<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JANUARY 13, 1998
REGISTRATION NO. 333-
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------------
RANDALL'S FOOD MARKETS, INC.
(Exact Name of Registrant as Specified in Its Charter)
<TABLE>
<S> <C>
TEXAS 74-213-4840
(State or Other Jurisdiction of Incorporation (I.R.S. Employer Identification Number)
or Organization)
</TABLE>
3663 BRIARPARK
HOUSTON, TEXAS 77042
(Address, including Zip Code, of Registrant's Principal Executive Offices)
1997 STOCK PURCHASE AND OPTION PLAN
FOR KEY EMPLOYEES OF
RANDALL'S FOOD MARKETS, INC. AND SUBSIDIARIES
(Full Title of the Plan)
------------------------
R. RANDALL ONSTEAD
PRESIDENT AND CHIEF EXECUTIVE OFFICER
3663 BRIARPARK
HOUSTON, TEXAS 77042
(713) 268-3500
(Name, Address, including Zip Code, and Telephone Number, including Area Code,
of Registrant's Agent for Service)
WITH COPIES TO:
ARTHUR D. ROBINSON, ESQ.
SIMPSON THACHER & BARTLETT
425 LEXINGTON AVENUE
NEW YORK, NEW YORK 10017-3954
(212) 455-2000
------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
FROM TIME TO TIME AFTER THE EFFECTIVE DATE OF THIS REGISTRATION STATEMENT.
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
PROPOSED PROPOSED
MAXIMUM MAXIMUM
AMOUNT TO OFFERING AGGREGATE AMOUNT OF
BE PRICE OFFERING REGISTRATION
TITLE OF SECURITIES TO BE REGISTERED REGISTERED PER SHARE(A) PRICE(A) FEE(A)
<S> <C> <C> <C> <C>
Common Stock, $.25 par value per share...................... 2,400,000 $ 12.11 $ 29,064,000 $8,573.88
</TABLE>
(a) Pursuant to Rule 457(h) under the Securities Act of 1933, the proposed
maximum offering price per share, the proposed maximum aggregate offering
price and the amount of registration fee have been computed on the basis of
the price at which common stock under the Plan will be sold, and the price
at which options under the Plan may be exercised.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
ITEM 1. PLAN INFORMATION.
Not required to be filed with this Registration Statement.
ITEM 2. REGISTRANT INFORMATION AND EMPLOYEE PLAN ANNUAL INFORMATION.
Not required to be filed with this Registration Statement.
<PAGE>
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE.
The following documents, previously filed by Randall's Food Markets, Inc.
(the "Company" or the "Registrant") with the Securities and Exchange Commission
(the "Commission") pursuant to Rule 424(b) of the Securities Act of 1933, as
amended (the "Act"), are hereby incorporated by reference in this Registration
Statement:
(a) Prospectus, dated January 9, 1998, relating to the Offer to Exchange
up to $150,000,000 of its 9 3/8% Series B Senior Subordinated Notes due
2007, which have been registered under the Securities Act for any and all of
its outstanding 9 3/8% Senior Subordinated Notes due 2007.
All documents filed by the Company pursuant to Section 13(a), 13(c), 14 and
15(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
after the date of this Registration Statement and prior to the filing of a
post-effective amendment to this Registration Statement indicating that all
securities offered have been sold or which deregisters all securities then
remaining unsold, shall be deemed to be incorporated by reference into this
Registration Statement and to be part hereof from the date of filing of such
documents. Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Registration Statement to the extent that a statement
contained herein or in any subsequently filed document which also is or is
deemed to be incorporated by reference herein modifies or supersedes such
statement. Any such statement so modified or superseded shall not be deemed,
except as so modified or superseded, to constitute a part of this Registration
Statement.
ITEM 4. DESCRIPTION OF SECURITIES.
The following description of the terms of the Common Stock is qualified in
its entirety by reference to the provisions in the Management Stockholder's
Agreement, filed as part of this Registration Statement as Exhibit 4.4.
The entire authorized capital stock of the Company consists of (i)
75,000,000 shares of Common Stock, (ii) 8,250 shares of Class A Preferred Stock,
and (iii) 5,000,000 shares of serial preferred stock with a par value of $10.00
per share (the "Serial Preferred Stock"). As of October 18, 1997, there were (i)
29,800,261 shares of Common Stock issued and outstanding; (ii) no shares of
Class A Preferred Stock or Serial Preferred Stock issued or outstanding; (iii)
572,521 shares of Common Stock reserved for issuance upon exercise of authorized
but unissued outstanding employee or director stock options to purchase shares
of Common Stock granted under any stock option or stock purchase plan, program
or arrangement of the Company; and (iv) 662,142 shares of Common Stock issuable
upon exercise of outstanding stock options (with an average exercise price of
$16.08).
VOTING RIGHTS. The holders of the Common Stock are entitled to one vote per
share on all matters submitted for action by the shareholders. There is no
provision for cumulative voting with respect to the election of directors.
Accordingly, the holders of more than 50% of the shares of Common Stock can, if
they choose to do so, elect all of the directors. In such event, absent
contractual provisions to the contrary the holders of the remaining shares will
not be able to elect any directors.
DIVIDEND RIGHTS. All shares of Common Stock are entitled to share equally
in such dividends as the Board of Directors may declare from sources legally
available therefor.
LIQUIDATION RIGHTS. Upon liquidation or dissolution of the Company, whether
voluntary or involuntary, all shares of Common Stock are entitled to share
equally in the assets available for distribution to shareholders after payment
of all prior obligations of the Company.
2
<PAGE>
OTHER MATTERS. The holders of the Common Stock have no preemptive rights.
All outstanding shares of Common Stock are, and the Common Stock offered hereby
will be, fully paid and non-assessable.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL.
Not applicable.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Article 2.02-1.B of the Texas Business Corporation Act, as amended (the
"TBCA"), grants to a corporation the power to indemnify a person who was, is or
is threatened to be made a named defendant or respondent in a proceeding because
the person is or was a director of the corporation against judgments, penalties
(including excise and similar taxes), fines, settlements and reasonable expenses
actually incurred in connection therewith, only if it is determined that the
person (1) conducted himself in good faith; (2) reasonably believed that (a) in
the case of conduct in his official capacity as a director of the corporation,
his conduct was in the corporation's best interests, and (b) in all other cases,
his conduct was at least not opposed to the corporation's best interests; and
(3) in the case of any criminal proceeding, he had no reasonable cause to
believe that his conduct was unlawful. Article 2.02-1.C limits the allowable
indemnification by providing that, except to the extent permitted by Article
2.02-1.E, a director may not be indemnified in respect of a proceeding in which
the person was found liable (1) on the basis that he improperly received a
personal benefit, whether or not the benefit resulted from an action taken in
his official capacity, or (2) to the corporation. Article 2.02-1.E provides that
if a director is found liable to the corporation or is found liable on the basis
that he received a personal benefit, the permissible indemnification (1) is
limited to reasonable expenses actually incurred by the person in connection
with the proceeding, and (2) shall not be made in respect of any proceeding in
which the person shall have been found liable for willful or intentional
misconduct in the performance of his duty to the corporation. Finally, Article
2.02-1.H provides that a corporation shall indemnify a director against
reasonable expenses incurred by him in connection with a proceeding in which he
is a named defendant or respondent because he is or was a director if he has
been wholly successful, on the merits or otherwise, in defense of the
proceeding.
With respect to the officers of a corporation, Article 2.02-1.O of the TBCA
provides that a corporation may indemnify and advance expenses to an officer of
the corporation to the same extent that it may indemnify and advance expenses to
directors under Article 2.02-I. Further, Article 2.02-1.O provides that an
officer of a corporation shall be indemnified as, and to the same extent,
provided by Article 2.02-1.H for a director.
The Articles of Incorporation and Bylaws of the Registrant provide for
indemnification of officers and directors as and to the fullest extent permitted
by the TBCA. In addition, the Registrant maintains officers' and directors'
insurance covering certain liabilities that may be incurred by officers and
directors in the performance of their duties.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED.
Not applicable.
ITEM 8. EXHIBITS.
See "Index to Exhibits."
ITEM 9. UNDERTAKINGS.
(a) The undersigned Registrant hereby undertakes:
3
<PAGE>
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this Registration Statement;
(i) to include any prospectus required by Section 10(a)(3) of the
Act;
(ii) to reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth in
the registration statement. Notwithstanding the foregoing, any increase
or decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum offering
range may be reflected in the form of prospectus filed with the
Commission pursuant to Rule 424(b) if, in the aggregate, the changes in
volume and price represent no more than a 20 percent change in the
maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective Registration Statement; and
(iii) to include any material information with respect to the plan of
distribution not previously disclosed in this Registration Statement or
any material change to such information in this Registration Statement.
(2) That, for the purposes of determining any liability under the Act,
each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof. (3) To remove from registration by
means of a post-effective amendment any of the securities being
registered which remain unsold at the termination of the offering.
(b) That, for purposes of determining any liability under the Act, each
filing of the Registrant's annual report pursuant to Section 13(a) or 15(d) of
the Exchange Act that is incorporated by reference in this Registration
Statement shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the Act may be
permitted to directors, officers and controlling persons of the Registrant
pursuant to the foregoing provisions, or otherwise, the Registrant has been
advised that in the opinion of the Commission such indemnification is against
public policy as expressed in the Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities (other than the
payment by the Registrant of expenses incurred or paid by a director, officer or
controlling person of the Registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the Registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-8 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Houston, State of Texas, on this 13th day of January,
1998.
<TABLE>
<S> <C> <C>
RANDALL'S FOOD MARKETS, INC.
(Registrant)
By /S/ R. RANDALL ONSTEAD, JR.
-----------------------------------------
R. Randall Onstead, Jr.
PRESIDENT AND CHIEF EXECUTIVE OFFICER
</TABLE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints R. Randall Onstead, Jr., Lee E. Straus and Curtis
D. McClellan, or any of them, his true and lawful attorneys-in-fact and agents,
with full power of substitution and resubstitution, for him and in his name,
place and stead, in any and all capacities, to sign any and all amendments
(including post-effective amendments) and supplements to this Registration
Statement, and to file the same, with all exhibits thereto, and other documents
in connection therewith, with the Securities and Exchange Commission, granting
unto said attorneys-in-fact and agents, and each of them, full power and
authority to do and perform each and every act and thing requisite and necessary
to be done, as fully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact and
agents, or either of them, or their substitutes, may lawfully do or cause to be
done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the date indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------ -------------------------- -------------------
<C> <S> <C>
Chief Executive Officer
/S/ R. RANDALL ONSTEAD,JR. and
- ------------------------------ Director (Principal January 13, 1998
R. Randall Onstead, Jr. Executive Officer)
Senior Vice President of
/S/ LEE E. STRAUS Finance, Secretary and
- ------------------------------ Treasurer (Principal January 13, 1998
Lee E. Straus Financial Officer)
Vice President and
/S/ CURTIS D. MCCLELLAN Corporate Controller
- ------------------------------ (Principal Accounting January 13, 1998
Curtis D. McClellan Officer)
</TABLE>
5
<PAGE>
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------ -------------------------- -------------------
<C> <S> <C>
/S/ HENRY R. KRAVIS
- ------------------------------ Director January 13, 1998
Henry R. Kravis
/S/ GEORGE R. ROBERTS
- ------------------------------ Director January 13, 1998
George R. Roberts
/S/ PAUL E. RAETHER
- ------------------------------ Director January 13, 1998
Paul E. Raether
/S/ JAMES H. GREENE, JR.
- ------------------------------ Director January 13, 1998
James H. Greene, Jr.
/S/ NILS P. BROUS
- ------------------------------ Director January 13, 1998
Nils P. Brous
/S/ ROBERT R. ONSTEAD
- ------------------------------ Director January 13, 1998
Robert R. Onstead
/S/ A. BENTON COCANOUGHER
- ------------------------------ Director January 13, 1998
A. Benton Cocanougher
</TABLE>
6
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ----------- --------------------------------------------------------------------------------------------------------
<C> <S>
4.1 Amended and Restated Articles of Incorporation of the Company (filed as Exhibit 3.1 to the Company's
Registration Statement on Form S-4 dated January 9, 1998 (the "S-4") and incorporated herein by
reference).
4.2 By-laws of the Company (filed as Exhibit 3.2 to the S-4 and incorporated herein by reference).
4.3 1997 Stock Purchase and Option Plan for Key Employees of Randall's Food Markets, Inc. and Subsidiaries
4.4 Form of Management Stockholder's Agreement
4.5 Form of Non-Qualified Stock Option Agreement
4.6 Form of Sale Participation Agreement
4.7 Registration Rights Agreement, dated June 18, 1997, between Randall's Food Markets, Inc. and RFM
Acquisition LLC (filed as Exhibit 4.4 to the S-4 and incorporated herein by reference).
5 Opinion of Vinson & Elkins L.L.P.
23.1 Consent of Deloitte & Touche LLP
23.2 Consent of Arthur Andersen LLP
23.3 Consent of Vinson & Elkins L.L.P. (included as part of its opinion filed as Exhibit 5.1 hereto)
24.1 Power of Attorney (included in Part II of this Registration Statement)
</TABLE>
7
<PAGE>
EXHIBIT 4.3
PLAN DOCUMENT
1997 STOCK PURCHASE AND OPTION PLAN
FOR KEY EMPLOYEES OF
RANDALL'S FOOD MARKETS, INC. AND SUBSIDIARIES
1. PURPOSE OF PLAN
The 1997 Stock Purchase and Option Plan for Key Employees of Randall's Food
Markets, Inc. and Subsidiaries (the "Plan") is designed:
(a) to promote the long term financial interests and growth of Randall's
Food Markets, Inc. (the "Corporation") and its subsidiaries by attracting and
retaining management personnel with the training, experience and ability to
enable them to make a substantial contribution to the success of the
Corporation's business;
(b) to motivate management personnel by means of growth-related incentives
to achieve long range goals; and
(c) to further the identity of interests of participants with those of the
shareholders of the Corporation through opportunities for increased stock, or
stock-based, ownership in the Corporation.
