining order, damages or other relief of any
kind or nature whatsoever, legal or equitable, with respect to the transactions
contemplated by this Agreement, the Collateral Documents, or Borrower’s other
business activities.

 

(e) Corporate Documents. Agent shall have received the following, in form and
substance satisfactory to it:

 

(i) certified copies of the articles of incorporation of Borrower, together with
certificates as to good standing and tax status, from the Secretary of State or
other Governmental Authority, as applicable, of Borrower’s state of
incorporation and certificates from the Secretary of State or other Governmental
Authority, as applicable, of each other state where Borrower is qualified to do
business as a foreign corporation as to Borrower’s status as a foreign
corporation and tax status, each dated as of a recent date prior to the Closing
Date; and

 

(ii) a certificate of the Secretary or Assistant Secretary of Borrower, dated
the Closing Date, certifying (A) copies of the bylaws of Borrower and the
resolutions of the Board of Directors of Borrower authorizing the execution,
delivery and performance of the Loan Documents and (B) the incumbency, authority
and signatures of each Authorized Officer who will act as such in connection
with the Loan Documents.

 

(f) Legal Opinion. Agent shall have received the opinion of Sheppard, Mullin,
Richter & Hampton LLP, counsel to Borrower, dated the Closing Date, in
substantially the form of the opinion rendered by such law firm in connection
with the Amended and Restated Credit Agreement.

 

(g) Due Diligence and Other Matters. Agent shall have completed its due
diligence investigation of Borrower, and shall be satisfied, in its sole
discretion, with the results thereof, including an investigation confirming that
there has not occurred a substantial impairment of the financial markets
generally.

 

4.2 Conditions Precedent to All Loans.

 

The obligation of each Lender to make a Loan on the occasion of each Borrowing,
including the initial Loan, shall be subject to the satisfaction of each of the
following conditions precedent:

 

(a) Notice. Borrower shall have given the Notice of Borrowing or telephonic
notice thereof as provided in Section 2.2.

 

(b) Borrowing Base Certificate and Collateral Reports. Borrower shall have
delivered to Agent a completed Borrowing Base Certificate dated as of a date at
least as recent as that required under Section 6.1(a)(vii), in form and
substance satisfactory to Agent, together with the related collateral reports
and information required under Section 6.1(a)(vii), and the statements contained
therein shall be true and correct on and as of the date thereof. The giving of
any Notice of Borrowing and the acceptance by Borrower of the proceeds of a
Borrowing shall each be deemed a certification to Agent and Lenders that on and
as of the date of such Borrowing such statements are true and correct as of the
date of such Borrowing Base Certificate and that any changes in the information
set forth therein have been only in the ordinary course of business.

 

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(c) Collateral. Agent shall have received, in form and substance satisfactory to
it, evidence that all filings, registrations and recordings have been made in
the appropriate governmental offices, and all other action has been taken, which
shall be necessary to create, in favor of Agent on behalf of Lenders, a
perfected first priority Lien on the Collateral, including the filing of
completed UCC-1 financing statements in the appropriate governmental offices,
any necessary deliveries of Collateral (including all Collateral consisting of
instruments) to the extent and in the manner provided in Section 3 of the
Security Agreement, together with appropriate endorsements, and compliance with
all other Collateral Procedures.

 

(d) Material Adverse Effect. On and as of the date of such Borrowing, there
shall have occurred no Material Adverse Effect since the date of this Agreement
(in the case of the initial Borrowing) or the date of the most recent Borrowing
(in the case of any subsequent Borrowing), as the case may be.

 

(e) Representations and Warranties, No Default. On the date of such Borrowing,
both before and after giving effect thereto and to the application of proceeds
therefrom: (i) the representations and warranties contained in Article V and in
the other Loan Documents shall be true and correct on and as of the date of such
Borrowing as though made on and as of such date; and (ii) no Default shall have
occurred and be continuing or shall result from such Borrowing. For purposes of
this Section 4.2(e) in respect of the representation and warranty contained in
Section 5.1(q), clause (i) shall be deemed to refer to the last day of the most
recent fiscal quarter and fiscal year for which financial statements have then
been delivered and shall not be deemed to refer to any other representations and
clause (i) warranties which relate solely to a specific date provided that such
other representations and warranties shall be true and correct as of such date.
The giving of any Notice of Borrowing and the acceptance by Borrower of the
proceeds of each Borrowing following the Closing Date shall each be deemed a
certification to Agent and Lenders that on and as of the date of such Borrowing
such statements are true.

 

(f) No Event of Default Under Unified Loan Agreement. No “Event of Default”
under (and as defined in) the Unified Loan Agreement shall have occurred and be
continuing.

 

(g) Additional Documents. Agent shall have received, in form and substance
satisfactory to it, such additional approvals, opinions, documents and other
information as Agent or any Lender (through Agent) may reasonably request
(including, without limitation, any of the foregoing as the same may relate to
Alternative Use Receivables or Expansion Loans).

 

ARTICLE V

REPRESENTATIONS AND WARRANTIES

 

5.1 Representations and Warranties. Borrower represents and warrants to each
Lender and Agent that:

 

(a) Organization and Powers. Each of Borrower and its Subsidiaries is a
corporation duly organized, validly existing and in good standing under the law
of the jurisdiction of its incorporation, is qualified to do business and is in
good standing in each jurisdiction in which the failure so to qualify or be in
good standing would have a Material Adverse Effect and has all requisite power
and authority to own its assets and carry on its business and to execute,
deliver and perform its obligations under the Loan Documents.

 

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(b) Authorization, No Conflict. The execution, delivery and performance by
Borrower of the Loan Documents have been duly authorized by all necessary
corporate action of Borrower and do not and will not (i) contravene the terms of
the certificate or articles, as the case may be, of incorporation and the bylaws
of Borrower or result in a breach of or constitute a default under any indenture
or loan or credit agreement or any other agreement, lease or instrument to which
Borrower is a party or by which it or its properties may be bound or affected;
(ii) violate any provision of any law, rule, regulation, order, writ, judgment,
injunction, decree or the like binding on or affecting Borrower; or (iii) except
as contemplated by this Agreement, result in, or require, the creation or
imposition of any Lien upon or with respect to any of the properties of
Borrower.

 

(c) Binding Obligation. The Loan Documents to which Borrower is or will become a
party constitute, or when delivered under this Agreement will constitute, legal,
valid and binding obligations of Borrower, enforceable against Borrower in
accordance with their respective terms.

 

(d) Consents. No authorization, consent, approval, license, exemption of, or
filing or registration with, any Governmental Authority, or approval or consent
of any other Person, is required for the due execution, delivery or performance
by Borrower of any of the Loan Documents, except for recordings or filings in
connection with the perfection of the Liens on the Collateral in favor of Agent
on behalf of Lenders.

 

(e) No Defaults. Neither Borrower nor any of its Subsidiaries is in default
under any material contract, lease, agreement, judgment, decree or order to
which it is a party or by which it or its properties may be bound, which default
would have a Material Adverse Effect.

 

(f) Title to Properties, Liens. Borrower and its Subsidiaries have good and
marketable title to their properties and assets, including all property forming
a part of the Collateral, and there is no Lien upon or with respect to any of
such properties or assets, including any of the Collateral, except for Permitted
Liens.

 

(g) Litigation. There are no actions, suits or proceedings pending or, to the
best of Borrower’s knowledge, threatened against or affecting Borrower or any of
its Subsidiaries or the properties of Borrower or any of its Subsidiaries before
any Governmental Authority or arbitrator which if determined adversely to
Borrower or any such Subsidiary would have a Material Adverse Effect.

 

(h) Compliance with Environmental Laws. Each of Borrower and its Subsidiaries is
in full compliance with all Environmental Laws, whether in connection with the
ownership, use, maintenance or operation of its Premises or the conduct of any
business thereon, or otherwise. Neither Borrower, any of its Subsidiaries nor to
the best of Borrower’s knowledge, after due and diligent inquiry and
investigation, any previous owner, tenant, occupant, user or operator of the
Premises, or any present tenant or other present occupant, user or operator of
the Premises, has used, generated, manufactured, installed, treated, released,
stored or disposed of any Hazardous Substances on, under, or at the Premises,
except in compliance with all applicable Environmental Laws. After due and
diligent inquiry and investigation, Borrower has determined that no Hazardous
Substances have at any time been spilled, leaked, dumped, deposited, discharged,
disposed of or released on, under, at or from the Premises, nor have any of the
Premises been used at any time by any Person as a landfill or waste disposal
site. There are no actions, suits, claims, notices of violation, hearings,
investigations or proceedings pending or, to the best of Borrower’s knowledge,
threatened against or affecting Borrower or any of its Subsidiaries or with
respect to the ownership, use, maintenance and operation of the Premises,
relating to Environmental Laws or Hazardous Substances.

 

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(i) Governmental Regulation. Neither Borrower nor any of its Subsidiaries is
subject to regulation under the Public Utility Holding Company Act of 1935, the
Federal Power Act, the Investment Company Act of 1940, the Interstate Commerce
Act, any state public utilities code or any other federal or state statute or
regulation limiting its ability to incur Indebtedness.

 

(j) ERISA. Borrower and each other member of its Controlled Group has fulfilled
its obligations under the minimum funding standards of and is in compliance in
all material respects with ERISA and the Code to the extent applicable to it and
has not incurred any liability to the PBGC or a Plan under Title IV of ERISA
other than a liability to the PBGC for premiums under Section 4007 of ERISA.
Neither the Borrower nor any other member of its Controlled Group has any
contingent liabilities with respect to any post retirement benefits under a
Welfare Plan, other than liability for continuation coverage described in
Article 6 of Title I of ERISA, which may reasonably be expected to have a
Material Adverse Effect.

 

(k) Subsidiaries: Ownership

 

(i) The name, capital structure and ownership of each Subsidiary of Borrower on
the date of this Agreement is as set forth in Schedule 5.1(k). All of the
outstanding capital stock of, or other interest in, each such Subsidiary has
been validly issued, and is fully paid and nonassessable. Except as set forth in
such Schedule, on the date of this Agreement Borrower has no material equity
interest in any Person.

 

(ii) Unified is directly the record and beneficial owner of 100% of the issued
and outstanding shares of capital stock of Borrower.

 

(l) Receivables

 

(i) At the time of the creation of a Receivable constituting Eligible
Collateral, such Receivable will be a bona fide existing obligation in the
ordinary and usual course of Borrower’s (or URI’s) business; to the best of
Borrower’s knowledge at the time of the creation of a Receivable, such
Receivable will be owed without any defenses, disputes, offsets, or
counterclaims, or any rights of cancellation; Borrower shall not have received
notice of actual or imminent bankruptcy or insolvency of any Receivable Debtor
at the time the Receivable due from such Receivable Debtor is created; in
accordance with prudent credit policies, to the best knowledge of Borrower at
the time of the creation of any Receivable, the Receivable Debtor will be able
to timely discharge all of its Indebtedness to Borrower; and, in the event
Borrower becomes aware or is notified that any of the warranties,
representations or covenants contained in this Section 5.1(l) is no longer
completely accurate or true, or becomes aware of any fact or event which would
adversely affect any or all of the Receivable Debtor’s ability to timely
discharge any or all of its Indebtedness to Borrower, Borrower will immediately
provide Agent with written notification of such change in circumstances and any
and all information Borrower has regarding same.

 

(ii) At the time each Receivable constituting Eligible Collateral is created,
all performance by Borrower (or URI) giving rise to such Receivable shall have
been completed. Borrower shall deliver to Agent, all originals of all Store
Development Loans, Equipment Loans, Inventory Loans, Deposit Fund Loans,
Affiliate Loans, Program Leases, New Lease/Loan Products, Alternative Use
Receivables, and such other documentation as Agent may from time to time
reasonably require. All copies of all such items, whether retained by Borrower,
the Receivable Debtor thereunder, or any other party, shall be conspicuously
marked “Copy.”

 

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(iii) At the time each Receivable constituting Eligible Collateral is created,
all such Receivables will be due and payable on terms based upon Borrower’s
historical ordinary course of business practices or upon terms more favorable to
Borrower (or on such other terms approved in writing by Agent in advance of the
creation of such Receivable and which are expressly set forth on the face of all
Finance Receivables, Additional Loan/Lease Receivables, Expansion Loans and
Alternative Use Receivables, copies of which shall be held by Borrower as
custodian for Agent).

 

(iv) Agent shall retain its security interest in all Receivables, eligible and
ineligible, until all Obligations have been fully repaid and the Commitments
have been terminated. Borrower shall promptly notify Agent of all recoveries
and, on request, promptly notify Agent of all disputes and claims. During the
existence of an Event of Default, no discount, credit or allowance shall be
granted to any Receivable Debtor by Borrower without Agent’s consent. Agent may,
during the existence of an Event of Default, settle or adjust disputes and
claims directly with Receivable Debtors for amounts and upon terms which Agent
considers advisable, and in such cases Agent will credit Borrower’s account with
only the net amounts received by Agent in payment of the Receivables, after
deducting all Agent’s Expenses in connection therewith.

 

(m) Margin Regulations. Borrower is not engaged in the business of extending
credit for the purpose of purchasing or carrying “margin stock” (within the
meaning of Regulation U of the Board of Governors of the Federal Reserve System
of the United States). No part of the proceeds of the Loans will be used to
purchase or carry any margin stock or to extend credit to others for the purpose
of purchasing or carrying any margin stock.

 

(n) Taxes. Each of Borrower and its Subsidiaries has duly filed all tax and
information returns required to be filed, and has paid all taxes, fees,
assessments and other governmental charges or levies that have become due and
payable, except to the extent such taxes or other charges are being contested in
good faith and are adequately reserved against in accordance with GAAP.

 

(o) Patents and Other Rights. Each of Borrower and its Subsidiaries possesses
all permits, franchises, licenses, patents, trademarks, trade names, service
marks, copyrights and all rights with respect thereto, free from burdensome
restrictions, that are necessary for the ownership, maintenance and operation of
its business and neither Borrower nor any such Subsidiary is in violation of any
rights of others with respect to the foregoing.

 

(p) Insurance. The properties of Borrower and its Subsidiaries are insured, with
financially sound and reputable insurance companies, in such amounts, with such
deductibles and covering such risks as is customarily carried by companies
engaged in similar businesses and owning similar properties in the localities
where Borrower or such Subsidiary operates.

 

(q) Financial Statements. The audited Consolidated balance sheet of Borrower and
its Subsidiaries as at September 30, 2003, and the related Consolidated
statements of income, shareholders’ equity and cash flows for the fiscal year
then ended, and the unaudited Consolidated balance sheet of Borrower and its
Subsidiaries as at December 31, 2003, and the related Consolidated statement of
income for the month then ended and the six month period then ended, are
complete and correct and fairly represent the financial condition of Borrower
and its Subsidiaries as at such dates and the results of operations of Borrower
and its Subsidiaries for the periods covered by such statements, in each case in
accordance with GAAP consistently applied (subject to the absence of footnote
disclosures and normal fiscal year end adjustments in the case of the financial
statements delivered as at December 31, 2003). Since December 31, 2003, there
has been no Material Adverse Effect.

 

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(r) Liabilities. Neither Borrower nor any of its Subsidiaries has any material
liabilities, fixed or contingent, that are not reflected in the financial
statements referred to in subsection (q), in the notes thereto or otherwise
disclosed in writing to Lenders, other than liabilities arising in the ordinary
course of business since December 31, 2003, the NCB Loan Purchase Agreement, any
Third Party Loan Purchase Agreement, and the Guaranty.

 

(s) Labor Disputes, Etc. There are no strikes, lockouts or other labor disputes
against Borrower or any of its Subsidiaries, or, to the best of Borrower’s
knowledge, threatened against or affecting Borrower or any of its Subsidiaries,
which may have a Material Adverse Effect.

 

(t) Disclosure. None of the representations or warranties made by Borrower or
any of its Subsidiaries in the Loan Documents as of the date of such
representations and warranties, and none of the statements contained in each
exhibit or report furnished by or on behalf of Unified, Borrower or any of its
Subsidiaries to Agent and Lenders in connection with the Loan Documents,
contains any untrue statement of a material fact or omits any material fact
required to be stated therein or necessary to make the statements made therein,
in the light of the circumstances under which they are made, not misleading.