2. DEFINITIONS
As used in the Plan, the following words shall have the following meanings:
(a) "Grant" means an award made to a Participant pursuant to the Plan and
described in Paragraph 5, including, without limitation, an award of an
Incentive Stock Option, Stock Option, Stock Appreciation Right, Dividend
Equivalent Right, Restricted Stock, Purchase Stock, Performance Units,
Performance Shares or Other Stock Based Grant or any combination of the
foregoing.
(b) "Grant Agreement" means an agreement between the Corporation and a
Participant that sets forth the terms, conditions and limitations applicable to
a Grant.
(c) "Board of Directors" means the Board of Directors of the Corporation.
(d) "Committee" means the Compensation Committee of the Board of Directors.
(e) "Common Stock" or "Share" means common stock of the Corporation which
may be authorized but unissued, or issued and reacquired.
<PAGE>
2
(f) "Employee" means a person, including an officer, in the regular
full-time employment of the Corporation or one of its Subsidiaries who, in the
opinion of the Committee, is, or is expected, to be primarily responsible for
the management, growth or protection of some part or all of the business of the
Corporation.
(g) "Exchange Act" means the Securities Exchange Act of 1934, as amended.
(h) "Fair Market Value" means such value of a Share as reported for stock
exchange transactions and/or determined in accordance with any applicable
resolutions or regulations of the Committee in effect at the relevant time.
(i) "Participant" means an Employee, or other person having a unique
relationship with the Corporation or one of its Subsidiaries, to whom one or
more Grants have been made and such Grants have not all been forfeited or
terminated under the Plan; provided, however, a non-employee director of the
Corporation or one of its Subsidiaries may not be a Participant.
(j) "Stock-Based Grants" means the collective reference to the grant of
Stock Appreciation Rights, Dividend Equivalent Rights, Restricted Stock,
Performance Units, Performance Shares and Other Stock Based Grants.
(k) "Stock Options" means the collective reference to "Incentive Stock
Options" and "Other Stock Options".
(l) "Subsidiary" means any corporation other than the Corporation in an
unbroken chain of corporations beginning with the Corporation if each of the
corporations other than the last corporation in the unbroken chain owns 50% or
more of the voting stock in one of the other corporations in such chain.
3. ADMINISTRATION OF PLAN
(a) The Plan shall be administered by the Committee. None of the members
of the Committee shall be eligible to be selected for Grants under the Plan, or
have been so eligible for selection within one year prior thereto; provided,
however, that the members of the Committee shall qualify to administer the Plan
for purposes of Rule 16b-3 (and any other applicable rule) promulgated under
Section 16(b) of the Exchange Act to the extent that the Corporation is subject
to such rule. The Committee may adopt its own rules of procedure, and the
action of a majority of the Committee, taken at a meeting or taken without a
meeting by a writing signed by such majority, shall constitute action by the
Committee. The Committee shall have the power and authority to administer,
construe and interpret the Plan, to make rules for carrying it out and to make
changes in such rules. Any such interpretations, rules, and administration
shall be consistent with the basic purposes of the Plan.
<PAGE>
3
(b) The Committee may delegate to the Chief Executive Officer and to other
senior officers of the Corporation its duties under the Plan subject to such
conditions and limitations as the Committee shall prescribe except that only the
Committee may designate and make Grants to Participants who are subject to
Section 16 of the Exchange Act.
(c) The Committee may employ attorneys, consultants, accountants,
appraisers, brokers or other persons. The Committee, the Corporation, and the
officers and directors of the Corporation shall be entitled to rely upon the
advice, opinions or valuations of any such persons. All actions taken and all
interpretations and determinations made by the Committee in good faith shall be
final and binding upon all Participants, the Corporation and all other
interested persons. No member of the Committee shall be personally liable for
any action, determination or interpretation made in good faith with respect to
the Plan or the Grants, and all members of the Committee shall be fully
protected by the Corporation with respect to any such action, determination or
interpretation.
4. ELIGIBILITY
The Committee may from time to time make Grants under the Plan to such
Employees, or other persons having a unique relationship with the Corporation or
any of its Subsidiaries, and in such form and having such terms, conditions and
limitations as the Committee may determine. No Grants may be made under this
Plan to non-employee directors of the Corporation or any of its Subsidiaries.
Grants may be granted singly, in combination or in tandem. The terms,
conditions and limitations of each Grant under the Plan shall be set forth in a
Grant Agreement, in a form approved by the Committee, consistent, however, with
the terms of the Plan; provided, however, such Grant Agreement shall contain
provisions dealing with the treatment of Grants in the event of the termination,
death or disability of a Participant, and may also include provisions concerning
the treatment of Grants in the event of a change of control of the Corporation.
5. GRANTS
From time to time, the Committee will determine the forms and amounts of
Grants for Participants. Such Grants may take the following forms in the
Committee's sole discretion:
(a) INCENTIVE STOCK OPTIONS - These are stock options within the meaning of
Section 422 of the Internal Revenue Code of 1986, as amended ("Code"), to
purchase Common Stock. In addition to other restrictions contained in the Plan,
an option granted under this Paragraph 5(a), (i) may not be exercised more than
10 years after the date it is granted, (ii) may not have an option price less
than the Fair Market Value of Common Stock on the date the option is granted,
(iii) must otherwise comply with Code Section 422, and (iv) must be designated
as an "Incentive Stock
<PAGE>
4
Option" by the Committee. The maximum aggregate Fair Market Value of Common
Stock (determined at the time of each Grant) with respect to which any
Participant may first exercise Incentive Stock Options under this Plan and any
Incentive Stock Options granted to the Participant for such year under any plans
of the Corporation or any Subsidiary in any calendar year is $100,000. Payment
of the option price shall be made in cash or in shares of Common Stock, or a
combination thereof, in accordance with the terms of the Plan, the Grant
Agreement, and of any applicable guidelines of the Committee in effect at the
time.
(b) OTHER STOCK OPTIONS - These are options to purchase Common Stock which
are not designated by the Committee as "Incentive Stock Options". At the time
of the Grant the Committee shall determine, and shall have contained in the
Grant Agreement or other Plan rules, the option exercise period, the option
price, and such other conditions or restrictions on the grant or exercise of the
option as the Committee deems appropriate, which may include the requirement
that the grant of options is predicated on the acquisition of Purchase Shares
under Paragraph 5(e) by the Optionee. In addition to other restrictions
contained in the Plan, an option granted under this Paragraph 5(b), (i) may not
be exercised more than 10 years after the date it is granted and (ii) may not
have an option exercise price less than 50% of the Fair Market Value of Common
Stock on the date the option is granted. Payment of the option price shall be
made in cash or in shares of Common Stock, or a combination thereof, in
accordance with the terms of the Plan, the Grant Agreement and of any applicable
guidelines of the Committee in effect at the time.
(c) STOCK APPRECIATION RIGHTS - These are rights that on exercise entitle
the holder to receive the excess of (i) the Fair Market Value of a share of
Common Stock on the date of exercise over (ii) the Fair Market Value on the date
of Grant (the "base value") multiplied by (iii) the number of rights exercised
as determined by the Committee. Stock Appreciation Rights granted under the
Plan may, but need not be, granted in conjunction with an Option under Paragraph
5(a) or 5(b). The Committee, in the Grant Agreement or by other Plan rules, may
impose such conditions or restrictions on the exercise of Stock Appreciation
Rights as it deems appropriate, and may terminate, amend, or suspend such Stock
Appreciation Rights at any time. No Stock Appreciation Right granted under this
Plan may be exercised less than 6 months or more than 10 years after the date it
is granted except in the event of death or disability of a Participant. To the
extent that any Stock Appreciation Right that shall have become exercisable, but
shall not have been exercised or cancelled or, by reason of any termination of
employment, shall have become non-exercisable, it shall be deemed to have been
exercised automatically, without any notice of exercise, on the last day on
which it is exercisable, provided that any conditions or limitations on its
exercise are satisfied (other than (i) notice of exercise and (ii) exercise or
election to exercise
<PAGE>
5
during the period prescribed) and the Stock Appreciation Right shall then have
value. Such exercise shall be deemed to specify that the holder elects to
receive cash and that such exercise of a Stock Appreciation Right shall be
effective as of the time of automatic exercise.
(d) RESTRICTED STOCK - Restricted Stock is Common Stock delivered to a
Participant with or without payment of consideration with restrictions or
conditions on the Participant's right to transfer or sell such stock; provided
that the price of any Restricted Stock delivered for consideration and not as
bonus stock may not be less than 50% of the Fair Market Value of Common Stock on
the date such Restricted Stock is granted or the price of such Restricted Stock
may be the par value. If a Participant irrevocably elects in writing in the
calendar year preceding a Grant of Restricted Stock, dividends paid on the
Restricted Stock granted may be paid in shares of Restricted Stock equal to the
cash dividend paid on Common Stock. The number of shares of Restricted Stock
and the restrictions or conditions on such shares shall be as the Committee
determines, in the Grant Agreement or by other Plan rules, and the certificate
for the Restricted Stock shall bear evidence of the restrictions or conditions.
No Restricted Stock may have a restriction period of less than 6 months, other
than in the case of death or disability.
(e) PURCHASE STOCK - Purchase Stock refers to shares of Common Stock
offered to a Participant at such price as determined by the Committee, the
acquisition of which will make him eligible to receive under the Plan,
including, but not limited to, Other Stock Options; provided, however, that the
price of such Purchase Shares may not be less than 50% of the Fair Market Value
of the Common Stock on the date such shares of Purchase Stock are offered.
(f) DIVIDEND EQUIVALENT RIGHTS - These are rights to receive cash payments
from the Corporation at the same time and in the same amount as any cash
dividends paid on an equal number of shares of Common Stock to shareholders of
record during the period such rights are effective. The Committee, in the Grant
Agreement or by other Plan rules, may impose such restrictions and conditions on
the Dividend Equivalent Rights, including the date such rights will terminate,
as it deems appropriate, and may terminate, amend, or suspend such Dividend
Equivalent Rights at any time.
(g) PERFORMANCE UNITS - These are rights to receive at a specified future
date, payment in cash of an amount equal to all or a portion of the value of a
unit granted by the Committee. At the time of the Grant, in the Grant Agreement
or by other Plan rules, the Committee must determine the base value of the unit,
the performance factors applicable to the determination of the ultimate payment
value of the unit and the period over which the Corporation's performance will
be measured. These factors must
<PAGE>
6
include a minimum performance standard for the Corporation below which no
payment will be made and a maximum performance level above which no increased
payment will be made. The term over which the Corporation's performance will be
measured shall be not less than six months.
(h) PERFORMANCE SHARES - These are rights to receive at a specified future
date, payment in cash or Common Stock, as determined by the Committee, of an
amount equal to all or a portion of the average Fair Market Value for all days
that the Common Stock is traded during the last forty-five (45) days of the
specified period of performance of a specified number of shares of Common Stock
at the end of a specified period based on the Corporation's performance during
the period. At the time of the Grant, the Committee, in the Grant Agreement or
by Plan rules, will determine the factors which will govern the portion of the
rights so payable and the period over which the Corporation's performance will
be measured. The factors will be based on the Corporation's performance and
must include a minimum performance standard for the Corporation below which no
payment will be made and a maximum performance level above which no increased
payment will be made. The term over which the Corporation's performance will be
measured shall be not less than six months. Performance Shares will be granted
for no consideration.
(i) OTHER STOCK-BASED GRANTS - The Committee may make other Grants under
the Plan pursuant to which shares of Common Stock (which may, but need not, be
shares of Restricted Stock pursuant to Paragraph 5(d)) or other equity
securities of the Corporation are or may in the future be acquired, or Grants
denominated in stock units, including ones valued using measures other than
market value. Other Stock-Based Grants may be granted with or without
consideration; provided, however, that the price of any such Grant made for
consideration that provides for the acquisition of shares of Common Stock or
other equity securities of the Corporation may not be less than 50% of the Fair
Market Value of the Common Stock or such other equity securities on the date of
grant of such Grant. Such Other Stock-Based Grants may be made alone, in
addition to or in tandem with any Grant of any type made under the Plan and must
be consistent with the purposes of the Plan.
6. LIMITATIONS AND CONDITIONS
(a) The number of Shares available for Grants under this Plan shall be 2.4
million shares of the authorized Common Stock as of the effective date of the
Plan. The number of Shares subject to Grants under this Plan to any one
Participant shall not be more than 400,000 shares. Unless restricted by
applicable law, Shares related to Grants that are forfeited, terminated,
cancelled or expire unexercised, shall immediately become available for Grants.
<PAGE>
7
(b) No Grants shall be made under the Plan beyond ten years after the
effective date of the Plan, but the terms of Grants made on or before the
expiration of the Plan may extend beyond such expiration. At the time a Grant
is made or amended or the terms or conditions of a Grant are changed, the
Committee may provide for limitations or conditions on such Grant.
(c) Nothing contained herein shall affect the right of the Corporation to
terminate any Participant's employment at any time or for any reason.
(d) Deferrals of Grant payouts may be provided for, at the sole discretion
of the Committee, in the Grant Agreements.