 

(u) Subordinated Debt, Other Agreements. Borrower is not in default under or in
breach of the terms of any Subordinated Debt or any other indentures or
agreements to which it is a party.

 

(v) Material Adverse Effect. No other Material Adverse Effect has occurred and
is continuing.

 

(w) Solvency. Borrower is and shall hereafter be at all times Solvent.

 

ARTICLE VI

COVENANTS

 

6.1 Reporting Covenants

 

So long as any of the Obligations shall remain unpaid or any Lender shall have
any Commitment, Borrower agrees that:

 

(a) Financial Statements and Other Reports. Borrower will furnish to Agent in
sufficient copies for distribution to Lenders:

 

(i) as soon as available and in any event within 120 days after the end of each
fiscal year of Borrower, a Consolidated balance sheet of Borrower and its
Subsidiaries as of the end of such fiscal year, and the related Consolidated
statements of income, shareholders’ equity and cash flows of Borrower and its
Subsidiaries for such fiscal year, prepared in accordance with GAAP consistently
applied, all in reasonable detail and setting forth in comparative form the
figures for the previous fiscal year, and accompanied by a report thereon of
independent certified public accountants of recognized national standing
acceptable to Agent, which report shall be unqualified as to scope of audit or
the status of Borrower and its Subsidiaries as a going concern, and shall state
that such consolidated financial statements present fairly the financial
condition of Borrower as at the dates indicated and the results of operations
and changes in cash flows for the periods then ended in

 

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conformity with GAAP applied on a basis consistent with the previous years
(except as otherwise stated therein) together with a certificate of such
independent public accountants stating that (1) their audit examination of
Borrower and its Subsidiaries has included a review of the terms of this
Agreement as they relate to accounting matters; (2) in the course of such audit
examination, which audit was conducted by such accountants in accordance with
generally accepted auditing standards, such accountants have obtained no
knowledge that any Default has occurred and is continuing, or, if such Default
has occurred and is continuing, indicating the nature thereof; provided that
such accountants shall not be liable by reason of any failure to obtain
knowledge of any Default that would not be disclosed in the course of their
audit examination; and (3) based on their audit examination nothing has come to
their attention which causes them to believe that the matters set forth in the
Compliance Certificate delivered pursuant to clause (iv) for the applicable
fiscal year with respect to compliance with the provisions of Section 6.2 and
subsections (a), (f), (g) and (h) of Section 6.4 are not stated in accordance
with the terms of this Agreement;

 

(ii) as soon as available and in any event within 45 days after the end of each
quarter, a Consolidated balance sheet of Borrower and its Subsidiaries as of the
end of such quarter, and the related Consolidated and consolidating statement of
income of Borrower and its Subsidiaries for such quarter and the portion of the
fiscal year through such quarter, prepared in accordance with GAAP consistently
applied, all in reasonable detail and setting forth in comparative form (A) the
figures for the corresponding period in the preceding fiscal year and (B) the
projected figures for the corresponding period contained in the forecast for the
current fiscal year delivered to Lenders hereunder, together with a certificate
of the chief financial officer of Borrower stating that such financial
statements fairly present the financial position of Borrower and its
Subsidiaries as at such date and the results of operations of Borrower and its
Subsidiaries for the period ended on such date and have been prepared in
accordance with GAAP (except for the absence of footnote disclosure)
consistently applied, subject to changes for normal, year-end adjustments;

 

(iii) concurrent with the financial statements delivered pursuant to subsection
(i) above, copies of the reports submitted to Borrower by its independent
certified public accountants in connection with each annual audit examination of
Borrower and its Subsidiaries made by such accountants, including any
“management letter” submitted by such accountants to Borrower in connection with
their annual audit relating to the results of operations of Borrower and any
variance from Borrower’s projections;

 

(iv) as soon as available and in any event within 45 days after the end of each
of the first three fiscal quarters of each fiscal year of Borrower and together
with the annual financial statements required pursuant to clause (i), a
Compliance Certificate as of the end of such fiscal quarter or fiscal year;

 

(v) as soon as available and in any event not more than 90 days after the start
of each fiscal year of Borrower and its Subsidiaries, a Consolidated financial
forecast for Borrower and its Subsidiaries for the following fiscal year,
including forecasted Consolidated balance sheets and statements of income and
cash flows of Borrower and its Subsidiaries, which forecast shall (A) state the
assumptions used in the preparation thereof, (B) contain such other information
as requested by any Lender and (C) be in form satisfactory to the Majority
Lenders;

 

(vi) as soon as available, copies of all financial statements, reports and other
material delivered by Unified under Section 8.5 of the Unified Loan Agreement,
together with all certificates accompanying or delivered in connection such
financial statements, reports and other material;

 

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(vii) as soon as available and in any event not later than 15 Business Days
after the end of each calendar month (or more frequently if requested by the
Majority Lenders), (A) a completed Borrowing Base Certificate, (B) a report with
respect to the Receivables containing (1) detailed aging information, (2)
summaries of the Receivables, including a breakdown thereof by category, (3)
descriptions of any amendments, modifications and waivers entered into with or
otherwise granted to any Receivable Debtors, and (4) a listing of all
charge-offs since the date of the last such report, and (C) the “Watch Report”
prepared by Borrower with respect to the Receivable Debtors, each as of the end
of such month (or other reporting period so requested) and in form and substance
satisfactory to Agent;

 

(viii) such reports and notices as are required by the Security Agreement;

 

(ix) prompt written notice of any proposed changes in the GCC Loan Guidelines
and material changes to the other documentation, credit and collection policies
and practices of Borrower, setting forth the details thereof; and

 

(x) promptly after the giving, sending or filing thereof, copies of all reports,
if any, which Unified sends to the holders of its capital stock or other
securities and of all reports or filings, if any, by Unified, Borrower or any of
their Subsidiaries with the Securities and Exchange Commission or any national
securities exchange.

 

(b) Additional Information. Borrower will furnish to Agent:

 

(i) concurrent with the financial statements delivered pursuant to Sections
6.1(a)(i) and (ii), a certificate of the chief financial officer of Borrower
certifying that as of the end of the fiscal year or quarter, as applicable, no
Default has occurred and is continuing, or, if a Default has occurred and is
continuing, setting forth details of such Default and the action which Borrower
proposes to take with respect thereto;

 

(ii) prompt written notice of (A) any proposed acquisition of stock, assets or
property by Borrower that could reasonably be expected to result in
environmental liability under Environmental Laws, and (B)(1) any spillage,
leakage, discharge, disposal, leaching, migration or release of any Hazardous
Substances required to be reported to any Governmental Authority under
applicable Environmental Laws, and (2) all actions, suits, claims, notices of
violation, hearings, investigations or proceedings pending, or to the best of
Borrower’s knowledge, threatened against or affecting Borrower with respect to
the ownership, use, maintenance and operation of the Premises, relating to
Environmental Laws or Hazardous Substances, in each case together with a
statement of an Authorized Officer setting forth the details thereof and the
action which Borrower proposes to take with respect thereto;

 

(iii) prompt written notice of all actions, suits and proceedings before any
Governmental Authority or arbitrator pending, or to the best of Borrower’s
knowledge, threatened against or affecting Borrower or any of its Subsidiaries
which (A) if adversely determined would involve an aggregate liability of
$500,000 or more, or (B) otherwise may have a Material Adverse Effect;

 

(iv) prompt written notice of: (a) the occurrence of any reportable event (as
defined in ERISA) with respect to a Plan, other than events for which the PBGC
has waived the notice requirements in its regulations, (b) receipt of any notice
from the PBGC of its intention to seek termination of any Plan or appointment of
a trustee therefor, (c) its intention to terminate or withdraw from any Plan,
and (d) the occurrence of any event with respect to any Plan which would result
in the

 

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incurrence by the Borrower or any of member of its Controlled Group of any
material liability, fine or penalty, or any material increase in the contingent
liability of the Borrower or any member of its Controlled Group with respect to
any post retirement Welfare Plan benefit.

 

(v) [Intentionally Omitted]

 

(vi) [Intentionally Omitted]

 

(vii) the information regarding insurance maintained by Borrower as required
under Section 6.3(c);

 

(viii) prompt written notice of any Event of Default or any other condition or
event which has resulted, or that could reasonably be expected to result, in a
Material Adverse Effect; and

 

(ix) such other information respecting the operations, properties, business or
condition (financial or otherwise) of Unified, Borrower or their respective
Subsidiaries (including with respect to the Collateral) as any Lender (through
Agent) may from time to time reasonably request.

 

6.2 Financial Covenants.

 

So long as any of the Obligations shall remain unpaid or any Lender shall have
any Commitment, Borrower agrees that:

 

(a) Debt Ratio. Borrower will maintain a ratio of its Indebtedness (excluding
any Capital Debt) to Consolidated Adjusted Tangible Net Worth as of the end of
each of Borrower’s fiscal quarters of not more than 1.6 to 1.0.

 

(b) Minimum Consolidated Tangible Net Worth. Borrower will maintain Consolidated
Tangible Net Worth at all times of not less than $15,000,000.

 

(c) Interest Coverage Ratio. Borrower will maintain a ratio of Consolidated EBIT
to Consolidated Interest Expense, for the period of four consecutive fiscal
quarters of Borrower then ended (taken as one accounting period), of not less
than 2.0 to 1.0, as determined as of the end of each of Borrower’s fiscal
quarters; provided, however, that such ratio shall be computed excluding gains,
losses, interest and other expenses and taxes relating to Borrower’s interest in
Sav Max Foods, Inc.

 

6.3 Additional Affirmative Covenants.

 

So long as any of the Obligations shall remain unpaid or any Lender shall have
any Commitment, Borrower agrees that:

 

(a) Preservation of Existence, Etc. Borrower will, and will cause each of its
Subsidiaries to, maintain and preserve its corporate existence, its rights to
transact business and all other rights, franchises and privileges necessary or
desirable in the normal course of its business and operations and the ownership
of its properties.

 

(b) Payment of Taxes, Etc. Borrower will, and will cause each of its
Subsidiaries to, pay and discharge all taxes, fees, assessments and governmental
charges or levies imposed upon it

 

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or upon its properties or assets prior to the date on which penalties attach
thereto, and all lawful claims for labor, materials and supplies which, if
unpaid, might become a Lien upon any properties or assets of Borrower or any
Subsidiary, except to the extent such taxes, fees, assessments or governmental
charges or levies, or such claims, are being contested in good faith by
appropriate proceedings and are adequately reserved against in accordance with
GAAP.

 

(c) Maintenance of Insurance. Borrower, at its expense, shall keep and maintain
the Collateral insured against loss or damage by fire, theft, explosion,
sprinklers, and all other hazards and risks ordinarily insured against by other
owners who use such properties in businesses for the full insurable replacement
value thereof. Borrower shall also keep and maintain business interruption
insurance and public liability and property damage insurance relating to
Borrower’s ownership and use of the Collateral and its other assets. All such
policies of insurance shall be in such form, with such companies and in such
amounts as may be satisfactory to Agent. Borrower shall deliver to Agent
certified copies of such policies of insurance and, upon Agent’s request,
evidence of the payments of all premiums therefor. All such policies of
insurance except those of public liability and those relating to property damage
caused by Borrower or Borrower’s agents and employees shall contain an
endorsement in a form satisfactory to Agent showing Agent, on behalf of Lenders,
as an additional insured thereunder, with a waiver of warranties thereof, and
all proceeds payable thereunder shall be payable to Agent, on behalf of Lenders,
and, upon receipt by Agent, shall be applied on the account of the Obligations.
To secure the payment of the Obligations, Borrower grants Agent, on behalf of
Lenders, a security interest in and to all such policies of insurance relating
to the Collateral and the proceeds thereof, and Borrower shall direct all
insurers under such policies of insurance relating to the Collateral to pay all
proceeds thereof directly to Agent, on behalf of Lenders.

 

Borrower hereby irrevocably appoints Agent, on behalf of Lenders (acting through
any of Agent’s officers, employees or agents designated by Agent) to act during
the existence of an Event of Default, as Borrower’s attorney in fact for the
purpose of making, settling, and adjusting claims under such policies of
insurance relating to the Collateral, endorsing the name of Borrower on any
check, draft, instrument or other item of payment for the proceeds of such
policies of insurance and for making all determinations and decisions with
respect to such policies of insurance. Absent the existence of an Event of
Default, Borrower shall have the right to make, settle and adjust any and all
claims under such policies of insurance; provided, however, that Borrower shall
not legally conclude the settlement or adjustment of any claim in excess of
$500,000 without first obtaining the written consent of Agent. Borrower will not
cancel any of such policies without Agent’s prior written consent. Each such
insurer shall agree by endorsement upon the policy or policies of insurance
issued by it to Borrower as required above, or by independent instruments
furnished to Agent, that it will give Agent at least 10 days’ written notice
before any such policy or policies of insurance shall be altered or cancelled,
and that no act or default of Borrower, or any other Person, shall affect the
right of Agent to recover under such policy or policies of insurance required
above or to pay any premium in whole or in part relating thereto. If Borrower
fails to obtain such policy or policies of insurance, Agent may, without waiving
or releasing any Obligations or Default, but shall have no obligation to do so,
obtain and maintain such policies of insurance and pay such premiums and take
any other action with respect to such policies which Agent deems advisable. All
sums so disbursed by Agent, as well as reasonable attorneys’ fees, court costs,
expenses, and other charges relating thereto, shall be a part of the Obligations
and payable on demand.

 

(d) Keeping of Records and Books of Account. Borrower at all times hereafter
shall maintain, and shall cause each of its Subsidiaries to maintain, a standard
and modern system of accounting in accordance with GAAP, consistently applied,
with ledger and account cards or computer tapes and computer discs, computer
printouts and computer records pertaining to the Collateral which contain
information as may from time to time be requested by Agent. Borrower shall not,
and

 

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Borrower shall not permit any of its Subsidiaries to, modify or change its
method of accounting or enter into, modify or terminate any agreement presently
existing, or at any time hereafter entered into with any third party accounting
firm or service bureau for the preparation or storage of Borrower’s and its
Subsidiaries’ accounting records without written consent of Agent first obtained
and without said accounting firm or service bureau agreeing to provide
information regarding the Collateral and Borrower’s financial condition to
Agent.

 

(e) Inspection Rights; Audits. Borrower will at any reasonable time and from
time to time (i) permit Agent and Lenders or any of their respective agents or
representatives to visit and inspect any of the properties of Borrower and its
Subsidiaries and to examine and make copies of and abstracts from the records
and books of account of Borrower and its Subsidiaries, and to discuss the
business affairs, finances and accounts of Borrower and any such Subsidiary with
any of the officers, employees or accountants of Borrower or such Subsidiary,
and (ii) permit Agent or any of its agents or representatives to conduct one (1)
periodic audit of the Collateral each twelve month period, commencing on the
Closing Date (or more during the continuance of an Event of Default), provided
that communications between Agent or its agents or representatives and any
Receivable Debtor in connection with any such audit shall be subject to the
prior consent of Borrower at all times other than during the existence of an
Event of Default, which consent of Borrower shall not be unreasonably withheld
or delayed.

 

(f) Compliance with Laws, Etc. Borrower will, and will cause each of its
Subsidiaries to, comply in all material respects with the requirements of all
applicable laws, rules, regulations and orders of any Governmental Authority
(including all Environmental Laws) and the terms of any indenture, contract or
other instrument to which it may be a party or under which it or its properties
may be bound.

 

(g) Maintenance of Properties, Etc. Borrower will, and will cause each of its
Subsidiaries to, maintain and preserve all of its properties necessary or useful
in the proper conduct of its business in good working order and condition in
accordance with the general practice of other corporations of similar character
and size, ordinary wear and tear excepted.

 

(h) Licenses. Borrower will, and will cause each of its Subsidiaries to, obtain
and maintain all licenses, authorizations, consents, filings, exemptions,
registrations and other governmental approvals necessary in connection with the
execution, delivery and performance of the Loan Documents, the consummation of
the transactions therein contemplated or the operation and conduct of its
business and ownership of its properties.

 

(i) Action Under Environmental Laws. Borrower will, and will cause each of its
Subsidiaries to, upon becoming aware of the presence of any Hazardous Substance
or the existence of any environmental liability under applicable Environmental
Laws with respect to the Premises, take all actions, at their cost and expense,
as shall be necessary or advisable to investigate and clean up the condition of
the Premises, including all removal, containment and remedial actions, and
restore the Premises to a condition in compliance with applicable Environmental
Laws.