(e) Except as otherwise prescribed by the Committee, the amounts of the
Grants for any employee of a Subsidiary, along with interest, dividend, and
other expenses accrued on deferred Grants shall be charged to the Participant's
employer during the period for which the Grant is made. If the Participant is
employed by more than one Subsidiary or by both the Corporation and a Subsidiary
during the period for which the Grant is made, the Participant's Grant and
related expenses will be allocated between the companies employing the
Participant in a manner prescribed by the Committee.
(f) Other than as specifically provided with regard to the death of a
Participant, no benefit under the Plan shall be subject in any manner to
anticipation, alienation, sale, transfer, assignment, pledge, encumbrance, or
charge, and any attempt to do so shall be void. No such benefit shall, prior to
receipt thereof by the Participant, be in any manner liable for or subject to
the debts, contracts, liabilities, engagements, or torts of the Participant.
(g) Participants shall not be, and shall not have any of the rights or
privileges of, shareholders of the Corporation in respect of any Shares
purchasable in connection with any Grant unless and until certificates
representing any such Shares have been issued by the Corporation to such
Participants.
(h) No election as to benefits or exercise of Stock Options, Stock
Appreciation Rights, or other rights may be made during a Participant's lifetime
by anyone other than the Participant except by a legal representative appointed
for or by the Participant.
(i) Absent express provisions to the contrary, any grant under this Plan
shall not be deemed compensation for purposes of computing benefits or
contributions under any retirement plan of the Corporation or its Subsidiaries
and shall not affect any benefits under any other benefit plan of any kind now
or subsequently in effect under which the availability or amount of benefits is
related to level of compensation. This Plan is not a
<PAGE>
8
"Retirement Plan" or "Welfare Plan" under the Employee Retirement Income
Security Act of 1974, as amended.
(j) Unless the Committee determines otherwise, no benefit or promise under
the Plan shall be secured by any specific assets of the Corporation or any of
its Subsidiaries, nor shall any assets of the Corporation or any of its
Subsidiaries be designated as attributable or allocated to the satisfaction of
the Corporation's obligations under the Plan.
7. TRANSFERS AND LEAVES OF ABSENCE
For purposes of the Plan, unless the Committee determines otherwise: (a)
a transfer of a Participant's employment without an intervening period of
separation among the Corporation and any Subsidiary shall not be deemed a
termination of employment, and (b) a Participant who is granted in writing a
leave of absence shall be deemed to have remained in the employ of the
Corporation during such leave of absence.
8. ADJUSTMENTS
In the event of any change in the outstanding Common Stock by reason of a
stock split, spin-off, stock dividend, stock combination or reclassification,
recapitalization or merger, change of control, or similar event, the Committee
may adjust appropriately the number of Shares subject to the Plan and available
for or covered by Grants and Share prices related to outstanding Grants and make
such other revisions to outstanding Grants as it deems are equitably required.
9. MERGER, CONSOLIDATION, EXCHANGE,
ACQUISITION, LIQUIDATION OR DISSOLUTION
In its absolute discretion, and on such terms and conditions as it deems
appropriate, coincident with or after the grant of any Stock Option or any
Stock-Based Grant, the Committee may provide that such Stock Option or
Stock-Based Grant cannot be exercised after the merger or consolidation of the
Corporation into another corporation, the exchange of all or substantially all
of the assets of the Corporation for the securities of another corporation, the
acquisition by another corporation of 80% or more of the Corporation's then
outstanding shares of voting stock or the recapitalization, reclassification,
liquidation or dissolution of the Corporation, and if the Committee so provides,
it shall, on such terms and conditions as it deems appropriate in its absolute
discretion, also provide, either by the terms of such Stock Option or
Stock-Based Grant or by a resolution adopted prior to the occurrence of such
merger, consolidation, exchange, acquisition, recapitalization,
reclassification, liquidation or dissolution, that, for some period of time
prior to such event, such Stock Option or Stock-Based Grant shall be exercisable
as to all shares subject thereto, notwithstanding anything to the contrary
herein (but
<PAGE>
9
subject to the provisions of Paragraph 6(b)) and that, upon the occurrence of
such event, such Stock Option or Stock-Based Grant shall terminate and be of no
further force or effect; provided, however, that the Committee may also provide,
in its absolute discretion, that even if the Stock Option or Stock-Based Grant
shall remain exercisable after any such event, from and after such event, any
such Stock Option or Stock-Based Grant shall be exercisable only for the kind
and amount of securities and/or other property, or the cash equivalent thereof,
receivable as a result of such event by the holder of a number of shares of
stock for which such Stock Option or Stock-Based Grant could have been exercised
immediately prior to such event.
10. AMENDMENT AND TERMINATION
The Committee shall have the authority to make such amendments to any terms
and conditions applicable to outstanding Grants as are consistent with this Plan
provided that, except for adjustments under Paragraph 8 or 9 hereof, no such
action shall modify such Grant in a manner adverse to the Participant without
the Participant's consent except as such modification is provided for or
contemplated in the terms of the Grant.
The Board of Directors may amend, suspend or terminate the Plan except that
no such action, other than an action under Paragraph 8 or 9 hereof, may be taken
which would, without shareholder approval, increase the aggregate number of
Shares available for Grants under the Plan, decrease the price of outstanding
Options or Stock Appreciation Rights, change the requirements relating to the
Committee or extend the term of the Plan.
11. FOREIGN OPTIONS AND RIGHTS
The Committee may make Grants to Employees who are subject to the laws
of nations other than the United States, which Grants may have terms and
conditions that differ from the terms thereof as provided elsewhere in the Plan
for the purpose of complying with foreign laws.
12. WITHHOLDING TAXES
The Corporation shall have the right to deduct from any cash payment made
under the Plan any federal, state or local income or other taxes required by law
to be withheld with respect to such payment. It shall be a condition to the
obligation of the Corporation to deliver shares upon the exercise of an Option
or Stock Appreciation Right, upon payment of Performance units or shares, upon
delivery of Restricted Stock or upon exercise, settlement or payment of any
Other Stock-Based Grant that the Participant pay to the Corporation such amount
as may be requested by the Corporation for the purpose of satisfying any
liability for such withholding taxes. Any Grant Agreement may provide that the
Participant may elect, in accordance with any
<PAGE>
10
conditions set forth in such Grant Agreement, to pay a portion or all of such
withholding taxes in shares of Common Stock.
13. EFFECTIVE DATE AND TERMINATION DATES
The Plan shall be effective on and as of the date of its approval by the
shareholders of the Corporation and shall terminate ten years later, subject to
earlier termination by the Board of Directors pursuant to Paragraph 10.
<PAGE>
EXHIBIT 4.4
FORM OF MANAGEMENT STOCKHOLDER'S AGREEMENT
This Management Stockholder's Agreement (this "Agreement") is entered
into as of _____________ __, 199_ between RANDALL'S FOOD MARKETS, INC., a Texas
corporation (the "Company"), and _________________ (the "Purchaser") (the
Company and the Purchaser being hereinafter collectively referred to as the
"Parties").
RECITALS
On June 9, 1997, a special meeting of the shareholders of the Company
was held at which the shareholders approved (i) an amendment to the Company's
Restated Articles of Incorporation to increase the number of authorized shares
of the voting common stock, par value $0.25 per share, of the Company (the
"Common Stock") from 25,000,000 shares to 75,000,000 shares, (ii) the
Subscription Agreement dated as of April 1, 1997 ("Subscription Agreement")
among the Company, Robert R. Onstead and RFM Acquisition LLC ("RFM
Acquisition"), a Delaware limited liability company formed at the direction of
Kohlberg Kravis Roberts & Co., L.P. ("KKR"), which provides, among other things,
for RFM Acquisition to pay an aggregate of $225 million to the Company as
consideration for the Company's issuance to RFM Acquisition of 18,579,686 shares
of Common Stock and an option to purchase an additional 3,606,881 shares of
Common Stock at $12.11 per share, subject to adjustment, at any time on or
before 25 years from the closing of the Transaction (as defined herein) and
(iii) the Voting, Repurchase and Shareholders Agreement dated as of April 1,
1997 (as the same may be amended, supplemented or otherwise modified from time
to time, the "Shareholders Agreement") among the Company, RFM Acquisition and
certain shareholders of the Company. The transactions and events contemplated
by the Subscription Agreement and the Shareholders Agreement were consummated on
June 27, 1997, and are collectively referred to herein as the "Transaction." In
connection with the Transaction, the Company proposes to sell shares of its
Common Stock to key employees of the Company at a price of $12.11 per share of
Common Stock (the "Per Share Purchase Price").
This Agreement is one of several other agreements ("Other Purchasers'
Agreements") which have been, or which in the future will be, entered into
between the Company and other individuals who are or will be key employees of
the Company or one of its subsidiaries (collectively, the "Other Purchasers").
The Company has agreed to sell, and the Purchaser has agreed to buy,
___________ shares of Common Stock (the "Purchase Stock") to Purchaser at the
Per Share Purchase Price for an aggregate purchase price of $___________. In
addition, the Company will grant to Purchaser an option or options to purchase
_________ shares of Common Stock ("Options") at an exercise price
<PAGE>
2
of $12.11 per share of Common Stock pursuant to the terms of the 1997 Stock
Purchase and Option Plan for Key Employees of Randall's Food Markets, Inc. and
Subsidiaries (the "Option Plan") and the Non-Qualified Stock Option Agreement
(the "Non-Qualified Stock Option Agreement").
AGREEMENT
To implement the foregoing and in consideration of the mutual
agreements contained herein, the Parties agree as follows:
1. PURCHASE OF STOCK; ISSUANCE OF OPTIONS.
(a) Subject to the terms and conditions hereinafter set forth, the
Purchaser hereby subscribes for and shall purchase, and the Company shall sell
to the Purchaser, the Purchase Stock at the Per Share Purchase Price on
_____________ ____, 199__ (the "Purchase Date"); provided that with respect to
Purchasers who enter into this Agreement on [insert date], the Purchase Date
shall be deemed to be June 29, 1997. The Company shall have no obligation to
sell any Purchase Stock to any person who (i) is a resident or citizen of a
state or other jurisdiction in which the sale of the Purchase Stock to him or
her would constitute a violation of the securities or "blue sky" laws of such
jurisdiction or (ii) is not an employee of the Company or any of its
subsidiaries on the Purchase Date.
(b) The aggregate price for the Purchase Stock shall be $__________
(such amount hereinafter sometimes referred to as the "Purchase Price"). The
Purchase Price shall be paid in the following manner: the Purchaser shall
deliver to the Company at least three business days prior to the Purchase Date
cash or a certified bank check or checks payable to the order of the Company in
the aggregate amount of the Purchase Price. On the Purchase Date, in
consideration of receipt of the Purchase Price, the Company will deliver to the
Purchaser a certificate, registered in the Purchaser's name, for the Purchase
Stock, which shall be subject to the terms and conditions hereinafter set forth.
(c) Subject to the terms and conditions hereinafter set forth and
upon and as of the Purchase Date, the Company shall issue to the Purchaser the
Options and the Parties shall execute and deliver to each other copies of the
Non-Qualified Stock Option Agreement concurrently with the issuance of the
Options.
<PAGE>
3
2. PURCHASER'S REPRESENTATIONS, WARRANTIES AND AGREEMENTS.
(a) The Purchaser agrees and acknowledges that he will not, directly
or indirectly, offer, transfer, sell, assign, pledge, hypothecate or otherwise
dispose of (any such act being herein referred to as a "transfer") any shares of
the Purchase Stock, and, at the time of exercise, the Common Stock issuable upon
exercise of the Options (collectively, and, together with any other shares of
Common Stock beneficially owned by the Purchaser as of the date hereof or
hereafter acquired, the "Stock") unless such transfer complies with Section 3 of
this Agreement. Furthermore, if the Purchaser is an "affiliate" (as defined
under Rule 405 of the rules and regulations promulgated under the Act and as
interpreted by the Board of Directors of the Company) of the Company (an
"Affiliate"), the Purchaser agrees and acknowledges that he will not transfer
any shares of the Stock unless (i) the transfer is pursuant to an effective
registration statement under the Securities Act of 1933, as amended, and the
rules and regulations in effect thereunder (the "Act"), and in compliance with
applicable state securities laws or (ii) (A) counsel for the Purchaser (which
counsel shall be acceptable to the Company) shall have furnished the Company
with an opinion, satisfactory in form and substance to the Company, that no such
registration is required because of the availability of an exemption from
registration under the Act and such transfer is in compliance with the
applicable provisions of state securities laws and (B) if the Purchaser is a
citizen or resident of any country other than the United States, or the
Purchaser desires to effect any transfer in any such country, counsel for the
Purchaser (which counsel shall be acceptable to the Company) shall have
furnished the Company with an opinion or other advice satisfactory in form and
substance to the Company to the effect that such transfer will comply with the
securities laws of such jurisdiction. Notwithstanding the foregoing, the
Company acknowledges and agrees that any of the following transfers are deemed
to be in compliance with the Act and this Agreement and no opinion of counsel is
required in connection therewith: (x) a transfer made pursuant to Section 4, 5
or 6 hereof, (y) a transfer upon the death of the Purchaser to his executors,
administrators, testamentary trustees, legatees or beneficiaries (the
"Purchaser's Estate") or a transfer to the executors, administrators,
testamentary trustees, legatees or beneficiaries of a person who has become a
holder of Stock in accordance with the terms of this Agreement, provided that it
is expressly understood that any such transferee shall be bound by the
provisions of this Agreement and (z) a transfer made after the Purchase Date in
compliance with the federal securities laws to a trust or custodianship the
beneficiaries of which may include only the Purchaser, his spouse or his lineal
descendants (a "Purchaser's Trust") or a transfer made after the third
anniversary of the Purchase Date to such a trust by a person who has become a
holder of Stock in accordance with the terms of this Agreement, provided that
such transfer is made expressly subject
<PAGE>
4
to this Agreement and that the transferee agrees in writing to be bound by the
terms and conditions hereof.