 

(j) Use of Proceeds. Borrower will use the proceeds of the Loans solely for the
purpose of providing financing to (x) Unified Patrons in accordance with the GCC
Loan Guidelines (or, in the case of Loan proceeds which give rise to, or enable
the Borrower to make or maintain, Alternative Use Receivables, as otherwise
approved by the Agent) and (y) to Affiliates of Borrower pursuant to Affiliate
Loans.

 

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(k) NCB Stock. Borrower shall hold that number of shares of Class B capital
stock of NCB (“NCB Stock”), par value $100 per share, which is equal to 1.0% of
the maximum amount of NCB’s Commitment, and Borrower shall promptly execute and
deliver such additional documents or instruments as NCB shall deem necessary or
appropriate for NCB to obtain a perfected first priority Lien on such NCB Stock.

 

(l) Further Assurances and Additional Acts. Borrower will execute, acknowledge,
deliver, file, notarize and register at its own expense all such further
agreements, instruments, certificates, documents and assurances and perform such
acts as Agent or the Majority Lenders shall deem necessary or appropriate to
effectuate the purposes of the Loan Documents, and promptly provide Agent with
evidence of the foregoing satisfactory in form and substance to Agent and the
Majority Lenders, including, without limitation, any such agreements,
instruments and documents that Agent shall deem necessary or desirable to
reflect the release of any Collateral in connection with an Incremental
Purchase.

 

6.4 Negative Covenants

 

So long as any of the Obligations shall remain unpaid or any Lender shall have
any Commitment, Borrower agrees that:

 

(a) Indebtedness. Borrower will not, and will not permit any of its Subsidiaries
to, create, incur, assume or otherwise become liable for or suffer to exist any
Indebtedness, other than:

 

(i) Indebtedness of Borrower to Lenders hereunder;

 

(ii) accounts payable to trade creditors for goods and services and current
operating liabilities (not the result of the borrowing of money) incurred in the
ordinary course of Borrower’s or such Subsidiary’s business in accordance with
customary terms and paid within the specified time, unless contested in good
faith by appropriate proceedings and reserved for in accordance with GAAP;

 

(iii) Indebtedness consisting of guarantees resulting from endorsement of
negotiable instruments for collection by Borrower or any of its Subsidiaries in
the ordinary course of business;

 

(iv) existing Indebtedness of Borrower and its Subsidiaries set forth in
Schedule 6.4(a)(iv);

 

(v) Senior Debt and Subordinated Debt of Borrower and its Subsidiaries in an
aggregate principal amount not to exceed $30,000,000 at any time outstanding;

 

(vi) Indebtedness consisting of Capital Debt;

 

(vii) Indebtedness of Borrower and its Subsidiaries under Capital Leases in an
aggregate principal amount not to exceed $1,000,000 at any time outstanding;

 

(viii) Indebtedness of Borrower to any of its wholly-owned Subsidiaries or of
any of its wholly-owned Subsidiaries to another of its wholly-owned
Subsidiaries; and

 

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(ix) Indebtedness of Borrower incurred pursuant to the Loan Purchase Agreements
in a maximum principal amount not to exceed $90,000,000 and Indebtedness of
Borrower under the Guaranty.

 

(b) Liens. Borrower will not, and will not permit any of its Subsidiaries to,
create, incur, assume or suffer to exist any Lien upon or with respect to any of
its properties or assets, whether now owned or hereafter acquired, other than
Permitted Liens.

 

(c) Change in Nature of Business. Borrower will not, and will not permit any of
its Subsidiaries to, engage in any material line of business substantially
different from those lines of business carried on by it at the date hereof.

 

(d) Restrictions on Fundamental Changes. Borrower will not, and will not permit
any of its Subsidiaries to, (i) liquidate, wind up or dissolve itself (or suffer
any liquidation or dissolution), or (ii) merge with or consolidate into, or
acquire all or substantially all of the assets of, any Person, or enter into any
partnership or joint venture with any Person, or sell, transfer, lease or
otherwise dispose of (whether in one transaction or in a series of transactions)
all or substantially all of its assets, except that (x) any of Borrower’s
wholly-owned Subsidiaries may merge with, consolidate into or transfer all or
substantially all of its assets to another of Borrower’s wholly-owned
Subsidiaries or to Borrower and (y) Borrower may merge with URI, provided that
Borrower is the surviving corporation in any such Merger.

 

(e) Sales and Leases of Assets. Borrower will not, and will not permit any of
its Subsidiaries to, sell, lease, transfer or otherwise dispose of, or part with
control of (whether in one transaction or a series of transactions) any assets
(including any shares of stock in any Subsidiary or other Person), except (i)
sales or other dispositions of assets in the ordinary course of business which
have become worn out or obsolete or which are promptly being replaced; (ii)
sales or other dispositions of assets by any of its wholly-owned Subsidiaries to
another of its wholly-owned Subsidiaries or to Borrower; (iii) the sale of any
Receivables to Unified to facilitate the collection of such Receivables in
accordance with the provisions of the Operating Agreement; (iv) the sale or
other disposition of Receivables or other lease or loan assets if (A) such sale
or other disposition by Borrower is effected as part of and contemporaneously
with the extension of credit by Borrower to the Receivables Debtor which gives
rise to the Receivable, loan or lease asset subject of the sale or disposition,
and (B) payments by the Receivable Debtors thereon shall be made directly to the
transferees of such assets and such transferees shall have all other loan
servicing obligations with respect to such assets; (v) the sale or other
disposition effected by Borrower of assets acquired as an Investment permitted
under Section 6.4(f)(iv) which sale or other disposition is effected in
compliance with obligations of Borrower incurred when such Investment was made;
and (vi) the sale of the Released Collateral in accordance with the Loan
Purchase Agreements.

 

(f) Loans and Investments. Borrower will not, and will not permit any of its
Subsidiaries to, purchase or otherwise acquire the capital stock, assets
(constituting a business unit), obligations or other securities of or any
interest in any Person, or otherwise extend any credit to or make any additional
investments in any Person, other than in connection with:

 

(i) Receivables under the GCC Loan Guidelines in the ordinary course of
Borrower’s business, except as provided in clauses (iv) and (v);

 

(ii) Affiliate Loans;

 

(iii) Permitted Investments and the NCB Stock,

 

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(iv) extensions of credit in the form of subordinated Indebtedness from, and
equity investments in, Unified Patrons, provided that, except for the
investments and subordinated Indebtedness set forth on Schedule 6.4(f)(iv), no
such extension of credit shall be made or investment consummated if, after and
giving effect thereto, the aggregate amount of such subordinated Indebtedness
and equity investments shall exceed, at the time of the credit extension or
investment, as the case may be, the amount set forth below under the heading
“Maximum Amount” during a time that the amount of Consolidated Adjusted Tangible
Net Worth of Borrower shall be within the range set forth opposite such Maximum
Amount:

 

Consolidated Adjusted Tangible Net Worth

--------------------------------------------------------------------------------

   Maximum Amount

--------------------------------------------------------------------------------

Less than $15,000,000

   $ 0

$15,000,000 to $19,999,999

   $ 22,000,000

$20,000,000 to $22,499,999

   $ 22,500,000

$22,500,000 to $24,999,999

   $ 23,000,000

$25,000,000 and above

   $ 23,500,000

 

provided that nothing in this clause (iv) shall require the liquidation or
redemption of any such subordinated Indebtedness or equity investment that was
permitted hereunder when made; provided, further, any increase in the book or
fair market value of any such equity investments in Unified Patrons shall be
disregarded for purpose of the computation of Maximum Amount; provided further,
for the purpose of calculating Consolidated Adjusted Tangible Net Worth for this
Section 6.4(f)(iv), Capital Debt shall not include that portion, if any, thereof
that exceeds 50% of Consolidated Tangible Net Worth; or

 

(v) without duplication, Alternative Use Receivables and Expansion Loans.

 

(g) Capital Expenditures. Borrower will not, and will not permit any of its
Subsidiaries to, make any expenditures for fixed or capital assets, including
obligations under Capital Leases, in excess of $250,000, on a Consolidated
basis, in any fiscal year of Borrower. For purposes of the foregoing, the
acquisition by Borrower, of (i) equipment for the purpose of leasing such
equipment to Unified Patrons in the ordinary course of business or (ii) assets
upon foreclosure of a security interest securing a Receivable, or in settlement
thereof, arising in the ordinary course of business shall not be deemed an
expenditure for fixed or capital assets.

 

(h) Operating Leases. Borrower will not, and will not permit any of its
Subsidiaries to, make any expenditures in respect of Operating Leases, except
for: (i) Operating Leases between Borrower and any of its wholly-owned
Subsidiaries or between any Subsidiary and any of Borrower’s wholly-owned
Subsidiaries; and (ii) Operating Leases which would not cause Borrower and its
Subsidiaries, on a Consolidated basis, to make payments exceeding $500,000 in
any fiscal year of Borrower.

 

(i) Sales and Leasebacks. Borrower will not, and will not permit any of its
Subsidiaries to, become liable, directly or indirectly, with respect to any
lease, whether an Operating

 

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Lease or a Capital Lease, of any property (whether real, personal or mixed),
whether now owned or hereafter acquired, (i) which Borrower or such Subsidiary
has sold or transferred or is to sell or transfer to any other Person or (ii)
which Borrower or such Subsidiary intends to use for substantially the same
purposes as any other property which has been or is to be sold or transferred by
Borrower or such Subsidiary to any other Person in connection with such lease.

 

(j) Distributions. Borrower will not (i) declare or pay any dividends in respect
of Borrower’s capital stock, or purchase, redeem, retire or otherwise acquire
for value any of its capital stock now or hereafter outstanding, return any
capital to its shareholders as such, or make any distribution of assets to its
shareholders as such, or permit any of its Subsidiaries to purchase, redeem,
retire, or otherwise acquire for value any stock of Borrower, except that
Borrower may declare and deliver dividends and distributions payable only in
common stock of Borrower, or (ii) permit any Subsidiary of Borrower to grant or
otherwise agree to or suffer to exist any consensual restrictions on the ability
of such Subsidiary to pay dividends and make other distributions to Borrower, or
to pay any Indebtedness owed to Borrower or transfer properties and assets to
Borrower.

 

(k) Amendments of Certain Documents. Borrower will not (i) agree to or permit
any amendment, modification or waiver of Section 8 of the Operating Agreement,
or agree to or permit any amendment, modification or waiver of any other
material provision of, or terminate, the Investment Agreement or the Operating
Agreement; or (ii) agree to or permit any amendment, modification or waiver of
any provision of any agreement related to any Capital Debt or Subordinated Debt
(including any amendment, modification or waiver pursuant to an exchange of
other securities or instruments for outstanding Capital Debt or Subordinated
Debt) if the effect of such amendment, modification or waiver is to (A) increase
the interest rate on such Capital Debt or Subordinated Debt or change (to
earlier dates) the dates upon which principal and interest are due thereon; (B)
alter the redemption, prepayment or subordination provisions thereof; (C) alter
the covenants and events of default in a manner which would make such provisions
more onerous or restrictive to Borrower or such Subsidiary; or (D) otherwise
increase the obligations of Borrower in respect of such Subordinated Debt or
Capital Debt or confer additional rights upon the holders thereof which
individually or in the aggregate would be adverse to Borrower, its Subsidiaries
or Lenders.

 

(l) Amendments of GCC Loan Guidelines. Borrower will not agree to or permit any
amendment, modification or waiver of any provision of the GCC Loan Guidelines or
other documentation, credit and collection policies and practices of Borrower
that has the effect of diminishing the credit quality standards or expanding the
credit availability criteria set forth in the GCC Loan Guidelines, making such
policies and practices less rigorous, adding New Lease/Loan Products, or that
otherwise would have a Material Adverse Effect without the prior written consent
of Majority Lenders, which consent will not be unreasonably delayed or withheld
and which consent shall include, with respect to New Lease/Loan Products, a
designation as to whether each such New Lease/Loan Product shall be considered a
Finance Receivable, Additional Loan/Lease Receivable or an Expansion Loan.

 

(m) Transactions with Related Parties. Borrower will not, and will not permit
any of its Subsidiaries to, enter into any transaction, including the purchase,
sale or exchange of property or the rendering of any services, with any
Affiliate, any officer or director thereof or any Person which beneficially owns
or holds 5.0% or more of the equity securities, or 5.0% or more of the equity
interest, thereof (a “Related Party”), or enter into, assume or suffer to exist,
or permit any Subsidiary to enter into, assume or suffer to exist, any
employment or consulting contract with any Related Party, except a transaction
or contract which is in the ordinary course of Borrower’s or such Subsidiary’s
business and which is upon fair and reasonable terms not less favorable to
Borrower or such Subsidiary than it would obtain in a comparable arm’s length
transaction with a Person not a Related

 

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Party; provided, however, that nothing in this subsection shall prohibit the
Operating Agreement or any Affiliate Loans made by Borrower in the ordinary
course of its business (subject to the limitations thereon set forth in
subsection (f)).

 

(n) Hazardous Substances. Borrower will not, and will not permit any of its
Subsidiaries to, use, generate, manufacture, install, treat, release, store or
dispose of any Hazardous Substances, except in compliance with all applicable
Environmental Laws.

 

(o) Subordinated Debt. Borrower will not, and will not permit any of its
Subsidiaries to, prepay, purchase, acquire, redeem or retire any Subordinated
Debt.

 

(p) Purchases Under Loan Purchase Agreements. Borrower will not make Incremental
Purchases, or sell, transfer or otherwise dispose of any Collateral or rights or
interests therein to NCB or any Third Party Buyer, as the case may be, in
connection with any Incremental Purchase, unless Borrower shall,
contemporaneously with delivery under the applicable Loan Purchase Agreement to
the buyer (under the applicable Loan Purchase Agreement) of proper written
notice of a request to make an Incremental Purchase, deliver to Agent a duly
executed Purchase Notice and a completed, unsigned Release.

 

ARTICLE VII

EVENTS OF DEFAULT

 

7.1 Events of Default

 

Any of the following events which shall occur shall constitute an “Event of
Default”:

 

(a) Payments. Borrower shall fail to pay when due any amount of principal of, or
interest on, any Loan or Note, or any fee or other amount payable hereunder or
under any of the other Loan Documents, when due.

 

(b) Representations and Warranties. Any representation or warranty by Borrower
under or in connection with this Agreement or the other Loan Documents shall
prove to have been incorrect in any material respect when made or deemed made.

 

(c) Failure by Borrower to Perform Certain Covenants. Borrower shall fail in any
material respect to perform or observe any term, covenant or agreement contained
in Section 6.2, subsections (a) or (j) of Section 6.3 or Section 6.4.

 

(d) Failure by Borrower to Perform Other Covenants. Borrower shall fail in any
material respect to perform or observe any other term, covenant or agreement
contained in this Agreement or any other Loan Document on its part to be
performed or observed and any such failure shall remain unremedied for a period
of 20 days from the occurrence thereof (unless the Majority Lenders determine
that such failure is not capable of remedy).

 

(e) Bankruptcy. Borrower or any of its Subsidiaries, or Unified shall admit in
writing its inability to, or shall fail generally or be generally unable to, pay
its debts (including its payrolls) as such debts become due, or shall make a
general assignment for the benefit of creditors; or Borrower, Unified or any
such Subsidiary of Borrower shall file a voluntary petition in bankruptcy or a
petition or answer seeking reorganization, to effect a plan or other arrangement
with creditors or any other relief under the Bankruptcy Code or under any other
state or federal law relating to bankruptcy or reorganization granting relief to
debtors, whether now or hereafter in effect, or shall file an answer

 

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admitting the jurisdiction of the court and the material allegations of any
involuntary petition filed against Borrower, Unified or any such Subsidiary of
Borrower pursuant to the Bankruptcy Code or any such other state or federal law;
or Borrower, Unified or Subsidiary of Borrower shall be adjudicated a bankrupt,
or shall make an assignment for the benefit of creditors, or shall apply for or
consent to the appointment of any custodian, receiver or trustee for all or any
substantial part of Borrower’s, Unified’s or any such Subsidiary of Borrower’s
property, or shall take any action to authorize any of the actions set forth
above in this subsection; or an involuntary petition seeking any of the relief
specified in this subsection shall be filed against Borrower, Unified or any
such Subsidiary of Borrower and shall not be dismissed within 60 days; or any
order for relief shall be entered against Borrower, Unified or any such
Subsidiary of Borrower in any involuntary proceeding under the Bankruptcy Code
or any such other state or federal law referred to in this subsection (e).