(b) The certificate (or certificates) representing the Stock shall
bear the following legend:
"THE SHARES REPRESENTED BY THIS CERTIFICATE MAY NOT BE
TRANSFERRED, SOLD, ASSIGNED, PLEDGED, HYPOTHECATED OR OTHERWISE
DISPOSED OF UNLESS SUCH TRANSFER, SALE, ASSIGNMENT, PLEDGE,
HYPOTHECATION OR OTHER DISPOSITION COMPLIES WITH THE PROVISIONS
OF THE MANAGEMENT STOCKHOLDER'S AGREEMENT DATED AS OF
_______________ __199_, BETWEEN RANDALL'S FOOD MARKETS, INC. (THE
"COMPANY") AND THE PURCHASER NAMED ON THE FACE HEREOF (A COPY OF
WHICH IS ON FILE WITH THE SECRETARY OF THE COMPANY).
(c) The Purchaser acknowledges that he has been advised that (i) the
Stock has been registered on Form S-8 under the Act, (ii) a restrictive legend
in the form heretofore set forth shall be placed on the certificates
representing the Stock and (iii) a notation shall be made in the appropriate
records of the Company indicating that the Stock is subject to restrictions on
transfer and appropriate stop transfer restrictions will be issued to the
Company's transfer agent with respect to the Stock. If the Purchaser is an
Affiliate, the Purchaser also acknowledges that (1) the Stock must be held
indefinitely and the Purchaser must continue to bear the economic risk of the
investment in the Stock unless it is subsequently registered under the Act or an
exemption from such registration is available, (2) it is not anticipated that
there will be any market on an exchange or a quotation service for the Stock,
(3) when and if shares of the Stock may be disposed of without registration in
reliance on Rule 144 of the rules and regulations promulgated under the Act,
such disposition can be made only in limited amounts in accordance with the
terms and conditions of such Rule and (4) if the Rule 144 exemption is not
available, public sale without registration will require compliance with
Regulation A or some other exemption under the Act.
(d) If any shares of the Stock are to be disposed of in accordance
with Rule 144 under the Act or otherwise, the Purchaser shall promptly notify
the Company of such intended disposition and shall deliver to the Company at or
prior to the time of such disposition such documentation as the Company may
reasonably request in connection with such sale and, in the case of a
disposition pursuant to Rule 144, shall deliver to the Company an executed copy
of any notice on Form 144 required to be filed with the Securities and Exchange
Commission (the "SEC").
(e) The Purchaser agrees that, if any shares of the capital stock of
the Company are offered to the public pursuant to an effective registration
statement under the Act (other than registration of securities issued under an
employee plan), the
<PAGE>
5
Purchaser will not effect any public sale or distribution of any shares of the
Stock not covered by such registration statement within 7 days prior to, or
within 180 days after, the effective date of such registration statement, unless
otherwise agreed to in writing by the Company.
(f) The Purchaser represents and warrants that (i) he has received
and reviewed the document(s) comprising the Prospectus (the "Prospectus")
relating to the Stock and the documents referred to therein, certain of which
documents set forth the rights, preferences and restrictions relating to the
Stock and (ii) he has been given the opportunity to obtain any additional
information or documents and to ask questions and receive answers about such
documents, the Company and the business and prospects of the Company which he
deems necessary to evaluate the merits and risks related to his investment in
the Stock and to verify the information contained in the Prospectus and the
information received as indicated in this Section 2(f)(ii), and he has relied
solely on such information.
(g) The Purchaser further represents and warrants that (i) his
financial condition is such that he can afford to bear the economic risk of
holding the Stock for an indefinite period of time and has adequate means for
providing for his current needs and personal contingencies, (ii) he can afford
to suffer a complete loss of his investment in the Stock, (iii) he understands
and has taken cognizance of all risk factors related to the purchase of the
Stock, including those set forth in the Prospectus referred to above, and (iv)
his knowledge and experience in financial and business matters are such that he
is capable of evaluating the merits and risks of his purchase of the Stock as
contemplated by this Agreement.
(h) The Purchaser further acknowledges that, if he is a party to the
Shareholders Agreement, his shares of Stock will be subject, until termination
of the Shareholders Agreement, to the voting restrictions and requirements
contained in Section 4.01 (entitled "CERTAIN DIRECTORS") of the Shareholders
Agreement.
3. RESTRICTION ON TRANSFER.
Except for transfers permitted by clauses (x), (y) and (z) of Section
2(a) or a sale of shares of Stock pursuant to an effective registration
statement under the Act filed by the Company (as described herein but excluding
the Form S-8 filed in connection with this agreement) or pursuant to the Sale
Participation Agreement (as defined below), the Purchaser agrees that he will
not transfer, sell, assign, pledge, hypothecate or otherwise dispose of any
shares of the Stock at any time prior to the later of the fifth anniversary of
the Purchase Date or the first occurrence of a Qualified Public Offering (as
defined below) (such date being referred to as the "Unrestricted Date"). No
transfer of any such shares in violation hereof shall be made
<PAGE>
6
or recorded on the books of the Company and any such transfer shall be void and
of no effect.
4. RIGHT OF FIRST REFUSAL.
If at any time after the Unrestricted Date the Purchaser is permitted
to transfer shares of Stock pursuant to Sections 2 and 3 ("Unrestricted Shares")
and the Purchaser (i) receives a bona fide offer (the "Offer") to purchase any
or all of such Unrestricted Shares from a third party (the "Offeror") which the
Purchaser wishes to accept or (ii) if the Purchaser wishes to sell any or all of
his Unrestricted Shares in the open market at the market price ("Proposed Market
Sale"), the Purchaser shall cause the Offer or Proposed Market Sale to be
reduced to writing and shall notify the Company in writing of his wish to accept
the Offer or consummate the Proposed Market Sale, as the case may be. The
Purchaser's notice shall constitute an irrevocable offer to sell such
Unrestricted Shares to the Company (in the manner set forth below) at a purchase
price (i) in the case of an Offer, equal to the price contained in, and on the
same terms and conditions of, the Offer, and shall be accompanied by a true copy
of the Offer (which shall identify the Offeror) and (ii) in the case of a
Proposed Market Sale, equal to the market price on the date of such notice. At
any time within 30 days after the date of the receipt by the Company of the
Purchaser's notice, the Company shall have the right and option to purchase, or
to arrange for a third party to purchase, all of the Unrestricted Shares covered
by the Offer or the Proposed Market Sale either (i) at the same price and on the
same terms and conditions as the Offer or the Proposed Market Sale or (ii) if
the Offer includes any consideration other than cash, then at the sole option of
the Company, at the equivalent all cash price, determined in good faith by the
Company's Board of Directors, by delivering a certified bank check or checks in
the appropriate amount (and any such non-cash consideration to be paid) to the
Purchaser at the principal office of the Company against delivery of
certificates or other instruments representing the Unrestricted Shares so
purchased, appropriately endorsed by the Purchaser. If at the end of such
30-day period, the Company has not tendered the purchase price for such
Unrestricted Shares in the manner set forth above, the Purchaser may during the
succeeding 30-day period sell not less than all of the Unrestricted Shares
covered by the Purchaser's notice in the case of an Offer to the Offeror at a
price and on terms no less favorable to the Purchaser than those contained in
the Offer and in the case of a Proposed Market Sale at the market price at the
time of sale. Promptly after such sale, the Purchaser shall notify the Company
of the consummation thereof and shall furnish such evidence of the completion
and time of completion of such sale and of the terms thereof as may reasonably
be requested by the Company. If, at the end of 30 days following the expiration
of the 30-day period for the Company to purchase the Stock, the Purchaser has
not completed the sale of such shares of the Stock as aforesaid, all the
restrictions on sale contained in this
<PAGE>
7
Section shall again be in effect with respect to such Unrestricted Shares.
5. PURCHASER'S RESALE OF STOCK AND OPTIONS TO THE
COMPANY UPON THE PURCHASER'S DEATH OR DISABILITY.
(a) Except as otherwise provided herein, if at any time prior to the
Unrestricted Date, (i) the Purchaser is still in the employ of the Company or
any subsidiary of the Company or the Purchaser is in Retirement (as defined in
the Non-Qualified Stock Option Agreement) after having been employed by the
Company or any subsidiary of the Company for at least three years after the
Purchase Date and (ii) the Purchaser either dies or becomes permanently
disabled, then the Purchaser, the Purchaser's Estate or a Purchaser's Trust, as
the case may be, shall have the right, for six months following the date of
death or permanent disability, to (A) sell to the Company, and the Company shall
be required to purchase, on one occasion, all or any portion of the shares of
Stock then held by the Purchaser, the Purchaser's Estate and/or the Purchaser's
Trust, as the case may be, at the Section 5 Repurchase Price, as determined in
accordance with Section 7, and (B) require the Company to pay, on the same
occasion, to the Purchaser, the Purchaser's Estate or the Purchaser's Trust, as
the case may be, an additional amount equal to the Option Excess Price
determined on the basis of a Section 5 Repurchase Price as provided in Section 8
with respect to the termination of outstanding Options held by the Purchaser.
The Purchaser, the Purchaser's Estate and/or the Purchaser's Trust, as the case
may be, shall send written notice to the Company of its intention to sell shares
of Stock and to terminate such Options in exchange for the payment referred to
in the preceding sentence (the "Redemption Notice"). The completion of the
purchase shall take place at the principal office of the Company on the tenth
business day after the giving of the Redemption Notice. The Section 5
Repurchase Price and any payment with respect to the Options as described above
shall be paid by delivery to the Purchaser, the Purchaser's Estate and/or the
Purchaser's Trust, as the case may be, of a certified bank check or checks in
the appropriate amount payable to the order of the Purchaser, the Purchaser's
Estate or the Purchaser's Trust, as the case may be, against delivery of
certificates or other instruments representing the Stock so purchased and
appropriate documents cancelling the Options so terminated, each appropriately
endorsed or executed by the Purchaser, the Purchaser's Estate or the Purchaser's
Trust, or his or her or its duly authorized representative. For purposes of
this Agreement, Purchaser shall be deemed to have a "permanent disability" when
the majority of the Board of Directors of the Company shall, in good faith, so
determine.
(b) Notwithstanding anything in Section 5(a) to the contrary and
subject to Section 11, the Company shall not be obligated to repurchase any of
the Stock or the Options from the Purchaser, the Purchaser's Estate or the
Purchaser's Trust, as
<PAGE>
8
the case may be, if there exists and is continuing, or such repurchase would
result in, (x) a default or an event of default on the part of the Company or
any subsidiary of the Company under any loan, guarantee or other agreement under
which the Company or any subsidiary of the Company has borrowed money or (y) a
violation under any applicable provision of the Texas Business Corporation Act
(or if the Company reincorporates in another state, the business corporation law
of such state) (such occurrence being a "Blocking Event"). The Company's
obligation to repurchase any of the Stock or Options as set forth in Section
5(a) shall be suspended until the first business day which is 5 calendar days
after all of the foregoing Blocking Events have ceased to exist (the "Repurchase
Eligibility Date"); PROVIDED, HOWEVER, that (i) the number of shares of Stock
subject to repurchase under Section 5(a) at the time of delivery of the
Redemption Notice shall be that number of shares of Stock, and (ii) the number
of Exercisable Option Shares (as defined in Section 8) for purposes of
calculating the Option Excess Price payable after the termination of all
Blocking Events shall be the number of Exercisable Option Shares held by the
Purchaser, the Purchaser's Estate or the Purchaser's Trust, as the case may be,
at the time of delivery of a Redemption Notice in accordance with Section 5(a)
hereof; PROVIDED, FURTHER, that the Repurchase Calculation Date shall be
determined in accordance with Section 7 as of the Repurchase Eligibility Date
(unless the Section 5 Repurchase Price would be greater if the Repurchase
Calculation Date had been determined as if no Blocking Event had occurred in
which case, solely for purposes of this PROVISO, the Repurchase Calculation Date
shall be determined as if no Blocking Event had occurred). All Options
exercisable as of the date of a Redemption Notice shall continue to be
exercisable until the repurchase pursuant to such Redemption Notice.
(c) Notwithstanding any other provision of this Section 5 to the
contrary and subject to Section 11, the Purchaser, the Purchaser's Estate or the
Purchaser's Trust, as the case may be, shall have the right to withdraw any
Redemption Notice which has been pending for 60 or more days and which has
remained unsatisfied because of the provisions of Section 5(b).
6. THE COMPANY'S OPTION TO REPURCHASE STOCK
AND OPTIONS OF PURCHASER.
(a) If, prior to the Unrestricted Date, (i) the Purchaser's active
employment with the Company (and/or, if applicable, its subsidiaries) is either
(A) terminated by the Purchaser without Good Reason or (B) terminated by the
Company for Cause, (ii) a Purchaser's Trust fails to comply with the
requirements set forth in Section 2(a)(z), or (iii) the Purchaser shall effect a
transfer of any of the Stock other than as permitted in this Agreement, the
Company shall have the right to purchase all, but not less than all, of the
shares of the Stock then held by the Purchaser, the Purchaser's Estate or a
Purchaser's Trust at the applicable Section 6(a) Repurchase Price
<PAGE>
9
determined in accordance with Section 7 hereof. In the event of the Purchaser's
resignation without Good Reason, all unexercisable Options shall terminate
without any payment. In the event of Purchaser's active employment with the
Company is terminated by the Company for Cause, all Options shall terminate
without any payment.