 

(f) Default Under Other Indebtedness. (i) Borrower, Unified or any Subsidiary of
Borrower shall fail (A) to make any payment of any principal of, or interest or
premium on, any Indebtedness (other than in respect of the Loans) in an
aggregate principal amount outstanding of at least $250,000 ($10,000,000 in the
case of Unified) when due (whether by scheduled maturity, required prepayment,
acceleration, demand or otherwise) and such failure shall continue after the
applicable grace period, if any, specified in the agreement or instrument
relating to such Indebtedness, except where the amount or validity thereof is
currently being contested in good faith by appropriate proceedings and reserves
in conformity with GAAP with respect thereto have been provided, or (B) to
perform or observe any term, covenant or condition on its part to be performed
or observed under any agreement or instrument relating to any such Indebtedness,
when required to be performed or observed, and such failure shall continue after
the applicable grace period, if any, specified in such agreement or instrument,
if the effect of such failure to perform or observe is to accelerate, or to
permit the acceleration of, the maturity of such Indebtedness; or any such
Indebtedness shall be declared to be due and payable, or required to be prepaid
(other than by a regularly scheduled required prepayment), prior to the stated
maturity thereof; (ii) any “Event of Default” shall occur and be continuing
under the Unified Loan Agreement; or (iii) any “Termination Event” or event of
default shall occur and be continuing under any Loan Purchase Agreement, the
Guaranty or any other Guaranty Obligation related to any Loan Purchase
Agreement.

 

(g) Judgments. (i) A final judgment or order for the payment of money in excess
of $750,000 which is not fully covered by insurance shall be rendered against
Borrower or any of its Subsidiaries that remains unsatisfied for a period in
excess of 30 consecutive days; or (ii) any non-monetary judgment or order shall
be rendered against Borrower or any of its Subsidiaries which has or would
reasonably be expected to have a Material Adverse Effect; and in each case there
shall be any period of 30 consecutive days during which a stay of enforcement of
such judgment or order, by reason of a pending appeal or otherwise, shall not be
in effect.

 

(h) Material Adverse Effect. A Material Adverse Effect not otherwise expressly
mentioned in this Section 7.1, shall have occurred which gives reasonable
grounds to conclude, in the reasonable judgment of the Majority Lenders, that
Borrower may not, or will be unable to, perform or observe its obligations under
the Loan Documents or Unified may not, or will be unable to, perform or observe
in the normal course its obligations under the Operating Agreement.

 

(i) Change in Ownership or Control. Unified shall (A) cease to own and control,
directly or indirectly, 100% of the issued and outstanding shares of capital
stock of Borrower or (B) fail to possess, directly or indirectly, capital stock
representing voting control of Borrower.

 

(j) Failure to Perform Under Operating Agreement; Invalidity of Operating
Agreement. Unified shall fail to perform or observe any term, covenant or
agreement in Section 8 of

 

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the Operating Agreement, or shall fail in any material respect to perform or
observe any other term, covenant or agreement contained in the Operating
Agreement on its part to be performed or observed and any such failure shall
remain unremedied for a period of 20 days from the occurrence thereof (unless
the Majority Lenders determine that such failure is not capable of remedy); or
the Operating Agreement shall for any reason be revoked or invalidated, or
otherwise terminate or cease to be in full force and effect, or Unified or any
other Person shall contest in any manner the validity or enforceability thereof
or deny that it has any further liability or obligation thereunder.

 

(k) Invalidity of Subordination Provisions. The Investment Agreement or any
agreement or instrument governing any Subordinated Debt or Capital Debt shall
for any reason be revoked or invalidated or otherwise cease to be in full force
and effect; or Unified or any other Person shall contest in any manner the
validity or enforceability thereof or deny that it has any further liability or
obligation thereunder, or the Indebtedness hereunder shall for any reason be
subordinated or shall not have the priority contemplated by this Agreement or
the Investment Agreement.

 

(l) Invalidity of or Breach under Collateral Documents. Borrower or any other
Person shall fail in any material respect to perform or observe any term,
covenant or agreement contained in the Collateral Documents on its part to be
performed or observed and any such failure shall remain unremedied for a period
of 20 days from the occurrence thereof (unless the Majority Lenders determine
that such failure is not capable of remedy); any of the Collateral Documents
after delivery thereof shall for any reason be revoked or invalidated, or
otherwise cease to be in full force and effect, or Borrower or any other Person
shall contest in any manner the validity or enforceability thereof, or Borrower
or any other Person shall deny that it has any further liability or obligation
thereunder; or any of the Collateral Documents for any reason, except to the
extent permitted by the terms thereof, shall cease to create a valid and
perfected first priority Lien subject only to Permitted Liens in any of the
Collateral purported to be covered thereby.

 

(m) Purchases under NCB Loan Purchase Agreement. Borrower shall sell, or shall
accept any amount in respect of the Purchase Price (as defined in the NCB Loan
Purchase Agreement) for, any Property (as defined in the NCB Loan Purchase
Agreement) without obtaining the execution of and delivery by Agent of a Release
with respect to all Collateral constituting or relating to such Property.

 

(n) Purchases under Third Party Loan Purchase Agreement. Borrower shall sell, or
shall accept any amount in respect of the purchase price for, any property under
any Third Party Loan Purchase Agreement without obtaining the execution of and
delivery by Agent of a Release with respect to all Collateral constituting or
relating to such property.

 

7.2 Effect of Event of Default

 

If any Event of Default shall occur, Agent may, subject to Section 8.3, at its
election, and without notice of election and without demand, on behalf of
Lenders, do any one or more of the following all of which are authorized by
Borrower:

 

(i) Declare the Obligations, whether evidenced by this Agreement, by the Notes,
or otherwise, immediately due and payable;

 

(ii) Cease advancing money or extending credit to or for the benefit of Borrower
under this Agreement and terminate the daily automatic funds transfers from
Agent’s Account to Borrower’s Account;

 

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(iii) Terminate this Agreement and the Commitments as to any future liability or
obligation of Agent and Lenders, but without affecting Agent’s and Lenders’
rights and security interest in the Collateral and the Obligations;

 

(iv) Exercise any or all of Agent’s rights and remedies under the Collateral
Documents; and

 

(v) Proceed to enforce all other rights and remedies available to Agent and
Lenders under applicable law.

 

ARTICLE VIII

AGENT AND LENDER

 

8.1 Appointment and Powers of Agent

 

Each Lender hereby appoints and authorizes Agent to take such action as agent on
its behalf and to exercise such powers and discretion under this Agreement and
the Collateral Documents as are delegated to Agent by the terms hereof and
thereof, together with such powers as are reasonably incidental thereto. Without
limiting the foregoing, each Lender hereby expressly authorizes Agent to
execute, deliver, and perform its obligations under this Agreement and each of
the Collateral Documents to which Agent is a party, and to exercise all rights,
powers, and remedies that Agent may have hereunder or thereunder. As to any
matters not expressly provided for by this Agreement or the Collateral Documents
(including enforcement or collection of the Notes), Agent (which term as used in
this sentence, in Section 8.2, in Section 8.5, and in the first sentence of
Section 8.6 shall include reference to its Affiliates and to its own and its
Affiliates’ officers, directors, employees, and agents) shall not be required to
exercise any discretion or take any action, but shall be required to act or to
refrain from acting (and shall be fully protected in so acting or refraining
from acting) upon the instructions of Majority Lenders, and such instructions
shall be binding upon all Lenders and all holders of the Notes; provided,
however, that Agent shall not be required to take any action which exposes Agent
to personal liability or which is contrary to this Agreement, the Collateral
Documents, the Notes, or applicable law. Agent agrees to give to each Lender
prompt notice of each notice given to it by Borrower pursuant to the terms of
this Agreement or the Collateral Documents.

 

8.2 Agent’s Reliance

 

Agent shall not be liable for any action taken or omitted to be taken by it
under or in connection with this Agreement, the Notes, any Purchase Notice, any
Release, or any Collateral Document or any other Loan Document, except for its
own gross negligence or willful misconduct. Without limiting the generality of
the foregoing, Agent: (a) may treat the payee of any Note as the holder thereof
until Agent receives and accepts an assignment and acceptance entered into by
the Lender which is the payee of such Note, as assignor, and an assignee as
provided in Section 11.8; (b) may consult with legal counsel, independent public
accountants, and other experts selected by them and shall not be liable for any
action taken or omitted to be taken in good faith by Agent in accordance with
the advice of such counsel, accountants, or experts; (c) makes no warranty or
representation to any Lender and shall not be responsible to any Lender for any
statements, warranties, or representations made in or in connection with this
Agreement, the Notes, or any Collateral Document or any other Loan Document ;
(d) shall not have any duty to ascertain or to inquire as to the performance or
observance of any of the terms, covenants, or conditions of this Agreement, the
Notes, or any of the Collateral Documents or any other Loan Documents on the
part of any Person party hereto or thereto or to inspect any asset (including
the books and records) of Borrower or any of its Subsidiaries; (e) shall not be
responsible to any Lender for the due execution, legality, validity,

 

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enforceability, genuineness, sufficiency, or value of this Agreement, the Notes,
or any Collateral Document or any other Loan Document, or any other instrument
or document furnished pursuant hereto or thereto; (f) shall incur no liability
under or in respect of this Agreement, the Notes, or any Collateral Document or
any other Loan Document by acting upon any notice, consent, certificate, or
other instrument or writing (which may be by telegram, cable, telefacsimile, or
telex) believed by them to be genuine and signed or sent by the proper Person or
Persons; and (g) may execute and deliver, and shall incur no liability under or
in respect to this Agreement, the Notes, or any Collateral Document by executing
and delivering, or executing or delivering any other document, instrument or
agreement releasing any Collateral in connection with such execution and
delivery of, a Release in respect of any Purchase Notice received by it.

 

8.3 Defaults

 

Agent shall not be deemed to have knowledge of the occurrence of an Event of
Default unless Agent has received notice from a Lender or Borrower specifying
the occurrence of such Event of Default and stating that such notice is a
“Notice of Default.” In the event that Agent receives such a notice of the
occurrence of an Event of Default, Agent shall give prompt notice thereof to
Lenders. Agent shall (subject to Sections 8.1, 8.5, and 8.7) take such action
with respect to such Event of Default as shall be directed by Majority Lenders;
provided, however, that, unless and until Agent shall have received such
directions, Agent may (but shall not be obligated to) take such action, or
refrain from taking such action, with respect to such Event of Default as it
shall in its sole and absolute discretion deem advisable in the best interest of
Lenders.

 

8.4 Rights as a Lender, Rights under NCB Loan Purchase Agreement

 

With respect to its Commitment and the Loans made by it, NCB (and any successor
acting as Agent), in its capacity as a Lender hereunder, shall have the same
rights and powers hereunder as any other Lender and may exercise the same as
though it were not an Agent, and the term “Lender” or “Lenders” shall, unless
otherwise expressly indicated, include NCB (and any successor acting as Agent),
in its individual capacity. NCB (and any successor acting as Agent), and its
Affiliates may (without having to account therefor to any Lender) accept
deposits from (to the extent permitted by law), lend money to, act as trustee
under indentures of, and generally engage in any kind of banking, trust, or
other business with Borrower, or any of its Subsidiaries or Affiliates, as if it
were not the Agent, and NCB and its Affiliates, may accept fees and other
consideration from Borrower, or any of its respective Subsidiaries or
Affiliates, for services rendered in connection with this Agreement or otherwise
without having to account for the same to any Lender. NCB shall have the right
to perform its obligations in its capacity as “Buyer” under the NCB Loan
Purchase Agreement.

 

8.5 Indemnification

 

Each Lender hereby agrees to indemnify and hold Agent harmless (to the extent
not reimbursed on demand by Borrower), ratably according to the respective
principal amount of the Notes then held by each of them (or, if no principal is
outstanding under the Notes at that time, according to their respective
Commitments) from and against any and all losses, liabilities (including
liabilities for penalties), actions, suits, judgments, demands, damages, costs,
disbursements, or expenses (including attorneys’ fees and expenses) of any kind
or nature whatsoever which are imposed on, incurred by, or asserted against
Agent in any way relating to or arising out of this Agreement, the Notes, or the
Collateral Documents or any other Loan Documents, or as a result of any action
taken or omitted to be taken by Agent; provided, however, that no Lender shall
be liable for any portion of any such losses, liabilities (including liabilities
for penalties), actions, suits, judgments, demands, damages, costs,
disbursements, or expenses resulting from the gross negligence or willful
misconduct of Agent.

 

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Without limiting the generality of the foregoing, each Lender hereby agrees, in
the ratio aforesaid, to reimburse Agent promptly following demand for
reimbursement of any out-of-pocket expenses (including attorneys’ fees and
expenses) incurred by Agent in connection with the preparation, execution,
delivery, administration, modification, amendment, or enforcement (whether
through negotiations, legal proceedings, or otherwise) of, or legal advice in
respect of, Agent’s rights or responsibilities under this Agreement, the Notes,
or the Collateral Documents, any Loan Document or any other documents
contemplated by this Agreement, to the extent that Agent is not reimbursed (or
are not entitled to be reimbursed), on demand, for such amounts by Borrower.
Each Lender’s obligations hereunder shall survive the termination of this
Agreement and the discharge of Borrower’s obligations hereunder.

 

8.6 Non-Reliance by Lenders

 

Each Lender hereby acknowledges that it has, independently of and without
reliance upon Agent or any other Lender, and based upon the financial statements
referred to in Section 4.1(d) and such other documents and information as it has
deemed appropriate, made its own credit analysis and decision to enter into this
Agreement. Each Lender also acknowledges that it will, independently of and
without reliance upon Agent or any other Lender, and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
independent credit decisions in taking or omitting to take action under or in
connection with this Agreement. Agent shall not be required to keep informed as
to the performance or observance by Borrower or any other Person of this
Agreement, the Notes, the Collateral Documents or any other Loan Document, or to
inspect the assets or books and records of Borrower, any of its Subsidiaries or
Affiliates, or any other Person. Agent shall promptly furnish to Lenders, as and
when received by Agent, copies of the financial statements and reports set forth
in Section 6.1(a) and of any other notices, reports, and other documents as
Lenders may reasonably request of Agent. Except for notices, reports, and other
documents and information expressly required to be furnished to Lenders by Agent
hereunder, Agent shall not have any duty or responsibility to provide any Lender
with any credit or other information concerning the affairs, financial
condition, or business of Borrower or its subsidiaries or Affiliates which may
come into the possession of Agent or any of its Affiliates.

 

8.7 Failure to Act

 

Except for action expressly required of Agent hereunder, Agent shall in all
cases be fully justified in failing or refusing to act hereunder unless it shall
be indemnified to its satisfaction by Lenders against any and all liability and
expense which may be incurred by them by reason of taking or continuing to take
any such action.

 

8.8 Excess Payments

 

If any Lender or other holder of a Note shall obtain any payment or other
recovery (whether voluntary, involuntary, by application of offset, setoff, or
otherwise) on account of principal of or interest on any Note in excess of its
pro rata share of payments and other recoveries obtained by all Lenders or
holders of Notes, such Lender or other holder shall purchase from the other
Lenders or holders such participations in the Notes held by them as shall be
necessary to cause such purchasing Lender or holder to share the excess payment
or other recovery ratably with each of the other Lenders or holders; provided,
however, that, if all or any portion of the excess payment or other recovery is
thereafter recovered from such purchasing Lender or holder, the purchase shall
be rescinded and the purchase price restored to such Lender or other holder to
the extent of such recovery, but without interest.

 

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8.9 Sharing of Setoffs

 

Each Lender severally agrees that if it, through the exercise of the right of
setoff, banker’s lien, or counterclaim against Borrower or otherwise, receives
payment of the Obligations due it hereunder and under the Notes that is ratably
more than any other Lender, through any means, then: (a) the Lender exercising
the right of setoff, banker’s lien, or counterclaim or otherwise receiving such
payment shall purchase, and shall be deemed to have simultaneously purchased,
from the other Lenders a participation in the Obligations held by the other
Lenders and shall pay to the other Lenders a purchase price in an amount so that
the share of the Obligations held by each Lender after the exercise of the right
of setoff, banker’s lien, or counterclaim or receipt of payment shall be in the
same proportion that existed prior to the exercise of the right of setoff,
banker’s lien, or counterclaim or receipt of payment, and (b) such other
adjustments and purchases of participations shall be made from time to time as
shall be equitable to ensure that all Lenders share any payment obtained in
respect of the Obligations ratably in accordance with each Lender’s share of the
Obligations immediately prior to, and without taking into account, the payment;
provided, however, that, if all or any portion of a disproportionate payment
obtained as a result of the exercise of the right of setoff, banker’s lien,
counterclaim or otherwise is thereafter recovered from the purchasing Lender by
Borrower or any Person claiming through or succeeding to the rights of Borrower,
the purchase of a participation shall be rescinded and the purchase thereof
shall be restored to the extent of the recovery, but without interest; provided,
further, however, that the rights of NCB with respect to the NCB Stock shall not
be subject to the provisions of this Section 8.9. Each Lender that purchases a
participation in the Obligations pursuant to this Section 8.9 shall from and
after the purchase have the right to give all notices, requests, demands,
directions and other communications under this Agreement with respect to the
portion of the Obligations purchased to the same extent as though the purchasing
Lender were the original owner of the Obligations purchased. Borrower expressly
consents to the foregoing arrangements and agrees that any Lender holding a
participation in an Obligation so purchased may exercise any and all rights of
setoff, banker’s lien or counterclaim with respect to the participation as fully
as if the Lender were the original owner of the Obligation purchased; provided,
however, that each Lender agrees that it shall not exercise any right of setoff,
banker’s lien or counterclaim without first obtaining the consent of the
Majority Lenders.

 

8.10 Characterization Of Action

 

Nothing contained in this Agreement, and no action taken by any Lender or Agent
pursuant hereto or in connection herewith or pursuant to or in connection with
the Notes or the Collateral Documents shall be deemed to constitute Lenders,
together or with or without Agent, a partnership, association, joint venture, or
other entity.

 

8.11 Resignation by or Removal of Agent

 

Agent may resign at any time as an Agent under this Agreement and the Collateral
Documents and the other Loan Documents by giving written notice thereof to
Lenders and Borrower and may be removed at any time with or without cause by
Majority Lenders. Upon any such resignation or removal, the Majority Lenders
shall have the right to appoint a successor Agent. If no successor Agent shall
have been so appointed by Majority Lenders and shall have accepted such
appointment, within 30 calendar days after the retiring Agent’s giving of notice
of resignation or Majority Lenders’ removal of the retiring Agent, then the
retiring Agent may, on behalf of Lenders, appoint a successor Agent. Upon the
acceptance of any appointment as Agent hereunder by a successor Agent, such
successor Agent shall thereupon succeed to and become vested with all of the
obligations, rights, powers, privileges, and duties of the retiring Agent, and
the retiring Agent shall be discharged from its duties and obligations under
this Agreement, and the Collateral Documents and

 

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the other Loan Documents. After any retiring Agent’s resignation or removal
hereunder as Agent, the provisions of this Article VIII shall inure to its
benefit as to any actions taken or omitted to be taken by it while it was Agent
under this Agreement.

 

8.12 No Obligation of Borrower.

 

Borrower shall not have any obligations to Agent or any Lender under this
Article VIII which governs solely the rights and obligations of Lenders and
Agent, inter se.

 

ARTICLE IX

LENDERS’ REPRESENTATIONS

 

9.1 Investment Representation

 

Each Lender hereby represents to Borrower and to each other Lender that it will
make its Loans for its own account in the ordinary course of its commercial
lending business and not with a view to the public distribution or sale of any
Note held by such Lender.

 

ARTICLE X

EXPENSES AND INDEMNITEES

 

10.1 Expenses

 

(a) Payment by Agent on Behalf of Borrower. If Borrower fails to pay promptly
when due to any other Person, expenses or monies which Borrower is required to
pay by reason of any provision in this Agreement, Agent may, but shall not be
required to, pay the same and charge Borrower’s account therefor as Agent’s
Expenses; provided, however, that Agent shall not pay the same to the extent and
so long as: (a) the same are being diligently contested, in good faith and by
appropriate proceedings, and in such a manner as not to cause any Material
Adverse Effect; and (b) Borrower shall have set aside on its books reserves
(segregated to the extent required by GAAP) adequate with respect thereto. All
such sums shall become additional Obligations owing to Lenders, shall bear
interest at the rate set forth in Section 3.1(a)(i), and shall be secured by the
Collateral. Any payments made by Agent shall not constitute: (i) an agreement by
Agent to make similar payments in the future, or (ii) a waiver by Agent of any
Default. Agent need not inquire as to, or contest the validity of, any such
expense, tax, security interest, encumbrance, or lien and the receipt of any
customary official notice for the payment thereof shall be conclusive evidence
that the same was validly due and owing.

 

(b) Agent’s Expenses Due on Demand. Irrespective of whether the transactions
contemplated hereby shall be consummated, Borrower hereby agrees to pay to
Agent, on demand, all Agent’s Expenses, and Borrower hereby authorizes and
approves all advances and payments by Agent for items constituting Agent’s
Expenses.

 

10.2 Indemnity

 

In addition to the payment of Agent’s Expenses pursuant to Section 10.1 and
irrespective of whether the transactions contemplated hereby shall be
consummated, Borrower hereby agrees to indemnify, exonerate, pay, and hold
harmless Agent, Lenders, and the holders of any of the Notes, and the officers,
directors, employees, and agents of Agent, Lenders, or such holders
(collectively, the “Indemnitees” and individually, an “Indemnitee”) from and
against any and all liabilities, obligations, losses, damages, penalties,
actions, causes of action, judgments, suits, claims,

 

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costs, expenses, of any kind or nature whatsoever, including the reasonable fees
and expenses of counsel to Indemnitees (including allocated fees and expenses of
in-house counsel of Agent), in connection with any investigative,
administrative, or judicial proceeding, irrespective of whether such Indemnitee
shall be designated a party thereto, which may be imposed on, incurred by, or
asserted against such Indemnitee, in any manner relating to or arising out of
this Agreement, any other Loan Document, any Loans hereunder, the use or
intended use of the proceeds of the Loans, or the consummation of the
transactions contemplated by this Agreement or any other Loan Document (the
“Indemnified Liabilities”); provided, however, that Borrower’s obligations to
indemnify shall not extend to any losses, damages, liabilities, actions, or
claims against any Indemnitee arising as a result of the gross negligence or
willful misconduct of such Indemnitee. Each Indemnitee shall promptly notify
Borrower of each event of which it has knowledge which may give rise to a claim
under the indemnification provisions of this Section 10.2. If any investigative,
judicial, or administrative proceeding arising from any of the foregoing is
brought against any Indemnitee, Borrower, to the extent and in the manner
directed by such Indemnitee or upon Borrower’s election (by prior notice to the
Indemnitee) to so do, will resist and defend such action, suit, or proceeding by
counsel designated by Borrower (which counsel shall be reasonably satisfactory
to such Indemnitee); provided, however, that Borrower’s obligation to so resist
or defend any such action, suit, or proceeding shall exist if and only if
Borrower is directed to do so by the Indemnitee or if Borrower has given
Indemnitee prior notice of its election to assume such defense. Such Indemnitee
will use its best efforts to cooperate in all respects in the defense of any
such action, suit, or proceeding. To the extent that the undertaking to
indemnify, exonerate, pay, and hold harmless set forth in this Section 10.2 may
be unenforceable because it is violative of any law or public policy as
determined by a final judgment of a court of competent jurisdiction, Borrower
shall make the maximum contribution to the payment and satisfaction of each of
the Indemnified Liabilities which is permissible under applicable law. The
obligations of Borrower under this Section 10.2 shall survive the termination of
this Agreement and the discharge of Borrower’s other obligations hereunder.

 

ARTICLE XI

MISCELLANEOUS

 

11.1 Destruction of Borrower’s Documents

 

Except for original instruments or chattel paper, any documents, schedules,
invoices or other papers delivered to Agent may be destroyed by Agent 6 months
after they are delivered to or received by Agent, unless (i) within such six
month period, Borrower requests, in writing, the return of said documents,
schedules, invoices or other papers and makes arrangements, at Borrower’s
expense, for their return or (ii) such documents, schedules, invoices or other
papers relate to any Released Collateral, in which case such documents,
schedules, invoices or other papers may be destroyed at any time after 30 days
following the execution by NCB of the Release related to any such Released
Collateral, unless Borrower requests, in writing, the return of said documents,
schedules, invoices or other papers.

 

11.2 Amendments, etc.

 

(a) Amendments with Consent of Agent. Borrower and Agent may enter into one or
more amendments to any Collateral Document or this Agreement without the consent
of any Lender for any of the following purposes:

 

(i) to cure any ambiguity, defect or inconsistency herein or in any Collateral
Document or to make any change not inconsistent with the provisions hereof;

 

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(ii) to convey, transfer, assign, mortgage, or pledge any property to or with
Agent, or to make any other provisions with respect to matters or questions
arising hereunder or under any Collateral Document, so long as such action shall
not adversely affect the interests of Lenders;

 

(iii) to add to the covenants of Borrower hereunder for the benefit of Lenders;
and

 

(iv) to add to the rights of Lenders. Any such amendment must be in writing and
signed by Agent to be effective and then such amendment shall be effective only
in the specific instance and for the specific purpose for which given. Agent
shall promptly deliver to each Lender a copy of any such amendment.

 

(b) Amendments with Consent of Lenders. Except as provided in subsection (a) of
this Section 11.2 and except as contemplated in the definition of “Eligible
Collateral”, no amendment or waiver of any provision of this Agreement or any
Loan Document, nor consent to any departure by Borrower therefrom, shall in any
event be effective unless the same shall be in writing and signed by the
Majority Lenders and then such waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given; provided,
however, that no amendment, waiver, or consent shall, unless in writing and
signed by all Lenders, do any of the following: (i) increase the Commitments of
Lenders or subject Lenders to any additional obligations, (ii) reduce the
principal of, or interest on, the Loans or any fees or other amounts payable
hereunder, (iii) postpone any date fixed for any payment of principal of, or
interest on, the Loans or any fees or other amounts payable hereunder,
including, without limitation, to extend the Commitment Termination Date, (iv)
change the percentage, or the aggregate unpaid, principal amount of the Notes or
Loans, or the number of Lenders, which shall be required for Lenders or any of
them to take any action hereunder, (v) release any Collateral, except to the
extent expressly provided herein or in the Collateral Documents, or (vi) amend
this Section 11.2; provided further, however, that no amendment, waiver, or
consent shall, unless in writing and signed by Agent in addition to the Lenders
required above to take such action, affect the rights or duties of Agent under
this Agreement or any other Loan Document.

 

11.3 Notices

 

Unless otherwise provided in this Agreement, all notices or demands by any party
relating to this Agreement shall be in writing and either (a) personally served
or (b) sent by regular United States mail, first class postage prepaid, with a
copy sent via facsimile or overnight courier; to Borrower or to Agent, as the
case may be, at its address set forth below:

 

If to Borrower :   GROCERS CAPITAL COMPANY     5200 Sheila Street     Commerce,
CA 90040     Facsimile No.: (323) 262-1516     Attn: Chief Financial Officer If
to Agent:   NATIONAL COOPERATIVE BANK     1725 Eye Street NW, Suite 600    
Washington, D.C. 20006     Facsimile No.: (202) 336-7659     Attn: Corporate
Banking Division

 

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The parties hereto may change the address at which they are to receive notices
hereunder, by notice in writing in the foregoing manner given to the other. All
notices or demands sent in accordance with this Section 11.3 shall be deemed
received on the earlier of the date of actual receipt or 5 days after the
deposit thereof in the United States mail.

 

11.4 No Waiver; Cumulative Remedies

 

No failure on the part of Agent or any Lender to exercise, and no delay in
exercising, any right, remedy, power or privilege hereunder or under any other
Loan Document shall operate as a waiver thereof, nor shall any single or partial
exercise of any such right, remedy, power or privilege preclude any other or
further exercise thereof or the exercise of any other right, remedy, power or
privilege. The rights and remedies under this Agreement and the other Loan
Documents are cumulative and not exclusive of any rights, remedies, powers and
privileges that may otherwise be available to Agent or any Lender.

 

11.5 Right of Set-Off

 

Upon the occurrence and during the continuance of any Event of Default, each
Lender hereby is authorized at any time and from time to time, without notice to
Borrower (any such notice being expressly waived by Borrower), subject to
Section 8.9, 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 Lender to or for the credit or the account of Borrower
against any and all of the obligations of Borrower now or hereafter existing
under this Agreement and the Note held by such Lender, irrespective of whether
or not such Lender shall have made any demand under this Agreement or such Note
and although such obligations may be unmatured. Each Lender agrees promptly to
notify Borrower (through Agent) after any such set-off and application made by
such Lender; provided that the failure to give such notice shall not affect the
validity of such set-off and application. The rights of each Lender under this
Section 11.5 are in addition to other rights and remedies (including other
rights of set-off) which such Lender may have.

 

11.6 Survival

 

All covenants, agreements, representations and warranties made in any Loan
Document shall, except to the extent otherwise provided therein, survive the
execution and delivery of this Agreement, the making of the Loans and the
execution and delivery of the Notes, and shall continue in full force and effect
so long as any Lender has a Commitment, any Loans remain outstanding or any
other Obligations remain unpaid or any obligation to perform any other act
hereunder or under any other Loan Document remains unsatisfied. Without limiting
the generality of the foregoing, the obligations of Borrower under Sections 2.4,
2.5, 3.3, 3.6, 3.7, 10.1 and 10.2 and of Lenders under Sections 2.12 and 8.5,
and all similar obligations under the other Loan Documents (including all
obligations to pay costs and expenses and all indemnity obligations), shall
survive the repayment of the Loans and the termination of the Commitments.

 

11.7 Benefits of Agreement

 

This Agreement and the other Loan Documents are entered into for the sole
protection and benefit of the parties hereto and their successors and assigns,
and no other Person shall be a direct or indirect beneficiary of, or shall have
any direct or indirect cause of action or claim in connection with, this
Agreement or any other Loan Document.

 

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11.8 Assignments and Participations

 

(a) Assignments. Any Lender may make one or more assignments of its rights,
interests and obligations in the Loans (together with a pro rata interest in its
Commitment) to one or more assignees (the “Assignee”) with the prior written
consent of Borrower (which consent will not be unreasonably withheld or
delayed); provided, however, that any Lender may, subject to the limitations
contained herein below in this Section 11.8(a), assign to another Lender any
portion of its Loans or Commitments without the prior written consent of
Borrower or Agent; provided further, however, that Borrower shall not be
obligated to pay the costs and expenses of any assigning Lender or any Assignee
in connection with any such assignment. Each such Assignee shall become a party
to this Agreement as a “Lender” upon: (i) the execution of an amendment to this
Agreement or the execution of a supplemental assignment and acceptance agreement
with the assigning Lender, the Assignee, Agent, and, in the event Borrower’s
prior written consent to such assignment is required, Borrower; (ii) the
notification of Borrower and Agent by the assigning Lender of the identity of
the Assignee and the amount of the Loans or Commitment assigned; and (iii) the
payment to Agent, for its own account, of a processing and recordation fee of
$3,000; whereupon, from and after the effective date of such assignment as
designated by Agent, the assigning Lender shall be released and discharged from,
and such Assignee shall assume, all rights, duties and obligations with respect
to the interest so assigned. Any such assignment shall be made pro rata
according to all of such Lender’s Loans and its Commitment. At such time, the
Commitment amounts referenced herein shall be modified to reflect the pro rata
share of the Commitment of such new Lender and of the existing Lenders. In
addition, Borrower will, in exchange for the assigning Lender’s existing Notes
issue new Notes hereunder to such new Lender and to the assigning Lender in
conformity with the requirements of this Agreement in order to reflect their
revised pro rata shares of the Commitment and, if applicable, Loans. The Notes
received by Agent in exchange for such new Notes shall be cancelled and returned
to Borrower. Any partial assignment under this Agreement (other than to any
Affiliate of the assigning Lender or to any other Lender) shall be in a minimum
amount equal to $5,000,000.