(b) If, prior to the Unrestricted Date, the Purchaser's active
employment with the Company is terminated by the Purchaser with Good Reason or
terminated by the Company without Cause, the Company shall have the right to
purchase all, but not less than all, of the shares of the Stock then held by the
Purchaser, the Purchaser's Estate or a Purchaser's Trust at the applicable
Section 6(b) Repurchase Price determined in accordance with Section 7 hereof.
(c) If, prior to the Unrestricted Date, the Purchaser either (i) dies
or becomes permanently disabled and on the date of such death or permanent
disability the Purchaser was still in the employ of the Company or (ii) enters
into Retirement after having been employed by the Company or any subsidiary of
the Company for at least three years after the Purchase Date, the Company shall
have the right to purchase all, but not less than all, of the shares of the
Stock then held by the Purchaser, the Purchaser's Estate or a Purchaser's Trust,
PROVIDED, HOWEVER, that the Repurchase Price shall be the Section 5 Repurchase
Price.
(d) The circumstances under which the Company may elect to require
the repurchase of the shares of Stock pursuant to Sections 6(a), (b) and (c) are
hereinafter collectively referred to as "Call Events." The Company shall have a
period of 75 days from the date of a Call Event in which to give notice in
writing to the Purchaser of the exercise of such election ("Call Notice"). In
the event that the Company exercises its right to repurchase shares of the Stock
pursuant to this Section 6, the Company shall also pay the Purchaser an amount
equal to the Option Excess Price determined on the basis of the Section 6(a)
Repurchase Price, the Section 6(b) Repurchase Price or the Section 5 Repurchase
Price, as the case may be, as provided in Section 8, with respect to the
termination of outstanding Options held by the Purchaser.
(e) The completion of the purchases pursuant to the foregoing shall
take place at the principal office of the Company on the tenth business day
after the giving of notice of the exercise of the option to purchase. The
Section 5 Repurchase Price, the Section 6(a) Repurchase Price and the Section
6(b) Repurchase Price, as the case may be, and any payment with respect to the
Options as described above shall be paid by delivery to the applicable seller of
a certified bank check or checks in the appropriate amount payable to the order
of such seller against delivery of certificates or other instruments
representing the Stock so purchased and appropriate documents
<PAGE>
10
cancelling the Options so terminated, appropriately endorsed or executed by the
Purchaser, the Purchaser's Estate, the Purchaser's Trust or his, her or its
authorized representatives.
(f) Notwithstanding any other provision of this Section 6 to the
contrary and subject to Section 11, if there exists and is continuing any
Blocking Event, the Company shall delay the repurchase of any of the Stock or
the Options (pursuant to a Call Notice timely given in accordance with Section
6(a), 6(b) or 6(c) hereof) from the Purchaser, the Purchaser's Estate or the
Purchaser's Trust, as the case may be, until the Repurchase Eligibility Date;
PROVIDED, HOWEVER, that (i) the number of shares of Stock subject to repurchase
under this Section 6 at the time of the delivery of the Call Notice shall be
that number of shares of Stock subject to repurchase after the termination of
all Blocking Events and (ii) the number of Exercisable Option Shares for
purposes of calculating the Option Excess Price payable after the termination of
all Blocking Events shall be the number of Exercisable Option Shares held by the
Purchaser, the Purchaser's Estate or a Purchaser's Trust, as the case may be, at
the time of delivery of a Call Notice in accordance with Sections 6(a), 6(b) or
6(c) hereof; PROVIDED, FURTHER, that the Repurchase Calculation Date shall be
determined in accordance with Section 7 based on the Repurchase Eligibility Date
(unless the applicable Repurchase Price would be greater if the Repurchase
Calculation Date had been determined as if no Blocking Event had occurred, in
which case, solely for purposes of this PROVISO, the Repurchase Calculation Date
shall be determined as if no Blocking Event had occurred). All Options
exercisable as of the date of a Call Notice shall continue to be exercisable
until the repurchase pursuant to such Call Notice.
(g) For purposes of this Agreement the following definitions shall
apply: "Cause" shall mean (i) the Purchaser's willful and continued failure to
perform Purchaser's duties with respect to the Company or its subsidiaries which
continues beyond ten days after a written demand for substantial performance is
delivered to Purchaser by the Company or (ii) misconduct by Purchaser involving
(x) dishonesty or breach of trust in connection with Purchaser's employment or
(y) conduct which would be a reasonable basis for an indictment of Purchaser for
a felony or for a misdemeanor involving moral turpitude and "Good Reason" shall
mean (i) a reduction in Purchaser's base salary or (ii) a substantial reduction
in Purchaser's duties and responsibilities other than as reasonably approved by
the Chief Executive Officer of the Company.
7. DETERMINATION OF REPURCHASE PRICE.
(a) The Section 5 Repurchase Price, the Section 6(a) Repurchase Price
and the Section 6(b) Repurchase Price are hereinafter collectively referred to
as the "Repurchase Price." The Repurchase Price shall be calculated on the
basis of the unaudited financial statements of the Company or the Market Price
<PAGE>
11
Per Share (as defined in Section 7(h)) as of the last day of the month preceding
the later of (i) the month in which the event giving rise to the repurchase
occurs and (ii) the month in which the Repurchase Eligibility Date occurs
(hereinafter called the "Repurchase Calculation Date"). The event giving rise
to the repurchase shall be the death, permanent disability or termination of
employment, as the case may be, of the Purchaser, not the giving of any notice
required pursuant to Section 5 or 6.
(b) The Section 5 Repurchase Price shall be a per share Repurchase
Price equal to (i) prior to a Public Offering (as defined below), $12.11 plus
the increase, if any, in Book Value Per Share (as defined in Section 7(f)) from
the Purchase Date through the Repurchase Calculation Date or (ii) after a Public
Offering, $12.11 plus the amount, if any, by which the Market Price Per Share as
of the Repurchase Calculation Date exceeds $12.11.
(c) The Section 6(a) Repurchase Price shall be a per share Repurchase
Price equal to (i) prior to a Public Offering, the lesser of (x) Book Value Per
Share and (y) $12.11 plus the product of (A) the Unrestricted Percentage (as
defined below) and (B) the increase in the Book Value Per Share from the
Purchase Date through the Repurchase Calculation Date, if such Book Value Per
Share has increased or (ii) after a Public Offering, the lesser of (x) the
Market Price Per Share and (y) $12.11 plus the product of (A) the Unrestricted
Percentage and (B) the amount, if any, by which the Market Price Per Share as of
the Repurchase Calculation Date exceeds $12.11.
(d) The Section 6(b) Repurchase Price shall be a per share Repurchase
Price equal to (x) prior to a Public Offering, Book Value Per Share or (y) after
a Public Offering, the Market Price Per Share.
(e) For purposes of this Agreement the "Unrestricted Percentage"
shall be determined as follows:
Repurchase Calculation Date Percentage
- --------------------------- ----------
Purchase Date through and including the first
anniversary of the Purchase Date 0%
After the first anniversary of the Purchase Date
through and including the second anniversary
of the Purchase Date 20%
After the second anniversary of the Purchase Date
through and including the third anniversary of
the Purchase Date 40%
After the third anniversary of the Purchase Date
through and including the fourth anniversary
of the Purchase Date 60%
<PAGE>
12
After the fourth anniversary of the Purchase Date
through and including the fifth anniversary of
the Purchase Date 80%
After the fifth anniversary of the Purchase Date 100%
(f) For purposes of this Agreement, "Book Value Per Share" shall be
the quotient of (a)(i) $359,839,700 million PLUS (ii) the aggregate net income
of the Company from and after June 29, 1997 (as decreased by any net losses from
and after June 29, 1997 PLUS (iii) the aggregate dollar amount contributed to
the Company after June 29, 1997 as equity by the shareholders of the Company
(including consideration to be received upon exercise of the Options and other
stock equivalents), (iv) PLUS, to the extent reflected as deductions to Book
Value Per Share in clause (ii) above, or minus, to the extent reflected as
additions to Book Value Per Share in clause (ii) above, unusual noncash items
recognized by the Company, if and to the extent determined in the sole
discretion of the Compensation Committee of the Board of Directors of the
Company, minus (v) the aggregate dollar amount of any dividends paid by the
Company on and after June 29, 1997 divided by (b) the sum of the number of
shares of Common Stock then outstanding and the number of shares of Common Stock
issuable upon the exercise of all outstanding stock options and other rights to
acquire Common Stock and the conversion of all securities convertible into
shares of Common Stock. The calculations set forth in clauses (a)(ii),
(a)(iii), (a)(iv) and (a)(v) of the immediately preceding sentence shall be
determined in accordance with generally accepted accounting principles applied
on a basis consistent with any prior periods as reflected in the consolidated
financial statements of the Company.
(g) As used herein the term "Public Offering" shall mean the sale of
shares of Common Stock to the public subsequent to the date hereof pursuant to a
registration statement under the Act which has been declared effective by the
SEC (other than a registration statement on Form S-8 or any other similar form)
which results in an active trading market in the Common Stock if such a market
does not already exist. A "Qualified Public Offering" shall mean a Public
Offering pursuant to an effective registration statement relating to the sale of
shares of Common Stock held by any of the KKR Entities (as defined below);
PROVIDED, HOWEVER, that a "Qualified Public Offering" shall be deemed to have
occurred if there has been a Public Offering and there exists an active trading
market in 40% or more of the Common Stock.
(h) As used herein the term "Market Price Per Share" shall mean the
price per share equal to the average of the last sale price of the Common Stock
on the Repurchase Calculation Date on each exchange on which the Common Stock
may at the time be listed or, if there shall have been no sales on any of such
exchanges on the Repurchase Calculation Date, the average of the
<PAGE>
13
closing bid and asked prices on each such exchange at the end of the Repurchase
Calculation Date or if there is no such bid and asked price on the Repurchase
Calculation Date on the next preceding date when such bid and asked price
occurred or, if the Common Stock shall not be so listed, the average of the
closing sales prices as reported by NASDAQ at the end of the Repurchase
Calculation Date in the over-the-counter market. If the Common Stock is not so
listed or reported by NASDAQ, then the Market Price Per Share shall be the Book
Value Per Share.
(i) In determining the Repurchase Price, appropriate adjustments
shall be made for any future issuances of rights to acquire and securities
convertible into Common Stock and any stock dividends, splits, combinations,
recapitalizations or any other adjustment in the number of outstanding shares of
Common Stock.
8. STOCK ISSUED TO PURCHASER UPON EXERCISE OF STOCK OPTIONS;
TERMINATION OF OPTIONS.
(a) The Company may from time to time grant to the Purchaser, in
addition to the Options, options under the Option Plan to purchase shares of
Common Stock at the Per Share Purchase Price or at a different option exercise
price.
(b) All outstanding Options granted to the Purchaser under the Option
Plan or otherwise, whether or not then exercisable, will be automatically
terminated upon the payment by the Company to the Purchaser, pursuant to the
provisions of Sections 5 or 6 of this Agreement, of an amount equal to the
Option Excess Price. If the Option Excess Price is zero or a negative number,
all outstanding stock options granted to the Purchaser under the Option Plan or
otherwise, whether or not then exercisable, shall be automatically terminated
upon the repurchase of Stock as provided in Sections 5 or 6. The Option Excess
Price is the excess, if any, of the Section 5 Repurchase Price, the Section 6(a)
Repurchase Price or the Section 6(b) Repurchase Price, depending on which
Repurchase Price is being used to repurchase the remainder of the Stock, over
the Option Price (as defined in the Option Plan) multiplied by the number of
Exercisable Option Shares. For purposes hereof, "Exercisable Option Shares"
shall mean the shares of Common Stock which, at the time of determination of the
Option Excess Price, could be purchased by the Purchaser upon exercise of his
outstanding options.
9. THE COMPANY'S REPRESENTATIONS AND WARRANTIES.
(a) The Company represents and warrants to the Purchaser that (i)
this Agreement has been duly authorized, executed and delivered by the Company
and (ii) the Stock, when issued and delivered in accordance with the terms
hereof, will be duly and validly issued, fully paid and nonassessable.
<PAGE>
14
(b) If the Company shall have engaged in a Public Offering, the
Company will file the reports required to be filed by it under the Act and the
Exchange Act and the rules and regulations adopted by the SEC thereunder, to
the extent required from time to time to enable the Purchaser to sell shares of
Stock without registration under the Act within the limitations of the
exemptions provided by (A) Rule 144 under the Act, as such Rule may be amended
from time to time, or (B) any similar rule or regulation hereafter adopted by
the SEC. Notwithstanding anything contained in this Section 9(b), the Company
may deregister under Sections 12 or 15 of the Exchange Act if it is then
permitted to do so pursuant to the Exchange Act and the rules and regulations
thereunder. Nothing in this Section 9(b) shall be deemed to limit in any manner
the restrictions on sales of Stock contained in this Agreement.
10. "PIGGYBACK" REGISTRATION RIGHTS.