 

(b) Participations. Any Lender may grant one or more participations in its
interests in the Loans or its Commitment; provided, however, that: (i) such
Lender shall remain a “Lender” for all purposes under this Agreement and the
participant shall not constitute a “Lender” under this Agreement; (ii) any such
grant of a participation will be made in compliance with all applicable state or
federal laws, rules, and regulations; (iii) any such participation shall be made
pro rata according to all of such Lender’s Loans or its Commitment; and (iv) no
Lender shall grant any participation under which the participant shall have
rights to approve any amendment to or waiver of this Agreement, the Notes, or
the Collateral Documents, except as to matters specifically relating to rates of
interest on the Obligations, the amount of such Lender’s Commitment, and
extensions to the Commitment Termination Date. In the case of any participation,
the participant shall not have any rights under this Agreement or any of the
other documents entered into in connection herewith (the participant’s rights
against such Lender in respect of such participation to be those set forth in
the participation or other agreement executed by such Lender and the participant
relating thereto) and all amounts payable to any Lender hereunder shall be
determined as if such Lender had not sold such participation. In no event shall
any participant grant a participation in its participation interest in the Loans
or the Commitment in which it is participating without the prior written consent
of Agent.

 

(c) Affiliates. Notwithstanding anything to the contrary contained in clauses
(a) and (b) of this Section 11.8, no Lender shall be restricted from making
assignments or granting participations to any of its Affiliates.

 

(d) Inurement; No Assignment by Borrower. Subject to subsections (a), (b), and
(c) of this Section 11.8, this Agreement shall bind and inure to the benefit of
the respective successors

 

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and assigns of Lenders. Borrower may not assign this Agreement or any rights
hereunder without Lenders’ prior written consent and any prohibited assignment
shall be absolutely void. No consent to an assignment by Lenders shall release
Borrower of its Obligations to Lenders.

 

11.9 GOVERNING LAW. EXCEPT AS SPECIFICALLY SET FORTH IN ANY COLLATERAL DOCUMENT
(A) THIS AGREEMENT, THE NOTES, AND THE COLLATERAL DOCUMENTS SHALL BE DEEMED TO
HAVE BEEN MADE IN THE STATE OF CALIFORNIA; AND (B) THE VALIDITY OF THIS
AGREEMENT, THE NOTES, AND THE COLLATERAL DOCUMENTS, AND THE CONSTRUCTION,
INTERPRETATION, AND ENFORCEMENT HEREOF AND THEREOF, AND THE RIGHTS OF THE
PARTIES HERETO AND THERETO SHALL BE DETERMINED UNDER, GOVERNED BY, AND CONSTRUED
IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF CALIFORNIA, WITHOUT REGARD
TO PRINCIPLES OF CONFLICTS OF LAW.

 

11.10 CONSENT TO VENUE. THE PARTIES HERETO AGREE THAT ALL ACTIONS OR PROCEEDINGS
ARISING IN CONNECTION WITH THIS AGREEMENT, THE NOTES, OR THE COLLATERAL
DOCUMENTS SHALL BE TRIED AND LITIGATED ONLY IN THE STATE AND FEDERAL COURTS
LOCATED IN THE COUNTY OF LOS ANGELES, STATE OF CALIFORNIA. EACH OF BORROWER,
LENDERS, AND AGENT HEREBY 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 11.10 AND STIPULATES THAT THE STATE AND
FEDERAL COURTS LOCATED IN THE COUNTY OF LOS ANGELES, STATE OF CALIFORNIA, SHALL
HAVE JURISDICTION AND VENUE OVER IT FOR THE PURPOSE OF LITIGATING ANY SUCH
DISPUTE, CONTROVERSY, OR PROCEEDING ARISING OUT OF OR RELATED TO THIS AGREEMENT,
THE NOTES, OR THE COLLATERAL DOCUMENTS. SERVICE OF PROCESS SUFFICIENT FOR
PERSONAL JURISDICTION IN ANY ACTION AGAINST EACH OF BORROWER, LENDERS, AND AGENT
MAY BE MADE BY REGISTERED OR CERTIFIED MAIL, RETURN RECEIPT REQUESTED, TO ITS
ADDRESS INDICATED IN SECTION 11.3. EACH OF BORROWER, LENDERS, AND AGENT AGREES
THAT ANY FINAL JUDGMENT RENDERED AGAINST IT IN ANY ACTION OR PROCEEDING SHALL BE
CONCLUSIVE AS TO THE SUBJECT OF SUCH FINAL JUDGMENT AND MAY BE ENFORCED IN OTHER
JURISDICTIONS IN ANY MANNER PROVIDED BY LAW.

 

11.11 WAIVER OF JURY TRIAL. EACH OF BORROWER, LENDERS, AND AGENT HEREBY
EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION, CAUSE
OF ACTION, OR PROCEEDING ARISING UNDER OR WITH RESPECT TO THIS AGREEMENT, THE
NOTES, OR THE COLLATERAL DOCUMENTS, OR IN ANY WAY CONNECTED WITH, OR RELATED TO,
OR INCIDENTAL TO, THE DEALINGS OF THE PARTIES HERETO WITH RESPECT TO THIS
AGREEMENT, THE NOTES, THE COLLATERAL DOCUMENTS, OR THE TRANSACTIONS RELATED
HERETO OR THERETO, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND
IRRESPECTIVE OF WHETHER SOUNDING IN CONTRACT, TORT, OR OTHERWISE. EACH OF
BORROWER, LENDERS, AND AGENT HEREBY AGREES THAT ANY SUCH CLAIM, DEMAND, ACTION,
CAUSE OF ACTION, OR PROCEEDING SHALL BE DECIDED BY A COURT TRIAL WITHOUT A JURY
AND THAT ANY PARTY HERETO MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS
SECTION 11.11 WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE OTHER
PARTY OR PARTIES HERETO TO WAIVER OF ITS OR THEIR RIGHT TO TRIAL BY JURY.

 

-53-

--------------------------------------------------------------------------------

11.12 Demand, Protest, Notice

 

Borrower waives demand, protest, notice of protest, notice of default or
dishonor, notice of payment and nonpayment, notice of any default, nonpayment at
maturity, release, compromise, settlement, extension, or renewal of any or all
commercial paper, accounts, documents, instruments, chattel paper, and
guarantees at any time held by Agent or Lenders on which Borrower may in any way
be liable.

 

11.13 Confidential Relationships

 

Borrower waives the right to assert a confidential relationship, if any, it may
have with any accounting firm or service bureau in connection with any
information requested by Agent or Lenders pursuant to or in accordance with this
Agreement, and agrees that Agent or Lenders may contact directly any such
accounting firm or service bureau in order to obtain such information.

 

11.14 Limitation on Liability

 

No claim shall be made by Borrower or its Affiliates against Agent, Lenders or
any of their respective Affiliates, directors, employees, attorneys or agents
for any special, indirect, exemplary, consequential or punitive damages in
respect of any breach or wrongful conduct (whether or not the claim therefor is
based on contract, tort or duty imposed by law), in connection with, arising out
of or in any way related to the transactions contemplated by this Agreement or
the other Loan Documents or any act or omission or event occurring in connection
therewith; and Borrower hereby waives, releases and agrees not to sue upon any
such claim for any such damages, whether or not accrued and whether or not known
or suspected to exist in its favor.

 

11.15 Entire Agreement

 

This Agreement and the other Loan Documents reflect the entire agreement among
Borrower, Lenders and Agent with respect to the matters set forth herein and
therein and supersede any prior agreements, drafts, communications, commitments,
discussions and understandings, oral or written, with respect thereto.

 

11.16 Interpretation

 

This Agreement and the other Loan Documents were drafted with the joint
participation of the respective parties thereto and shall be construed neither
against nor in favor of any party, but rather in accordance with the fair
meaning thereof.

 

11.17 Confidentiality

 

Each Lender and Agent shall hold all non-public information relating to Unified,
Borrower and their respective Subsidiaries obtained by it under this Agreement
in accordance with its customary procedures for handling confidential
information of this nature, except for: (i) disclosure to its counsel or to any
agent or advisor acting on its behalf in connection with the negotiation,
execution or performance of the Loan Documents; (ii) disclosure as reasonably
required in connection with a transfer to a prospective assignee or participant
of all or part of its Loans or any participation therein, as provided in Section
11.8; (iii) disclosure as may be required or requested by Governmental

 

-54-

--------------------------------------------------------------------------------

Authority or representative thereof or pursuant to legal process; and (iv) any
other disclosure with the prior written consent of Borrower or Unified, as the
case may be. Prior to any disclosure by any Lender or Agent of such non-public
information permitted under clause (iii) (other than in connection with an
examination of the financial condition of such Lender, Agent or any of their
Affiliates by any Governmental Authority), such Lender or Agent shall, if
permitted by applicable law or judicial order, notify Borrower of such pending
disclosure. In no event shall any Lender or Agent be obligated or required to
return any materials furnished by Unified, Borrower or any of their
Subsidiaries. Notwithstanding the foregoing, such obligation of confidentiality
shall not apply if the information or substantially similar information (A) is
rightfully received by any Lender or Agent from a Person other than Unified,
Borrower or any of their Affiliates without such Lender or Agent being under an
obligation to such Person not to disclose such information, or (B) is or becomes
part of the public domain.

 

11.18 Severability

 

Whenever possible, each provision of this Agreement and the other Loan Documents
shall be interpreted in such manner as to be effective and valid under all
applicable laws and regulations. If, however, any provision of this Agreement or
any of the other Loan Documents shall be prohibited by or invalid under any such
law or regulation in any jurisdiction, it shall, as to such jurisdiction, be
deemed modified to conform to the minimum requirements of such law or
regulation, or, if for any reason it is not deemed so modified, it shall be
ineffective and invalid only to the extent of such prohibition or invalidity
without affecting the remaining provisions of this Agreement and the other Loan
Documents, or the validity or effectiveness of such provision in any other
jurisdiction.

 

11.19 Counterparts

 

This Agreement may be executed in any number of counterparts and by different
parties hereto in separate counterparts, each of which when so executed shall be
deemed to be an original and all of which taken together shall constitute but
one and the same agreement. This Agreement shall become effective when it shall
have been executed by Borrower and Agent and when Agent shall have been notified
by each Lender that such Lender has executed it.

 

[Remainder of Page Intentionally Left Blank; Signature Page Follows]

 

-55-

--------------------------------------------------------------------------------

IN WITNESS WHEREOF the parties hereto have duly executed this Agreement as of
the date first above written.

 

   

Borrower

   

GROCERS CAPITAL COMPANY

   

By:

 

/s/    CAROLYN FOX

--------------------------------------------------------------------------------

   

Title:

 

Carolyn Fox, President

   

Agent

       

NATIONAL CONSUMER COOPERATIVE BANK

   

By:

 

/s/  ROMIE BASRA

--------------------------------------------------------------------------------

   

Title:

 

Romie Basra, Vice President

Commitment            

 

Lenders

$10,000,000

 

NATIONAL CONSUMER COOPERATIVE BANK

   

By:

 

/s/    ROMIE BASRA

--------------------------------------------------------------------------------

   

Title:

 

Romie Basra, Vice President

 

Signature Page:

Second Amended and Restated

Credit Agreement

--------------------------------------------------------------------------------

EXHIBIT 1.1 B-1

 

FORM OF BORROWING BASE CERTIFICATE

 

To:

  National Consumer Cooperative Bank, as Agent     1725 Eye Street, NW, Suite
600     Washington, D.C. 20006     Attn: Loan Servicing

 

Re:     Grocers Capital Company

 

Ladies and Gentlemen:

 

This Borrowing Base Certificate is made and delivered pursuant to the Second
Amended and Restated Credit Agreement dated as of June 9, 2004 (as amended,
modified, renewed or extended from time to time, the “Credit Agreement”) among
Grocers Capital Company (“Borrower”), certain financial institutions named
therein as Lenders and National Consumer Cooperative Bank, dba National
Cooperative Bank, as Agent, and reference is made thereto for full particulars
of the matters described herein. All capitalized terms used in this Borrowing
Base Certificate and not otherwise defined herein shall have the meanings
assigned to them in the Credit Agreement.

 

I am the Chief Financial Officer of Borrower and hereby certify that the
information set forth on Schedule 1 hereto is true, accurate and complete as of
                ,             .

 

IN WITNESS WHEREOF, the undersigned officer in his capacity as such has signed
this Borrowing Base Certificate this                  day of                 ,
            .

 

GROCERS CAPITAL COMPANY,

a California corporation

By:

 

 

--------------------------------------------------------------------------------

Name:

 

 

--------------------------------------------------------------------------------

Title:

 

Chief Financial Officer

 

-1-

--------------------------------------------------------------------------------

SCHEDULE 1

to the Borrowing Base Certificate

 

Date of Calculation:

  _____, __        

 

A.

   Eligible Collateral           1.   Aggregate amount of Receivables arising in
the ordinary course of Borrower’s business    $_______________      2.  
Ineligible Receivables:               (a)   Receivables for which Borrower’s
right to receive payment has not been fully earned by performance or is
contingent upon the fulfillment of any condition whatsoever or which otherwise
do not arise from bona fide completed transactions with Borrower   
$_______________          (b)   Receivables which have been disputed or against
which there have been asserted any defenses, offsets, claims, counterclaims, or
other defenses of any nature, whether well-founded or otherwise, or which are
otherwise conditional    $_______________          (c)   Receivables that do not
comply with all applicable legal requirements, including all laws, rules,
regulations and orders of any Governmental Authority    $_______________       
  (d)   Receivables which are not owned by Borrower free and clear of all Liens
and rights of others (other than the Liens in favor of Agent on behalf of
Lenders and other Permitted Liens)    $_______________          (e)  
Receivables in which the Agent on behalf of Lenders shall not have a valid and
perfected first-priority Lien    $_______________          (f)   Receivables
owing by any officer, director (but not in his or her capacity as a Unified
Patron), employee, agent, partner, Subsidiary or Affiliate of Borrower (other
than Affiliate Loans)    $_______________

 

-2-

--------------------------------------------------------------------------------

        

(g)

  Receivables owing by the United States or any department, agency or
instrumentality thereof or by a State or any department, agency, instrumentality
or political subdivision thereof    $_______________         

(h)

  Receivables denominated in currency other than Dollars or owing by any
non-resident of the United States    $_______________         

(i)

  Receivables not complying with the GCC Loan Guidelines and other
documentation, credit and collection policies and practices of Borrower   
$_______________         

(j)

  Receivables owing by any Receivable Debtor who, as of the end of the previous
collection period, has failed to make full payment within 90 days from the due
date on the Receivables or any portion thereof owing to Borrower by such
Receivable Debtor or, as to any such Receivables of such a Receivable Debtor
disputed in good faith, such unpaid Receivables    $_______________         

(k)

  Receivables owing by any bankrupt or insolvent Receivable Debtors   
$_______________         

(l)

  Receivables which are subordinated to the prior payment of any other
obligations of the Receivable Debtor obligated in respect of such Receivable   
$_______________         

(m)

  Receivables with respect to which the terms or conditions prohibit or restrict
assignment or collection rights, or which require the consent of the Receivable
Debtor that has not been obtained    $_______________

 

-3-

--------------------------------------------------------------------------------

         (n )   Receivables with respect to which Agent, in its reasonable
discretion, deems the creditworthiness or financial condition of the Receivable
Debtor to be unsatisfactory or the prospect of payment or performance to be
impaired, and other Receivables which, in Agent’s reasonable discretion, are
otherwise ineligible; provided that, with respect to Alternative Use
Receivables, the Agent may (in its sole discretion) waive any or all of
preceding clauses (d), (e), (f), (g), (i) and/or (l)    $_______________     

3.

  Total ineligible Receivables (sum of 2(a) through 2(n))    $_______________  
  

4.

  Total Eligible Collateral (1 minus 3)    $_______________     

5.

  Eligible Collateral consisting of Finance Receivables    $_______________     
    (a )   Eligible Store Development Loans    $_______________          (b )  
Eligible Equipment Loans    $_______________          (c )   Eligible Inventory
Loans    $_______________          (d )   Eligible New Lease/Loan Products
(designated as Finance Receivables pursuant to Section 6.4(l) of the Credit
Agreement)    $_______________     

6.