(a) Effective upon the purchase of Common Stock pursuant to this
Agreement, until the Unrestricted Date, the Purchaser (i) hereby agrees to be
bound by all of the terms, conditions and obligations of the Registration Rights
Agreement dated as of June 27, 1997 (the "Registration Rights Agreement"), among
the Company and one or more Affiliates of KKR (such Affiliates referred to
collectively as the "KKR Entities"; and individually, a "KKR Entity") and (ii)
subject to the limitations set forth in this Section 10, shall have the right
under the Registration Rights Agreement to participate in offerings that would
result in a Public Offering ratably with the KKR Entities (except that the
Purchaser will not have demand registration rights, but shall have the right to
participate ratably with the KKR Entities parties thereto in any demand
registration by the KKR Entities); PROVIDED, HOWEVER, that the Purchaser shall
not be bound by any amendments to the Registration Rights Agreement unless
Purchaser consents thereto. Notwithstanding anything to the contrary contained
in the Registration Rights Agreement, the Purchaser's rights and obligations
under the Registration Rights Agreement shall be subject to the limitations and
additional obligations set forth in this Section 10. All shares of Stock shall
be deemed to be Registrable Securities as defined in the Registration Rights
Agreement.
(b) The Company will promptly notify the Purchaser in writing (a
"Notice") of any proposed registration (a "Proposed Registration"). If within
15 days of the receipt by the Purchaser of such Notice, the Company receives
from the Purchaser, the Purchaser's Trust or the Purchaser's Estate a written
request (a "Request") to register shares of Stock held by the Purchaser, the
Purchaser's Estate or the Purchaser's Trust (which Request will be irrevocable
unless otherwise mutually agreed to in writing by the Purchaser and the
Company), shares of Stock will be so registered as provided in this Section 10;
PROVIDED, HOWEVER, that for each such registration statement only one Request,
which shall be executed by the Purchaser, the
<PAGE>
15
Purchaser's Trust or the Purchaser's Estate, as the case may be, may be
submitted for all Registrable Securities held by the Purchaser, the Purchaser's
Estate and the Purchaser's Trust.
(c) The maximum number of shares of Stock which will be registered
pursuant to a Request will be the lowest of (i) the number of shares of Stock
then held by the Purchaser (which for purposes of this subparagraph (c) shall
include shares held by the Purchaser's Estate or a Purchaser's Trust), including
all shares of Stock which the Purchaser is then entitled to acquire under an
unexercised Option to the extent then exercisable or (ii) the maximum number of
shares of Stock which the Company can register in the Proposed Registration
without adverse effect on the offering in the view of the managing underwriters
(reduced pro rata with all Other Purchasers) as more fully described in
subsection (d) of this Section 10 or (iii) the maximum number of shares which
the Purchaser (pro rata based upon the aggregate number of shares of Common
Stock the Purchaser and all Other Purchasers have requested be registered) and
all Other Purchasers are permitted to register under the Registration Rights
Agreement. With respect to any Request, each Purchaser, Purchaser's Estate or
Purchaser's Trust shall be bound by the provisions of Section 3.06 of the
Registration Rights Agreement and shall be deemed a "Holder" for such purpose.
(d) Upon delivering a Request the Purchaser, the Purchaser's Estate
or Purchaser's Trust (or his or their authorized representative) will, if
requested by the Company, execute and deliver a custody agreement and power of
attorney in form and substance satisfactory to the Company with respect to the
shares of Stock to be registered pursuant to this Section 10 (a "Custody
Agreement and Power of Attorney"). The Custody Agreement and Power of Attorney
will provide, among other things, that the Purchaser, the Purchaser's Estate or
Purchaser's Trust (or his or their authorized representative) will deliver to
and deposit in custody with the custodian and attorney-in-fact named therein a
certificate or certificates representing such shares of Stock (duly endorsed in
blank by the registered owner or owners thereof or accompanied by duly executed
stock powers in blank) and irrevocably appoint said custodian and
attorney-in-fact as the Purchaser's, Purchaser's Estate's or Purchaser's Trust's
agent and attorney-in-fact with full power and authority to act under the
Custody Agreement and Power of Attorney on its behalf with respect to the
matters specified therein.
(e) The Purchaser agrees that he will execute such other agreements
as the Company may reasonably request to further evidence the provisions of this
Section 10.
(f) Notwithstanding anything to the contrary in the foregoing, the
Purchaser shall have no registration rights under this Section 10 unless he is
an Affiliate of the Company.
11. PRO RATA REPURCHASES.
<PAGE>
16
Notwithstanding anything to the contrary contained in Sections 5 or 6,
if at any time consummation of all purchases and payments to be made by the
Company pursuant to this Agreement and the Other Purchasers' Agreements would
result in a Blocking Event, then the Company shall make purchases from, and
payments to, the Purchaser and the Other Purchasers (on the basis of the
proportion of the number of shares of Stock and the number of Options each such
Purchaser and all Other Purchasers have elected or are required to sell to the
Company) for the maximum number of shares of Stock and shall pay the Option
Excess Price for the maximum number of Options permitted without resulting in a
Blocking Event. The maximum number of shares of Stock and the maximum number of
Options permitted to be purchased or paid for by the Company at any time without
resulting in a Blocking Event shall be referred to herein as the "Maximum
Repurchase Amount". The provisions of Section 5(b) and 6(f) shall apply in
their entirety to payments and repurchases with respect to Options and shares of
Stock which may not be made due to the limits imposed by the Maximum Repurchase
Amount under this Section 11. Until all of such Stock and Options are purchased
and paid for by the Company, the Purchaser and the Other Purchasers whose Stock
and Options are not purchased in accordance with this Section 11 shall have
priority, on the basis set forth in this Section 11, over other purchases of
Common Stock and Options by the Company pursuant to this Agreement and the Other
Purchasers' Agreements.
12. RIGHTS TO NEGOTIATE REPURCHASE PRICE.
Nothing in this Agreement shall be deemed to restrict or prohibit the
Company from purchasing shares of Stock or Options from the Purchaser, at any
time, upon such terms and conditions, and for such price, as may be mutually
agreed upon between the Parties, whether or not at the time of such purchase
circumstances exist which specifically grant the Company the right to purchase,
or the Purchaser the right to sell, shares of Stock or the Company has the right
to pay, or the Purchaser has the right to receive, the Option Excess Price under
the terms of this Agreement.
13. COVENANT REGARDING 83(B) ELECTION.
Except as the Company may otherwise agree in writing, the Purchaser
hereby covenants and agrees that he will make an election provided pursuant to
Treasury Regulation 1.83-2 with respect to the Stock, including without
limitation, the Stock to be acquired pursuant to Section 1 and the Stock to be
acquired upon each exercise of the Purchaser's Options; and Purchaser further
covenants and agrees that he will furnish the Company with copies of the forms
of election the Purchaser files within 30 days after the date hereof, and within
30 days after each exercise of Purchaser's Non-Qualified Options and with
evidence that each such election has been filed in a timely manner.
<PAGE>
17
14. NOTICE OF CHANGE OF BENEFICIARY.
Immediately prior to any transfer of Stock to a Purchaser's Trust, the
Purchaser shall provide the Company with a copy of the instruments creating the
Purchaser's Trust and with the identity of the beneficiaries of the Purchaser's
Trust. The Purchaser shall notify the Company immediately prior to any change
in the identity of any beneficiary of the Purchaser's Trust.
15. EXPIRATION OF CERTAIN PROVISIONS.
The provisions contained in Sections 4, 5 and 6 of this Agreement and
the portion of any other provision of this Agreement which incorporates the
provisions of Sections 4, 5 and 6, shall terminate and be of no further force or
effect with respect to any shares of Stock sold by the Purchaser (i) pursuant to
an effective registration statement filed by the Company pursuant to Section 10
hereof or (ii) pursuant to the terms of the Sale Participation Agreement of even
date herewith, among the Purchaser, KKR Partners II, L.P. and RFM Acquisition.
The rights and obligations of the parties hereto under Sections 3, 4,
5, 6 and 13 hereof shall all terminate if a Change in Control occurs. A "Change
of Control" means (i) a sale of all or substantially all of the assets of the
Company (other than in connection with financing transactions, sale and
leaseback transactions or other similar transactions) to a Person who is not a
KKR Entity, (ii) a sale by KKR or any of its Affiliates resulting in more than
50% of the voting stock of the Company (on a fully diluted basis, including,
without limitation, after giving effect to the exercise of the option to
purchase 3,606,881 shares of Common Stock granted to RFM Acquisition LLC by the
Company) being held by a person or group that does not include a KKR Entity or
one or members of the Management Group (as defined in the Non-Qualified Stock
Option Agreement) or (iii) a merger or consolidation of the Company into another
person which is not a KKR Entity; if and only if such event results in (a) the
inability of the KKR Entities to elect a majority of the Board of Directors of
the Company (or the resulting entity) and (b) the sale of a majority of the
shares held by the KKR Entities as of the Purchase Date.
16. RECAPITALIZATIONS, ETC.
The provisions of this Agreement shall apply, to the full extent set
forth herein with respect to the Stock or the Options, to any and all shares of
capital stock of the Company or any capital stock, partnership units or any
other security evidencing ownership interests in any successor or assign of the
Company (whether by merger, consolidation, sale of assets or otherwise) which
may be issued in respect of, in exchange for, or substitution of the Stock or
the Options, by reason of any stock dividend, split, reverse split, combination,
recapitalization,
<PAGE>
18
liquidation, reclassification, merger, consolidation or otherwise.
17. PURCHASER'S EMPLOYMENT BY THE COMPANY.
Nothing contained in this Agreement or in any other agreement entered
into by the Company and the Purchaser contemporaneously with the execution of
this Agreement (i) obligates the Company or any subsidiary of the Company to
employ the Purchaser in any capacity whatsoever or (ii) prohibits or restricts
the Company (or any such subsidiary) from terminating the employment, if any, of
the Purchaser at any time or for any reason whatsoever, with or without Cause,
and the Purchaser hereby acknowledges and agrees that neither the Company nor
any other person has made any representations or promises whatsoever to the
Purchaser concerning the Purchaser's employment or continued employment by the
Company or any subsidiary of the Company.
18. STATE SECURITIES LAWS.
The Company hereby agrees to use its best efforts to comply with all
state securities or "blue sky" laws which might be applicable to the sale of the
Stock and the issuance of the Options to the Purchaser.
19. BINDING EFFECT.
The provisions of this Agreement shall be binding upon and accrue to
the benefit of the parties hereto and their respective heirs, legal
representatives, successors and assigns. In the case of a transferee permitted
under Section 2(a) hereof, such transferee shall be deemed the Purchaser
hereunder; provided, however, that no transferee (including without limitation,
transferees referred to in Section 2(a) hereof) shall derive any rights under
this Agreement unless and until such transferee has delivered to the Company a
valid undertaking and becomes bound by the terms of this Agreement.
20. AMENDMENT.
This Agreement may be amended only by a written instrument signed by
the Parties hereto.
21. CLOSING.
Except as otherwise provided herein, the closing of each purchase and
sale of shares of Stock and the payment of the Option Excess Price, if any,
pursuant to this Agreement shall take place at the principal office of the
Company on the tenth business day following delivery of the notice by either
Party to the other of its exercise of the right to purchase or sell such Stock
hereunder or to cause the payment of the Option Excess Price, if any.
<PAGE>
19
22. APPLICABLE LAW.
The laws of the State of Texas (or if the Company reincorporates in
another state, of that state) shall govern the interpretation, validity and
performance of the terms of this Agreement, regardless of the law that might be
applied under principles of conflicts of law. Any suit, action or proceeding
against the Purchaser, with respect to this Agreement, or any judgment entered
by any court in respect of any thereof, may be brought in any court of competent
jurisdiction in the State of Texas (or if the Company reincorporates in another
state, in that state), and the Purchaser hereby submits to the non-exclusive
jurisdiction of such courts for the purpose of any such suit, action, proceeding
or judgment. Nothing herein shall in any way be deemed to limit the ability of
the Company to serve any such writs, process or summonses in any other manner
permitted by applicable law or to obtain jurisdiction over the Purchaser, in
such other jurisdictions and in such manner, as may be permitted by applicable
law. The Purchaser hereby irrevocably waives any objections which he may now or
hereafter have to the laying of the venue of any suit, action or proceeding
arising out of or relating to this Agreement brought in any court of competent
jurisdiction in the State of Texas (or if the Company reincorporates in another
state, in that state), and hereby further irrevocably waives any claim that any
such suit, action or proceeding brought in any such court has been brought in
any inconvenient forum. No suit, action or proceeding against the Company with
respect to this Agreement may be brought in any court, domestic or foreign, or
before any similar domestic or foreign authority other than in a court of
competent jurisdiction in the State of Texas (or if the Company reincorporates
in another state, in that state) or New York, and the Purchaser hereby
irrevocably waives any right which he may otherwise have had to bring such an
action in any other court, domestic or foreign, or before any similar domestic
or foreign authority. The Company hereby submits to the jurisdiction of such
courts for the purpose of any such suit, action or proceeding.
23. ASSIGNABILITY OF CERTAIN RIGHTS BY THE COMPANY.
The Company shall have the right to assign any or all of its rights or
obligations to purchase shares of Stock pursuant to Sections 4, 5 and 6 hereof;
provided, however, that the Company shall remain obligated to perform its
obligations notwithstanding such assignment in the event that such assignee
fails to perform the obligations so assigned to it.
24. MISCELLANEOUS.
In this Agreement (i) all references to "dollars" or "$" are to United
States dollars and (ii) the word "or" is not exclusive. If any provision of
this Agreement shall be declared illegal, void or unenforceable by any court of
competent
<PAGE>
20
jurisdiction, the other provisions shall not be affected, but shall remain in
full force and effect.
25. NOTICES.
All notices and other communications provided for herein shall be in
writing and shall be deemed to have been duly given if delivered by hand
(whether by overnight courier or otherwise) or sent by registered or certified
mail, return receipt requested, postage prepaid, to the Party to whom it is
directed:
(a) If to the Company, to it at the following address:
Randall's Food Markets, Inc.
3663 Briarpark
Houston, Texas 77042
Attn: Lee E. Straus
with copies to:
Kohlberg Kravis Roberts & Co.
9 West 57th Street
New York, New York 10019
Attn: Nils P. Brous
and
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, New York 10017-3954
Attn: David J. Sorkin, Esq.
(b) If to the Purchaser, to him at the address set forth below under
his signature;
or at such other address as either party shall have specified by
notice in writing to the other.
<PAGE>
21
26. COVENANT NOT TO COMPETE; CONFIDENTIAL INFORMATION.
(a) In consideration of the Company entering into this Agreement
with the Purchaser, the Purchaser hereby agrees effective as of the Purchase
Date, until the Applicable Anniversary (as defined) of the date the Purchaser
shall cease to be employed by the Company (the "NON-COMPETE PERIOD"), the
Purchaser shall not, directly or indirectly, own, manage, operate, control or
participate in the ownership, management, operation or control of, or be
connected in any manner with (including as a consultant), any business which
shall be engaged in the retail selling of food, beverages or other products
under the names "Randall's", "Tom Thumb" or "Simon David", or under any other
name which uses any of the foregoing names as a component or which is (or
includes a component which is) confusingly similar to any such names (the "TRADE
NAMES"), in the United States. In addition to the foregoing, the Purchaser
hereby agrees that during the Non-Compete Period, the Purchaser shall not,
directly or indirectly, own, manage, operate, control or participate in the
ownership, management, operation or control of, or be connected in any manner
with (including as a consultant), any business which shall be engaged in the
retail selling of food, beverages or other related products under any name,
including the Trade Names, in Texas, PROVIDED, that (i) unless such business
shall own, lease or operate a Supercenter (as defined below), the retail selling
of food, beverages or other related products shall be the primary business of
such business and (ii) this sentence shall not be applicable to restaurant or
catering businesses. For purposes hereof, "Supercenter" shall mean any store of
at least 50,000 square feet at which general merchandise as well as groceries
are sold at retail. For illustrative purposes only, Wal-Mart Supercenters and
Super Kmart Centers are examples of Supercenters. "Applicable Anniversary"
means with respect to (i) senior vice presidents and executives of higher
standing in the Company, a two-year period, (ii) vice presidents, a one-year
period and (iii) directors, a six-month period.
(b) Except as required by law or judicial process, the Purchaser will
not disclose or use at any time any Confidential Information (as defined below)
of which the Purchaser is or becomes aware, whether or not such information is
developed by him, except to the extent that such disclosure or use is directly
related to and required by the Purchaser's performance of duties, if any,
assigned to the Purchaser by the Company. As used in this Agreement, the term
"Confidential Information" means information that is not known to the public and
that is used, developed or obtained by the Company or its subsidiaries in
connection with its business, including but not limited to (i) products or
services, (ii) fees, costs and pricing structures, (iii) designs, (iv) computer
software, including operating systems, applications and program listings, (v)
flow charts, manuals and documentation, (vi) data bases, (vii) accounting and
business methods, (viii) inventions, devices, new developments,
<PAGE>
22
methods and processes, whether patentable or unpatentable and whether or not
reduced to practice, (ix) customers and clients and customer or client lists,
(x) other copyrightable works, (xi) all technology and trade secrets and (xii)
all similar and related information in whatever form. Confidential Information
will not include any information that has been published in a form available to
the public prior to the date the Purchaser proposes to disclose or use such
information. The Purchaser acknowledges and agrees that all copyrights, works,
inventions, innovations, improvements, developments, patents, trademarks and all
similar or related information which relate to the actual or anticipated
business of the Company and its subsidiaries (including its predecessors) and
conceived, developed or made by the Purchaser while employed by the Company or
its subsidiaries belong to the Company. The Purchaser will perform all actions
reasonably requested by the Company (whether during or after the Noncompete
Period) to establish and confirm such ownership at the Company's expense
(including without limitation assignments, consents, powers of attorney and
other instruments).
(c) Notwithstanding the foregoing paragraphs (a) and (b) above, if at
any time a court holds that the restrictions stated in such foregoing paragraphs
(a) and (b) are unreasonable or otherwise unenforceable under circumstances then
existing, the parties hereto agree that the maximum period, scope or geographic
area of such restrictions determined to be reasonable under such circumstances
by such court will be substituted for the stated period, scope or area of such
restrictions. Because the Purchaser's services are unique and because the
Purchaser has had access to Confidential Information, the parties hereto agree
that money damages will be an inadequate remedy for any breach of this
Agreement. In the event of a breach or threatened breach of this Agreement, the
Company or its successors or assigns may, in addition to other rights and
remedies existing in their favor, apply to any court of competent jurisdiction
for specific performance and/or injunctive relief in order to enforce, or
prevent any violations of, the provisions hereof (without the posting of a bond
or other security).
(d) Notwithstanding the foregoing paragraphs (a), (b) and (c), (i)
the provisions of any employment agreement in effect on the date hereof between
the Company and Purchaser which contains covenants relating to confidentiality
and competition shall supersede and replace the provisions of paragraphs (a) and
(b) hereof and shall be deemed incorporated by reference in this Agreement in
their entirety and (ii) if the Purchaser is a party to the Shareholders
Agreement, the provisions of Section 6.02 of the Shareholders Agreement shall
supersede and replace the provisions of paragraph (a) hereof and shall be deemed
incorporated by reference in this Agreement in their entirety.
<PAGE>
23
27. GOVERNING AGREEMENTS
With respect to signatories to this Agreement who are signatories to
the Shareholders Agreement, the provisions of this Agreement shall supersede and
replace the inconsistent provisions of the Shareholders Agreement in their
entirety, except as expressly set forth herein in Sections 2(h) and 26(d).
<PAGE>
24
IN WITNESS WHEREOF, the Parties have executed this Agreement as of the
date first above written.
RANDALL'S FOOD MARKETS, INC.
By
------------------------------
Name:
Title:
---------------------------------
[PURCHASER]
---------------------------------
---------------------------------
Address of Purchaser
<PAGE>
EXHIBIT 4.5
FORM OF NON-QUALIFIED STOCK OPTION AGREEMENT
THIS AGREEMENT, dated as of ________________, 1997 is made by and
between Randall's Food Markets, Inc., a Texas corporation (hereinafter referred
to as the "Company"), and __________________, an employee of the Company or a
Subsidiary (as defined below) or Affiliate (as defined below) of the Company,
hereinafter referred to as "Optionee".
WHEREAS, the Company wishes to afford the Optionee the opportunity to
purchase shares of its common stock, par value $.25 per share (the "Common
Stock");
WHEREAS, the Company wishes to carry out the Plan (as hereinafter
defined), the terms of which are hereby incorporated by reference and made a
part of this Agreement; and
WHEREAS, the Committee (as hereinafter defined), appointed to
administer the Plan, has determined that it would be to the advantage and best
interest of the Company and its shareholders to grant the Non-Qualified Options
provided for herein to the Optionee as an incentive for increased efforts during
his term of office with the Company or its Subsidiaries or Affiliates, and has
advised the Company thereof and instructed the undersigned officers to issue
said Options;
NOW, THEREFORE, in consideration of the mutual covenants herein
contained and other good and valuable consideration, receipt of which is hereby
acknowledged, the parties hereto do hereby agree as follows:
ARTICLE I
DEFINITIONS
Whenever the following terms are used in this Agreement, they shall
have the meaning specified in the Plan or below unless the context clearly
indicates to the contrary.
SECTION 1.1 - AFFILIATE
"Affiliate" shall mean, with respect to the Company, any corporation
directly or indirectly controlling, controlled by, or under common control with,
the Company or any other entity designated by the Board of Directors of the
Company in which the Company or an Affiliate has an interest.
<PAGE>
2
SECTION 1.2 - CAUSE
"Cause" shall mean (i) Optionee's willful and continued failure to
perform Optionee's duties with respect to the Company or its subsidiaries which
continues beyond ten days after a written demand for substantial performance is
delivered to Optionee by the Company or (ii) misconduct by Optionee involving
(x) dishonesty or breach of trust in connection with Optionee's employment or
(y) conduct which would be a reasonable basis for an indictment of Optionee for
a felony or for a misdemeanor involving moral turpitude.
SECTION 1.3 - CODE
"Code" shall mean the Internal Revenue Code of 1986, as amended.
SECTION 1.4 - COMMITTEE
"Committee" shall mean the Compensation Committee of the Company.
SECTION 1.5 - GRANT DATE
"Grant Date" shall mean the date on which the Options provided for in
this Agreement were granted.
SECTION 1.6 - MANAGEMENT GROUP
"Management Group" shall mean the group consisting of all or certain
Officers of the Company on the date hereof, whether or not such person remains
in that capacity.
SECTION 1.7 - MANAGEMENT STOCKHOLDER'S AGREEMENT
"Management Stockholder's Agreement" shall mean that certain
Management Stockholder's Agreement dated as of , 1997 between the
Optionee and the Company.
SECTION 1.8 - OFFICER
"Officer" shall mean the Chairman of the Board, the President, any
Executive Vice President, Senior Vice President or Vice President, the Treasurer
or the Secretary of the Company.
SECTION 1.9 - OPTIONS
"Options" shall mean the non-qualified options, which may include a
Time Option and/or a Performance Option, to purchase Common Stock granted under
this Agreement.
SECTION 1.10 - PERFORMANCE OPTION
<PAGE>
3
"Performance Option" shall mean an Option with respect to which the
commencement of exercisability is governed by Section 3.1(b) hereof.
SECTION 1.11 - PERMANENT DISABILITY
The Optionee shall be deemed to have a "Permanent Disability" when the
majority of the Board of Directors of the Company shall, in good faith, so
determine.
SECTION 1.12 - PLAN
"Plan" shall mean the 1997 Stock Purchase and Option Plan for Key
Employees of Randall's Food Markets, Inc. and Subsidiaries.
SECTION 1.13 - PRONOUNS
The masculine pronoun shall include the feminine and neuter, and the
singular the plural, where the context so indicates.
SECTION 1.14 - RETIREMENT
"Retirement" shall mean retirement (i) at age 65 or over (or such
other age as may be approved by the Board of Directors of the Company) after
having been employed by the Company or a Subsidiary for at least three years or
(ii) at age 55 or over (or such other age as may be approved by the Board of
Directors of the Company) after having been employed by the Company or a
Subsidiary for at least 10 years.
SECTION 1.15 - SECRETARY
"Secretary" shall mean the Secretary of the Company.
SECTION 1.16 - SUBSIDIARY
"Subsidiary" shall mean any corporation in an unbroken chain of
corporations beginning with the Company if each of the corporations, or group of
commonly controlled corporations, (other than the last corporation in the
unbroken chain), then owns stock possessing 50% or more of the total combined
voting power of all classes of stock in one of the other corporations in such
chain.
SECTION 1.17 - TIME OPTION
"Time Option" shall mean an Option with respect to which the
commencement of exercisability is governed by Section 3.1(a) hereof.
<PAGE>
4
SECTION 1.18 - TRIGGER DATE
"Trigger Date" shall mean the date hereof; provided that with respect
to Optionees who enter into this Agreement on [insert date], the Trigger Date
shall mean June 29, 1997.
ARTICLE II
GRANT OF OPTIONS
SECTION 2.1 - GRANT OF OPTIONS
For good and valuable consideration, on and as of the date hereof the
Company irrevocably grants to the Optionee a Time Option and/or a Performance
Option to purchase any part or all of an aggregate of the number of shares set
forth with respect to each such Option on the signature page hereof of its
Common Stock upon the terms and conditions set forth in this Agreement.
SECTION 2.2 - EXERCISE PRICE
Subject to Section 2.4, the exercise price of the shares of stock
covered by the Options shall be $12.11 per share without commission or other
charge.
SECTION 2.3 - CONSIDERATION TO THE COMPANY
In consideration of the granting of these Options by the Company, the
Optionee agrees to render faithful and efficient services to the Company or a
Subsidiary or Affiliate, with such duties and responsibilities as the Company
shall from time to time prescribe. Nothing in this Agreement or in the Plan
shall confer upon the Optionee any right to continue in the employ of the
Company or any Subsidiary or Affiliate or shall interfere with or restrict in
any way the rights of the Company and its Subsidiaries or Affiliates, which are
hereby expressly reserved, to terminate the employment of the Optionee at any
time for any reason whatsoever, with or without cause.
SECTION 2.4 - ADJUSTMENTS IN OPTIONS PURSUANT TO MERGER, CONSOLIDATION, ETC.
Subject to Section 9 of the Plan, in the event that the outstanding
shares of the stock subject to an Option are, from time to time, changed into or
exchanged for a different number or kind of shares of the Company or other
securities of the Company by reason of a merger, consolidation,
recapitalization, reclassification, stock split, stock dividend, combination of
shares, or otherwise, the Committee shall make an appropriate and equitable
adjustment in the number and kind of shares and/or the amount of consideration
as to which or for which, as the case may be, such Option, or portions thereof
then unexercised, shall be
<PAGE>
5
exercisable. Any such adjustment made by the Committee shall be final and
binding upon the Optionee, the Company and all other interested persons.