  Total eligible Finance Receivables    $_______________     

7.

  Total eligible Deposit Fund Loans    $_______________     

8.

  Total eligible Affiliate Loans    $_______________     

9.

  Total eligible Program Leases    $_______________     

10.

  Total eligible subordinated Indebtedness (up to a maximum aggregate amount of
$2,000,000)          

11.

  Total eligible New Lease/Loan Products (designated as Additional Loan/Lease
Receivables pursuant
to Section 6.4(l) of the Credit Agreement)    $_______________     

12.

  Total eligible Alternative Use Receivables which Agent has approved for
inclusion in the Borrowing
Base    $_______________

 

-4-

--------------------------------------------------------------------------------

     13.   Total eligible Expansion Loans provided that no Expansion Loan shall
under any circumstances
remain in the Borrowing Base for more than twelve months    $_______________

B.

   Borrowing Base and Availability           1.   Determination of Borrowing
Base               (a)   75% of A.6    $_______________          (b)   50% of
A.7    $_______________          (c)   50% of A.8    $_______________         
(d)   50% of A.9    $_______________          (e)   50% of A.10   
$_______________          (f)   50% of A.11    $_______________          (g)  
Percentage of each Alternative Use Receivable determined by Agent in its sole
discretion; schedule attached if any Alternative Use Receivables included in
Borrowing Base; input aggregate number for all Alternative Use Receivables from
schedule    $_______________          (h)   75% of A.13    $_______________     
2.   Borrowing Base (sum of B.1(a) through B.1(h))    $_______________      3.  
Outstanding aggregate principal amount of Loans    $_______________      4.  
Total Commitments    $_______________      5.   Aggregate principal amount of
Loans available for borrowing (lesser of B.2 minus B.3 or B.4 minus
B.3)    $_______________      6.   Aggregate principal amount of Loans to be
prepaid (if B.2 is less than B.3)    $_______________

 

-5-

--------------------------------------------------------------------------------

Exhibit 1.1 C-1

 

FORM OF COMPLIANCE CERTIFICATE

 

National Consumer Cooperative Bank

1725 Eye Street, NW, Suite 600

Washington, D.C. 20006

Attn.: Loan Servicing

 

Re: Grocers Capital Company

 

Ladies and Gentlemen:

 

This Compliance Certificate is made and delivered pursuant to the Second Amended
and Restated Credit Agreement dated as of June 9, 2004 (as amended, modified,
renewed or extended from time to time, the “Credit Agreement”) among Grocers
Capital Company (“Borrower”), certain financial institutions named therein as
Lenders, and National Consumer Cooperative Bank, dba National Cooperative Bank,
as Agent, and reference is made thereto for full particulars of the matters
described therein. All capitalized terms used in this Compliance Certificate and
not otherwise defined herein shall have the meanings assigned to them in the
Credit Agreement. This Compliance Certificate relates to the accounting period
ending             ,         .

 

I am the chief financial officer of Borrower and hereby certify that the
information set forth on Schedule 1 hereto (and on any additional schedules
hereto setting forth further supporting detail) is true, accurate and complete
as of the end of such accounting period.

 

I hereby further certify that (i) as of the date hereof that no Default has
occurred and is continuing and (ii) on and as of the date hereof, there has
occurred no Material Adverse Effect since the date of the last financial
statements delivered to Agent and Lenders pursuant to the Credit Agreement,
except in each case as may be set forth in a separate attachment hereto
describing in detail the nature of each condition or event constituting an
exception to the foregoing statements, the period during which it has existed
and the action which Borrower or Unified, as the case may be, is taking or
proposes to take with respect to each such condition or event.

 

IN WITNESS WHEREOF, the undersigned officer in his capacity as such has signed
this Compliance Certificate this         day of             ,         .

 

By:

 

 

--------------------------------------------------------------------------------

Name:

 

 

--------------------------------------------------------------------------------

Title:

  Chief Financial Officer

 

-1-

--------------------------------------------------------------------------------

SCHEDULE

to the Compliance Certificate

 

Dated                     ,             .

 

For the fiscal quarter ended                     ,             .

 

                    Actual

--------------------------------------------------------------------------------

   Required/Permitted

--------------------------------------------------------------------------------

1.

   Section 6.2(a) – Debt Ratio                     (A)    Indebtedness
calculation                          Indebtedness    $__________               
     minus Capital Debt    $__________                Net Consolidated
Indebtedness         $__________           (B)    Consolidated Adjusted Tangible
Net Worth calculation                          Consolidated Total Assets   
$__________                     plus the book value of NCB stock    $__________
                    plus Capital Debt    $__________                     minus
Consolidated Total Liabilities    $__________                     minus
intangible assets and other excluded assets    $__________                    
minus all unamortized debt discount and expense    $__________                 
   minus all treasury stock    $__________          

 

-2-

--------------------------------------------------------------------------------

                   Actual

--------------------------------------------------------------------------------

   Required/Permitted

--------------------------------------------------------------------------------

        

minus all receivables from and other obligations of directors (other than in
their capacities as Unified Patrons), employees or officers of Borrower

   $__________                   

minus the excess, if any, of the aggregate balance of Receivables past due more
than 90 days over reserves for loan losses

   $__________                   

Consolidated Adjusted Tangible Net Worth

        $__________              

Ratio of (A) to (B)

        __________    Not more than 1.6 to 1.0

2.

   Section 6.2(b) – Minimum Consolidated Tangible Net Worth                    
Consolidated Tangible Net Worth calculation                     Consolidated
Total Assets    $__________                minus Consolidated Total Liabilities
   $__________                minus intangible assets and other excluded assets
   $__________                minus all unamortized debt discount and expense   
$__________                minus all treasury stock    $__________          

 

-3-

--------------------------------------------------------------------------------

                  Actual

--------------------------------------------------------------------------------

  Required/Permitted

--------------------------------------------------------------------------------

     minus all receivables from and other obligations of directors (other than
in their capacities as Unified Patrons), employees or officers of Borrower or
Unified   $__________              Consolidated Tangible Net Worth      
$__________   Not less than $15,000,000

3.

   Section 6.2(c) – Interest Coverage Ratio              (A)    Consolidated
EBIT calculation for four consecutive fiscal quarters of Borrower then ended    
                  Consolidated Net Income (excluding notes or other payments in
kind received by Borrower in payment of any obligations to it)   $__________    
              plus Consolidated Interest Expense   $__________                  
plus income tax expense of Borrower and its Subsidiaries on a Consolidated basis
  $__________                   Consolidated EBIT       $__________          (B)
   Consolidated Interest Expense       $__________          Ratio of (A) to (B)1
      __________   Not less than 2.0 to 1.0

4.

   Section 6.4(a) - Indebtedness                  6.4(a)(v)   

Senior Debt and

Subordinated

Debt Calculation

           

--------------------------------------------------------------------------------

1 Ratio shall be computed excluding gains, losses, interest and other expenses
and taxes relating to Borrower's interest in Sav Max Foods, Inc.

 

-4-

--------------------------------------------------------------------------------

             Actual

--------------------------------------------------------------------------------

  

Required/Permitted

--------------------------------------------------------------------------------

   

Senior Debt of Borrower and its Subsidiaries

   $__________         

Subordinated Debt of Borrower and its Subsidiaries

   $__________         

Total Senior Debt and Subordinated Debt of Borrower and its Subsidiaries

   $__________    Not more than $30,000,000     6.4(a)(vii)   Indebtedness of
Borrower and its Subsidiaries under Capital Leases    $__________    Not more
than $1,000,000

5.

  Section 6.4(f) - Loans and Investments                                  
6.4(f)(iv)   Consolidated Adjusted Tangible Net Worth was calculated in (1)
above    $__________         

Subordinated Indebtedness of Unified Patrons

   $__________         

Equity Investments in Unified Patrons

   $__________         

Sum of above

   $__________    Not to exceed at the time of credit extension or investment
the applicable “Maximum Amount” set forth in Section 6.4(f)(iv)

 

-5-

--------------------------------------------------------------------------------

             Actual

--------------------------------------------------------------------------------

  

Required/Permitted

--------------------------------------------------------------------------------

6.

  Section 6.4(g) – Capital Expenditures              

Capital Expenditures

   $__________    Not more than $250,000 in fiscal year 7.   Section 6.4(h) -
Operating Leases               6.4(h) Operating Lease Payments    $__________   
Not more than $500,000 in fiscal year

 

-6-

--------------------------------------------------------------------------------

EXHIBIT 1.1 G-1

 

GROCERS CAPITAL COMPANY

 

MEMBER FINANCING POLICIES AND PROCEDURES

 

Approximately 35 years ago, the Unified Western Grocers (“UWG”) Board of
Directors voted to begin offering financing services to members as a way to
support wholesale and retail expansion and maintain competitiveness. In 1975,
Grocers Capital Company (“GCC”) was incorporated as a wholly-owned finance
subsidiary to make loans to the members. The objective of GCC financing has been
to support member growth with competitive financing through prudent lending that
provides a satisfactory return to GCC and the shareholders of Unified. These
credit and collection policies govern the underwriting and servicing of loans by
GCC.

 

Effective shortly after the CGC / UG merger, all member financing requests began
being processed through GCC. Requests previously reviewed by United Resources
are now consolidated with GCC. The following is a description of that process,
starting with the types of financing that are currently available.

 

1. Mission Statement

 

The mission statement of GCC is as follows:

 

“To provide financial services in partnership with progressive retailers which
support the managed growth of the retailers and Unified and its subsidiaries”

 

2. Guiding Principles

 

GCC Management is guided by the following principles:

 

  • GCC’s primary goal is to serve the capital needs of UWG Members while
maintaining a satisfactory return on assets and portfolio credit quality.

 

  • The importance of the financing request to achieving UWG’s long-term goals,
the ability of the borrower to repay the debt (historical cash flow), the
quality of the borrower’s balance sheet, and the collateral value of the assets
pledged, in that order, are the most important factors in a credit decision.

 

  • Wherever possible, GCC seeks to reduce credit risk by obtaining additional
support through guarantees, real estate, deposits, and other assets.

 

    1

--------------------------------------------------------------------------------

3. Scope of Credit Services

 

a. Desirable Credit

 

(All of the following require collateral, personal guaranty, and supply
agreement)

 

Inventory Term loans - usually used for existing inventory purchased in
conjunction with a new store. Also available for initial inventory required to
support a new store grand opening or remodel expansion. Monthly repayment up to
5 years.

 

Equipment loans – for grocery equipment associated with purchase or remodel of
existing store. Monthly repayment up to 7 years.

 

“Buy / Sell” loans - for the purchase of existing grocery store. Many times used
in conjunction with Inventory Term loan. Monthly repayment up to 7 years.

 

Deposit Fund loans - 100% of initial UWG deposit for new members. Weekly
repayment over 5 years.

 

NOTE: This is the only loan not requiring specific collateral

 

Loan Guarantee - Member financing request that is determined would be best
provided by a 3rd party financing source. GCC guarantee percentage varies with
member credit strength as evaluated by 3rd party lender.

 

Equity Investment - On occasion, GCC may make an equity investment in a Member.

 

b. Undesirable Credit

 

The following types of credit facilities are considered undesirable and have
been identified as situations with greater than normal risk. When these
circumstances are present, the credit request would normally be declined.
Exceptions may be approved if, in the judgement of GCC Management, the risks can
be controlled.

 

  • Loans to a business where the loans cannot be repaid within the specified
term except by borrowing elsewhere or by liquidating assets.

 

  • Venture capital loans to a start-up business where the borrowers lack
experience in the retail grocery business and the equity participation of the
borrowers is limited. These loans may be considered if the borrowers have other
sources of repayment acceptable to GCC which are pledged in support of the
loans.

 

  • Loans to parties whose integrity or honesty is questionable.

 

  • Real estate loans, either construction or takeout.

 

    2

--------------------------------------------------------------------------------

  • Credit facilities to holding companies that do not have operating assets.

 

  • Loans with balloon payments of greater than 40% of the original principal
balance and / or amortizations of greater than 10 years.

 

  • Credit facilities with maturities beyond seven years.

 

  • Credit extensions to pay delinquent interest.

 

  • Loans to company owners with the purpose being the buyout of other owners.

 

  • Working capital loans with the purpose of curing a cash flow deficit.

 

3. Eligibility

 

GCC may provide financing to any UWG Member Patron, Affiliate, or Customer.
Subsidiaries, affiliates, and principals of the above are also eligible provided
that GCC Management judges that the financing is warranted. GCC may request
documentation including articles of incorporation, financial statements or tax
returns to support the eligibility of any prospective borrower.

 

4. Single Borrower Concentration Limits

 

GCC’s single borrower limit (including loans, guarantees, and investments) is
35% of total Shareholder’s Equity as recorded on GCC’s financial statements.

 

GCC’s concentration limit is set at 25% of total Finance Receivables as recorded
on GCC’s financial statements.

 

Any proposed loans that will cause the borrower to exceed the single borrower or
concentration limits should include specific approval of that exception.

 

5. Credit Approval Authority Levels (based on a member’s cumulative loan
balance):

 

$0 TO $50,000

 

ANY GCC OFFICER

 

$50,001 TO $100,000:

 

ANY TWO GCC OFFICERS

 

$100,001 TO $3,000,000:

 

LOAN COMMITTEE-APPROVAL REQUIRES MAJORITY VOTE

 

    3

--------------------------------------------------------------------------------

OVER $3,000,000

 

REVIEW AND RECOMMENDATION FROM LOAN COMMITTEE

REVIEW AND RECOMMENDATION FROM UNIFIED FINANCE COMMITTEE

REVIEW AND APPROVAL FROM BOARD OF DIRECTORS OF UNIFIED

 

ANY BOARD MEMBER REQUEST/All EQUITY INVESTMENTS

 

REVIEW AND RECOMMENDATION FROM LOAN COMMITTEE

REVIEW AND RECOMMENDATION FROM UNIFIED FINANCE COMMITTEE

REVIEW AND APPROVAL FROM BOARD OF DIRECTORS OF UNIFIED

 

NOTE: Director requests require approval of UNIFIED Board Credit Committee

 

SEE ATTACHED PROCEDURES TO FOLLOW AFTER LOAN COMMITTEE DECISION.

 

6. Modifications to Loan Terms

 

Regardless of which lending authority has approved a credit extension, GCC
Management may make modifications as to amount of credit, rate, and terms as
follows:

 

  • Amount of Credit – Up to 10% increase in the approved amount

 

  • Interest Rate – Up to 1% of the approved rate

 

  • Terms – GCC Management may adjust the terms (collateral, covenants,
guarantors, etc.) as long as in its best judgement, the changes do not
materially affect the intent of the lending authority which approved the credit
extension. Changes other than the amount and rate noted above should be
documented in written form (NOTE TO FILE) and placed in the loan file. Any
significant release of collateral must be approved by the Loan Committee or
Board of Directors, as per the required credit approval authority criteria.

 

7. Credit and Security Standards

 

The guiding principles of GCC’s Credit and Collection Policy will be followed
when underwriting and originating any credit extension. Cash flow and the
certainty of future cash flows will be regarded as the primary source of
repayment for all credit extensions.

 

Secondary sources of repayment will be obtained whenever possible through
collateral, guarantees and other forms of support to the primary source of
repayment. GCC will comply with all laws and regulations pertaining to credit
and lending practices.

 

    4

--------------------------------------------------------------------------------

a. Loan Purpose

 

GCC Management will review the credit request to ensure that the request meets
the needs of the borrower. The use of the proceeds and the sources of repayment
should be clearly identified.

 

b. Underwriting Criteria

 

GCC will underwrite all eligible borrowers, subject only to funds availability
and approval of credit. The underwriting will include (i) a score using the GCC
Loan Matrix scoring system, and (ii) a detailed credit analysis performed by GCC
Management, including a Credit Worksheet that incorporates financial and ratio
analysis on the borrower.

 

It is important to note that every effort is made to keep this information
confidential between the Loan Committee, Management and the Member.

 

  • Loan Matrix. The Loan Matrix is an objective scoring system that assigns
point values to a borrower based on actual performance in 11 different
measurement categories. Based on the total score, a rating of Excellent, Very
Good, Good, Fair, and Poor is assigned to the borrower. Those borrowers with a
Poor rating may only be underwritten if, in the opinion of management, there are
sufficient reasons to overcome the rating assigned. Borrowers with ratings of
Fair, Good, Very Good, and Excellent may be underwritten, based upon credit
approval by the appropriate lending authority.

 

  • Credit Analysis. A written credit analysis is normally prepared for
exposures over $100,000.00. The written analysis discusses the background,
amount, purpose, and collateral for the financing. Included in the analysis will
be a financial comparison that provides ratios and other relevant financial
information.

 

The Loan Committee analysis of the request includes (in order of importance):

 

  • Ability to repay debts - financial statement strength

  • Operational experience

  • Site location(s)

  • Unified payment record

  • Collateral value

  • Minimum guidelines to sell loan to NCB after funding

  • Unified wholesale volume

 

NOTE: See attached procedures regarding loan process after approval by Loan
Committee.

 

    5

--------------------------------------------------------------------------------

c. Collateral

 

Collateral should always be looked at as a secondary source of repayment. GCC
will not normally enter into any loan arrangement where liquidation of the
collateral is the main source of repayment. The value of the collateral should
always be identified in the credit underwriting process. Subsequent to credit
approval, the value of the collateral should be supported by appraisals, lien
searches and other methods of documentation of value.

 

d. Real Estate Appraisals

 

Appraisals should be obtained whenever real property is taken as primary
collateral. The only exceptions should be in cases where it is determined by GCC
Management that the cost of the appraisal versus the potential equity is not
justified or where there is reasonable certainty of the property value (recent
purchase, comparable sales data, etc.). The method of appraisal is to be
determined by management, based on the exposure and importance of collateral
support. In general, a “drive by” appraisal prepared by an appraisal company
acceptable to management is all that will be required.

 

e. Title Policies

 

Title insurance policies with GCC as beneficiary should be obtained whenever
real property is taken as primary collateral. An abbreviated title policy is
acceptable in most cases, though management may require a full title. If, in
management’s view, acceptable information is available that supports the title
claim of the borrower, the title policy requirement may be waived.

 

f. UCC-1 Lien Searches

 

UCC-1 lien searches should be conducted on borrowers where store equipment or
other business assets are offered as collateral and the loan amount exceeds
$100,000.00. Management may waive a search in situations where existing filings
on the same borrower are present or when there is sufficient experience with the
borrower in management’s opinion to make a search unnecessary.

 

g. Real Estate Site Surveys

 

Real estate site surveys performed by a company acceptable to GCC should be
obtained whenever financing is to be used for a new or a closed store location.
The survey should indicate sales volumes that can be expected from the location
so that projections of future cash flows can be determined. If historical sales
information or other data acceptable to management can be obtained to support
the probable sales volume, then the requirement may be waived.

 

h. Credit Reports

 

TRW and Dun & Bradstreet credit reports should be pulled on all borrowers where
the total exposure will exceed $100,000.00. The only exception to this would be
in cases where GCC has sufficient other credit information available on the
borrower or guarantor to make the report unnecessary.

 

    6

--------------------------------------------------------------------------------

8. Interest Rates and Fees

 

Interest rates and fees charged by GCC will be set in a manner consistent with
its guiding principles, and take into account prevailing interest rates,
management policies, administrative expenses and relative risk. Interest should
be paid no less frequently than once a quarter, unless approved by the Loan
Committee.

 

a. Interest Rates

 

  • Floating rates. Based on Prime Rate, plus a margin. The Prime Rate used is
selected by GCC Management and may be changed from time to time. Adjustment will
usually occur on a calendar quarter basis, although other methods may be used
when such a change is desirable.

 

  • Fixed rates. Based on a specific spread above a base rate acceptable to
management, may be offered from time to time as market conditions dictate.

 

b. Fees

 

Non-refundable commitment fees are due upon acceptance of a commitment.
Commitment and other fees generally cover the costs of funding, underwriting and
yield enhancement. Other fees may be charged to cover out of pocket costs such
as legal expenses, so long as this is disclosed to the borrower in advance. Late
payment fees are not currently assessed by GCC, however, these may be charged
where such fees have been incorporated into the loan documentation.

 

9. Loan Loss Reserve Process

 

a. Evaluation

 

The company regularly evaluates the collectibility of its outstanding loans. The
weekly requirement to pay Unified allows for continuous monitoring of member
payments and this information is used in determining loan quality. On a
quarterly basis a thorough evaluation of identified loans is performed.

 

b. Loan loss reserves

 

As a normal course of business, the Company requires collateral on its loans. In
circumstances where a loan becomes delinquent and the Company has insufficient
collateral for full recovery of the outstanding balance, a specific loan loss
reserve is established. The Company also maintains a general loan loss reserve
based on historical experience for expected loan losses.

 

    7

--------------------------------------------------------------------------------

c. Charge-offs

 

Whenever it is reasonably determined by management that the probability of
collection of any part of a loan is not likely, a full or partial charge-off
against the loan loss reserve shall be made in order to assure that the value of
GCC’s assets are accurately stated. A charge-off does not imply a lessening of
efforts to collect the loan in full. All charge-offs must be approved by a GCC
officer and such approval should be documented in the file. Chargeoffs of
$100,000 or less require signature of one GCC officer. Chargeoffs over $100,000
require signature of two GCC officers.

 

10. Loan Portfolio Maintenance

 

Under its current policies, GCC only makes specific credit extensions for a
fixed period of time; there are no revolving credit arrangements. Therefore, the
type of information required to maintain is different from institutions whose
exposure varies over time and who may make several advances over a commitment
period. Management will review loans to ensure that required financial
information is on file and that documentation required to monitor insurance and
collateral preservation is in order.

 

a. Financial Information

 

GCC will collect the following financial information with respect to each
borrower on one or more loans which, either individually or in the aggregate,
have a principal balance greater than:

 

  • $250,000 – annual financial statements within 120 days of each fiscal year
of such borrower

 

  • $500,000 but less than $1,000,000 – in addition to annual statements,
semi-annual financial statements within 50 days of the end of the second fiscal
quarter of such borrower

 

  • $1,000,000 – in addition to audited annual financial statements, quarterly
financial statements within 50 days of the end of each fiscal quarter.

 

b. Loan covenant compliance

 

Loans that require compliance with specific financial ratios will be monitored
on an ongoing basis. A list of such loans will be maintained with comments as to
the status of each loan’s compliance. GCC Management may choose to remove or add
loans for financial compliance based on changes in exposure or in the borrower’s
financial condition.

 

    8

--------------------------------------------------------------------------------

c. Supply Agreement Compliance

 

Loans that include a supply agreement with Unified Western Grocers will be
monitored on an ongoing basis to determine whether agreed-upon purchase levels
are being met. A list of such loans, indicating compliance, will also be
maintained.

 

d. Insurance

 

All loans secured by store equipment and fixtures require that the borrower
maintain insurance in an equal to GCC’s loan balance and that GCC be named as an
additional loss payee on the policy. GCC will maintain a list of these loans and
copies of current endorsements in order to document compliance with those
conditions.

 

e. Collateral Filings and Appraisals

 

Loans that have UCC-1 filings to provide notice of GCC’s security interest in
specific assets of the borrower will be monitored on an ongoing basis. UCC-1
filings will be renewed for any loans greater than five years in term.
Appraisals on real property or other collateral may be ordered at any time if
GCC Management feels it is appropriate based on changes in exposure, market
conditions, or the financial condition of the borrower.

 

-END-

 

    9

--------------------------------------------------------------------------------

EXHIBIT 1.1 N-1

 

[Form of Secured Promissory Note]

 

SECURED PROMISSORY NOTE

 

$                        Los Angeles, California
as of                     

 

FOR VALUE RECEIVED, GROCERS CAPITAL COMPANY, a California corporation (“Maker”),
hereby promises to pay to the order of                      (“Lender”), the
principal sum of                      Dollars ($            ) or such lesser
amount as shall equal the aggregate outstanding principal balance of the Loans
severally made by Lender pursuant to the Credit Agreement (as defined below),
and to pay interest on said sum, or such lesser amount, at the rates and on the
dates provided in the Credit Agreement.

 

Maker shall make all payments hereunder for the account of Lender as provided in
Section 2.11 of the Credit Agreement.

 

Maker hereby authorizes Lender to record on the schedule(s) annexed to this Note
the date and amount of each Loan and of each payment of principal made by Maker
and agrees that all such notations shall constitute prima facie evidence of the
matters noted.

 

This Note is one of the Notes referred to in the Second Amended and Restated
Credit Agreement, dated as of June 9, 2004, among Maker, on the one hand, and
Lender, the other financial institutions a party thereto (collectively, the
“Lenders”), and NATIONAL CONSUMER COOPERATIVE BANK, dba National Cooperative
Bank, a federally chartered banking corporation, as Agent for the Lenders, on
the other hand (as such Credit Agreement may be from time to time hereafter
amended, restated or supplemented, the “Credit Agreement”). This Note is subject
to the terms of the Credit Agreement and Maker’s obligations under this Note are
secured by the Collateral as provided in the Collateral Documents. Nothing
herein shall be deemed to limit any of the terms or provisions of the Credit
Agreement or the Collateral Documents, and all of Lender’s rights and remedies
hereunder and thereunder are cumulative. Capitalized terms used herein have the
meanings assigned to those terms in the Credit Agreement, unless otherwise
defined herein.

 

The transfer, sale or assignment of any rights under or interest in this Note is
subject to certain restrictions contained in the Credit Agreement, including
Section 11.8 thereof.

 

No waiver or modification of any of the terms or provisions of this Note shall
be valid or binding unless set forth in a writing in compliance with Section
11.2 of the Credit Agreement, and then only to the extent specifically set
forth.

 

-1-

--------------------------------------------------------------------------------

Maker hereby waives notice of presentment, demand, protest or notice of any
other kind. This Note shall be governed by and construed in accordance with the
laws of the State of California without regard to principles of conflicts of
laws.

 

GROCERS CAPITAL COMPANY, a California corporation By:  

 

--------------------------------------------------------------------------------

Name:  

 

--------------------------------------------------------------------------------

Title:  

 

--------------------------------------------------------------------------------

 

-2-

--------------------------------------------------------------------------------

SCHEDULE TO SECURED PROMISSORY NOTE

 

Date Made,

Continued,

Converted or

Paid

--------------------------------------------------------------------------------

   Type

--------------------------------------------------------------------------------

   Amount of
Loan

--------------------------------------------------------------------------------

   Amount of
Principal
Continued,
Converted or
Paid

--------------------------------------------------------------------------------

   Unpaid
Principal
Balance of
Note

--------------------------------------------------------------------------------

   Name of
Person Making
Notations

--------------------------------------------------------------------------------

 

-3-

--------------------------------------------------------------------------------

EXHIBIT 1.1 N-2

 

NOTICE OF BORROWING

 

To:

 

National Consumer Cooperative Bank, as Agent

   

1725 Eye Street, NW, Suite 600

   

Washington, D.C. 20006

   

Attn: Loan Servicing

 

This Notice of Borrowing is given pursuant to Section 2.2(b) of that certain
Second Amended and Restated Credit Agreement, dated as of June 9, 2004 (the
“Agreement”), among GROCERS CAPITAL COMPANY, a California corporation
(“Borrower”), on the one hand, and the financial institutions which are
signatories thereto from time to time (“Lenders”), and NATIONAL CONSUMER
COOPERATIVE BANK, dba National Cooperative Bank, a federally chartered banking
corporation with principal offices located in Washington, D.C., as agent for
Lenders, on the other. All initially capitalized terms used but not defined in
this Notice of Borrowing shall have the meanings assigned to such terms in the
Agreement.

 

We hereby request a Borrowing as follows:

 

$                

  

Prime Rate Loan

$                

  

Eurodollar Rate Loan with an Interest Period of [1 or 3] month(s) and expiring
on                     ,         

$                

  

Total

 

It is requested that the extension of credit requested hereby be made available
on                 ,             . The undersigned certifies that, as of the
date of the requested Borrowing:

 

(a) the representations and warranties of Borrower contained in Article V of the
Agreement are true and correct in all material respects on and as of such date,
except to the extent such representations and warranties expressly relate solely
to an earlier date;

 

(b) no Material Adverse Effect has occurred since the date of the most recent
Borrowing;

 

(c) no Default has occurred and is continuing under the Agreement or will result
from the proposed Borrowing;

 

(d) no “Event of Default” under (and as defined in) the Unified Loan Agreement
has occurred and is continuing; and

 

-1-

--------------------------------------------------------------------------------

(e) Borrower has satisfied all conditions under the Agreement to be performed or
satisfied by it on or before such date.

 

 

Dated:                         ,         

           

GROCERS CAPITAL COMPANY,

   

a California corporation

   

By:

 

 

--------------------------------------------------------------------------------

   

Name:

 

 

--------------------------------------------------------------------------------

   

Title:

 

 

--------------------------------------------------------------------------------

 

-2-

--------------------------------------------------------------------------------

EXHIBIT 1.1 N-3

 

NOTICE OF CONVERSION OR CONTINUATION

 

To:   National Consumer Cooperative Bank, as Agent     1725 Eye Street, NW,
Suite 600     Washington, D.C. 20006     Attn: Loan Servicing

 

This Notice of Conversion or Continuation is given pursuant to Section 2.3(b) of
that certain Second Amended and Restated Credit Agreement, dated as of June 9,
2004 (the “Agreement”), among GROCERS CAPITAL COMPANY, a California corporation
(“Borrower”), on the one hand, and the financial institutions which are
signatories thereto (“Lenders”), and NATIONAL CONSUMER COOPERATIVE BANK, dba
National Cooperative Bank, a federally chartered banking corporation with
principal offices located in Washington D.C., as agent for Lenders, on the
other. All initially capitalized terms used but not defined in this Notice of
Conversion or Continuation shall have the meanings assigned to such terms in the
Agreement.

 

We hereby request that you:

 

(a) Convert $             in principal amount of the presently outstanding Loans
(integral multiples of $100,000 with a minimum amount of $1,000,000 only) on
            ,             , from a Prime Rate Loan to a Eurodollar Rate Loan
with an Interest Period of              [1 or 3] month(s) and expiring on
                    ,             ;

 

(b) Convert $             in principal amount of the presently outstanding Loans
(integral multiples of $100,000 with a minimum amount of $1,000,000 only) on
            ,              from a Eurodollar Rate Loan with an Interest Period
expiring on that day, to a Prime Rate Loan;

 

(c) Continue as a Eurodollar Rate Loan $             in principal amount of that
presently outstanding Eurodollar Rate Loan with an Interest Period expiring on
            ,             , commencing on such expiration day, with a new
Interest Period of              [1 or 3] month(s) and expiring on             ,
            ;

 

The undersigned certifies that, as of the date hereof, the representations and
warranties contained in Article V of the Agreement and in the other Loan
Documents are true and correct and no Default is continuing.

 

Dated:                ,        

 

GROCERS CAPITAL COMPANY, a California corporation By:  

 

--------------------------------------------------------------------------------

Name:  

 

--------------------------------------------------------------------------------

Title:  

 

--------------------------------------------------------------------------------

 

-1-

--------------------------------------------------------------------------------

SCHEDULE 1.1 P-1

 

PERMITTED LIENS

 

The security and other interests described in each of the following UCC
Financing Statements filed against GCC with the California Secretary of State’s
Office:

 

NONE.

 

-1-

--------------------------------------------------------------------------------

SCHEDULE 5.1(k)

 

SUBSIDIARIES

 

None.

 

-1-

--------------------------------------------------------------------------------

SCHEDULE 6.4(a)(iv)

 

EXISTING INDEBTEDNESS

 

Indebtedness pursuant to that certain Assignment and Assumption Agreement and
General Release, dated as of December 7, 2001 among GCC, Unified, URI and NCB.

 

-1-

--------------------------------------------------------------------------------

SCHEDULE 6.4(f)(iv)

 

INVESTMENTS AND SUBORDINATED INDEBTEDNESS

 

Current Investments:         Amount

--------------------------------------------------------------------------------

National Cooperative Bank

        $ 2,833,000 Subordinated Debt:    Loan Number

--------------------------------------------------------------------------------

   Balance

--------------------------------------------------------------------------------

Andronico’s Market, Inc.

   B0029003    $ 500,000

 

-1-