ARTICLE III
PERIOD OF EXERCISABILITY
SECTION 3.1 - COMMENCEMENT OF EXERCISABILITY
(a) Time Options shall become exercisable as follows:
Percentage of Time Option
Date Time Option Shares Granted As to Which
Becomes Exercisable Time Option Is Exercisable
- ------------------- --------------------------
After the first anniversary
of the Trigger Date 20%
After the second anniversary
of the Trigger Date 40%
After the third anniversary
of the Trigger Date 60%
After the fourth anniversary
of the Trigger Date 80%
After the fifth anniversary
of the Trigger Date 100%
Notwithstanding the foregoing, the Time Option shall become
immediately exercisable as to 100% of the shares of Common Stock subject to such
Option immediately prior to a Change of Control (but only to the extent such
Option has not otherwise terminated or become exercisable). A "Change of
Control" means (i) a sale of all or substantially all of the assets of the
Company to a Person who is not an Affiliate of Kohlberg Kravis Roberts & Co.,
L.P. ("KKR"), (ii) a sale by KKR or any of its Affiliates resulting in more than
50% of the voting stock of the Company (on a fully diluted basis, including,
without limitation, after giving effect to the exercise of the option to
purchase 3,606,881 shares of Common Stock granted to RFM Acquisition LLC by the
Company) being held by a Person or Group that does not include KKR or any of its
Affiliates or the Management Group or (iii) a merger or consolidation of the
Company into another Person which is not an Affiliate of KKR. "Person" means an
individual, partnership, corporation, business trust, joint stock company,
trust, unincorporated association, joint venture, governmental authority or
other entity of whatever nature. "Group" means two or more Persons acting
together as a
<PAGE>
6
partnership, limited partnership, syndicate or other group for the purpose of
acquiring, holding or disposing of securities of the Company.
(b) The Performance Option shall become exercisable with respect to
20% of the shares of Common Stock subject to such Option on each Vesting Date
following a Determination Date that the Company's Cumulative EBITDA equals or
exceeds the Cumulative EBITDA Target as of such Determination Date and the
actual EBITDA for that year equals or exceeds the EBITDA Target for that year.
If the Company's EBITDA for a Plan Year is less than 100% of the EBITDA Target
for such Plan Year (a "Missed Year"), no such Performance Option shall become
exercisable with respect to any additional shares of Common Stock on the Vesting
Date for such Plan Year. If, for any Plan Year subsequent to a Missed Year,
EBITDA exceeds the EBITDA Target AND Cumulative EBITDA exceeds the Cumulative
EBITDA Target, then any prior percentage of Performance Options in respect of
prior Missed Years shall become exercisable (but only to the extent such Option
has not otherwise terminated or become exercisable).
Notwithstanding the foregoing, the Performance Option shall become
exercisable as to 100% of the shares of Common Stock subject to such Option
after seven years and 11 months after the Trigger Date (but only to the extent
such Option has not otherwise terminated or become exercisable).
(c) For purposes of Section 3.1(b):
(i) "Cumulative EBITDA" means with respect to any Performance Option,
the sum of the EBITDA for the Company and its consolidated subsidiaries
during the period commencing on June 29, 1997 and ending on the last day of
the Plan Year preceding the Determination Date.
(ii) "Cumulative EBITDA Targets" means with respect to any
Performance Option, the sum of the EBITDA Targets for the period commencing
on June 29, 1997 and ending on the last day of the Plan Year preceding the
Determination Date.
(iii) "Determination Date" with respect to each Plan Year means the
September 30 following such Plan Year.
(iv) "EBITDA" shall mean, with respect to the Company and its
consolidated subsidiaries, net income before net interest expense, income
taxes, depreciation and amortization, writedown of property and securities,
extraordinary loss on extinguishment of debt, loss on disposal of
discontinued operations and loss from operation of discontinued operations.
(v) "EBITDA Target" shall have the meaning ascribed to
<PAGE>
7
such term in Schedule I hereto for Plan Years 1998 through 2002 and such
other targets as are established by the Committee with respect to
subsequent Plan Years; PROVIDED, that to the extent that the Company or any
of its subsidiaries disposes or acquires assets out of the ordinary course
of business the Committee will decrease or increase, as the case may be,
the EBITDA Target for such dispositions
or acquisitions.
(vi) "Plan Year" means (i) the period from June 29, 1997 to June 28,
1998 with respect to Plan Year 1998 and (ii) thereafter, the period
commencing on the day immediately succeeding the close of the prior Plan
Year until the Saturday closest to each June 30.
(vi) "Vesting Date" means three calendar days after the relevant
Determination Date.
(d) Notwithstanding the foregoing, no Option shall become exercisable
as to any additional shares of Common Stock following the termination of
employment of the Optionee for any reason other than a termination of employment
because of death, Permanent Disability or Retirement of the Optionee (if such
Optionee has been employed by the Company or any subsidiary of the Company for
at least three years after the Grant Date) and any Option (other than as
provided in the next succeeding sentence) which is non-exercisable as of the
Optionee's termination of employment shall be immediately cancelled. In the
event of a termination of employment because of such death, Permanent Disability
or Retirement, the Time Options (but not the Performance Options) shall
immediately become exercisable as to all shares of Common Stock subject thereto.
(e) In the event the Company elects to change its fiscal year, the
definitions of EBITDA Target and Plan Year shall be amended by the Committee in
good faith and in a manner consistent with such definitions included in this
Agreement on the date hereof.
SECTION 3.2 - EXPIRATION OF OPTIONS
Except as otherwise provided in Section 5 or 6 of the Management
Stockholder's Agreement, the Options may not be exercised to any extent by the
Optionee after the first to occur of the following events:
(a) The tenth anniversary of the Grant Date; or
(b) The first anniversary of the date of the Optionee's termination of
employment by reason of death, Permanent Disability or Retirement; or
<PAGE>
8
(c) The first business day which is fifteen calendar days after the
earlier of (i) 75 days after termination of employment of the Optionee for
any reason other than for Cause, death, Permanent Disability or Retirement
or (ii) the delivery of notice by the Company that it does not intend to
exercise its call right under Section 6 of the Management Stockholder's
Agreement; PROVIDED, HOWEVER, that in any event the Options shall remain
exercisable under this subsection 3.2(c) until at least 45 days after
termination of employment of the Optionee for any reason other than for
death, Permanent Disability or Retirement; or
(d) The date the Option is terminated pursuant to Section 5, 6 or 8(b)
of the Management Stockholder's Agreement;
(e) The date of an Optionee's termination of employment by the Company
for Cause (without regard to Sections 5 or 6 of the Management
Stockholder's Agreement); or
(f) If the Committee so determines pursuant to Section 9 of the Plan,
the effective date of either the merger or consolidation of the Company
into another Person, or the exchange or acquisition by another Person of
all or substantially all of the Company's assets or 80% or more of its then
outstanding voting stock, or the recapitalization, reclassification,
liquidation or dissolution of the Company. At least ten (10) days prior to
the effective date of such merger, consolidation, exchange, acquisition,
recapitalization, reclassification, liquidation or dissolution, the
Committee shall give the Optionee notice of such event if the Option has
then neither been fully exercised nor become unexercisable under this
Section 3.2.
ARTICLE IV
EXERCISE OF OPTIONS
SECTION 4.1 - PERSON ELIGIBLE TO EXERCISE
Except as otherwise provided in the Management Stockholder's
Agreement, during the lifetime of the Optionee, only he may exercise an Option
or any portion thereof. After the death of the Optionee, any exercisable
portion of an Option may, prior to the time when an Option becomes unexercisable
under Section 3.2, be exercised by his personal representative or by any person
empowered to do so under the Optionee's will or under the then applicable laws
of descent and distribution.
SECTION 4.2 - PARTIAL EXERCISE
<PAGE>
9
Any exercisable portion of an Option or the entire Option, if then
wholly exercisable, may be exercised in whole or in part at any time prior to
the time when the Option or portion thereof becomes unexercisable under Section
3.2; provided, however, that any partial exercise shall be for whole shares of
Common Stock only.
SECTION 4.3 - MANNER OF EXERCISE
An Option, or any exercisable portion thereof, may be exercised solely
by delivering to the Secretary or his office all of the following prior to the
time when the Option or such portion becomes unexercisable under Section 3.2:
(a) Notice in writing signed by the Optionee or the other person then
entitled to exercise the Option or portion thereof, stating that the Option
or portion thereof is thereby exercised, such notice complying with all
applicable rules established by the Committee;
(b) Full payment (in cash, by check or by a combination thereof) for
the shares with respect to which such Option or portion thereof is
exercised;
(c) A bona fide written representation and agreement, in a form
satisfactory to the Committee, signed by the Optionee or other person then
entitled to exercise such Option or portion thereof, stating that the
shares of stock are being acquired for his own account, for investment and
without any present intention of distributing or reselling said shares or
any of them except as may be permitted under the Securities Act of 1933, as
amended (the "Act"), and then applicable rules and regulations thereunder,
and that the Optionee or other person then entitled to exercise such Option
or portion thereof will indemnify the Company against and hold it free and
harmless from any loss, damage, expense or liability resulting to the
Company if any sale or distribution of the shares by such person is
contrary to the representation and agreement referred to above; provided,
however, that the Committee may, in its absolute discretion, take whatever
additional actions it deems appropriate to ensure the observance and
performance of such representation and agreement and to effect compliance
with the Act and any other federal or state securities laws or regulations;
(d) Full payment to the Company of all amounts which, under federal,
state or local law, it is required to withhold upon exercise of the Option;
and
(e) In the event the Option or portion thereof shall be exercised
pursuant to Section 4.1 by any person or persons other than the Optionee,
appropriate proof of the right of such person or persons to exercise the
option.
<PAGE>
10
Without limiting the generality of the foregoing, the Committee may require an
opinion of counsel acceptable to it to the effect that any subsequent transfer
of shares acquired on exercise of an Option does not violate the Act, and may
issue stop-transfer orders covering such shares. Share certificates evidencing
stock issued on exercise of this Option shall bear an appropriate legend
referring to the provisions of subsection (c) above and the agreements herein.
The written representation and agreement referred to in subsection (c) above
shall, however, not be required if the shares to be issued pursuant to such
exercise have been registered under the Act, and such registration is then
effective in respect of such shares.
SECTION 4.4 - CONDITIONS TO ISSUANCE OF STOCK CERTIFICATES
The shares of stock deliverable upon the exercise of an Option, or any
portion thereof, may be either previously authorized but unissued shares or
issued shares which have then been reacquired by the Company. Such shares shall
be fully paid and nonassessable. The Company shall not be required to issue or
deliver any certificate or certificates for shares of stock purchased upon the
exercise of an Option or portion thereof prior to fulfillment of all of the
following conditions:
(a) The obtaining of approval or other clearance from any state or
federal governmental agency which the Committee shall, in its absolute
discretion, determine to be necessary or advisable; and
(b) The lapse of such reasonable period of time following the exercise
of the Option as the Committee may from time to time establish for reasons
of administrative convenience.
SECTION 4.5 - RIGHTS AS STOCKHOLDER
The holder of an Option shall not be, nor have any of the rights or
privileges of, a stockholder of the Company in respect of any shares purchasable
upon the exercise of the Option or any portion thereof unless and until
certificates representing such shares shall have been issued by the Company to
such holder.
ARTICLE V
MISCELLANEOUS
SECTION 5.1 - ADMINISTRATION
The Committee shall have the power to interpret the Plan and this
Agreement and to adopt such rules for the administration, interpretation and
application of the Plan as are consistent therewith and to interpret or revoke
any such rules.
<PAGE>
11
All actions taken and all interpretations and determinations made by the
Committee shall be final and binding upon the Optionee, the Company and all
other interested persons. No member of the Committee shall be personally liable
for any action, determination or interpretation made in good faith with respect
to the Plan or the Options. In its absolute discretion, the Board of Directors
may at any time and from time to time exercise any and all rights and duties of
the Committee under the Plan and this Agreement.
SECTION 5.2 - OPTIONS NOT TRANSFERABLE
Except as provided in the Management Stockholder's Agreement, neither
the Options nor any interest or right therein or part thereof shall be liable
for the debts, contracts or engagements of the Optionee or his successors in
interest or shall be subject to disposition by transfer, alienation,
anticipation, pledge, encumbrance, assignment or any other means whether such
disposition be voluntary or involuntary or by operation of law by judgment,
levy, attachment, garnishment or any other legal or equitable proceedings
(including bankruptcy), and any attempted disposition thereof shall be null and
void and of no effect; provided, however, that this Section 5.2 shall not
prevent transfers by will or by the applicable laws of descent and distribution.
SECTION 5.3 - SHARES TO BE RESERVED
The Company shall at all times during the term of the Options reserve
and keep available such number of shares of stock as will be sufficient to
satisfy the requirements of this Agreement.
SECTION 5.4 - NOTICES
Any notice to be given under the terms of this Agreement to the
Company shall be addressed to the Company in care of its Secretary, and any
notice to be given to the Optionee shall be addressed to him at the address
given beneath his signature hereto. By a notice given pursuant to this Section
5.4, either party may hereafter designate a different address for notices to be
given to him. Any notice which is required to be given to the Optionee shall,
if the Optionee is then deceased, be given to the Optionee's personal
representative if such representative has previously informed the Company of his
status and address by written notice under this Section 5.4. Any notice shall
have been deemed duly given when enclosed in a properly sealed envelope or
wrapper addressed as aforesaid, deposited (with postage prepaid) in a post
office or branch post office regularly maintained by the United States Postal
Service.
SECTION 5.5 - TITLES
<PAGE>
12
Titles are provided herein for convenience only and are not to serve
as a basis for interpretation or construction of this Agreement.
SECTION 5.6 - APPLICABILITY
OF PLAN AND MANAGEMENT STOCKHOLDER'S AGREEMENT
The Options and the shares of Common Stock issued to the Optionee upon
exercise of the Options shall be subject to all of the terms and provisions of
the Plan and the Management Stockholder's Agreement, to the extent applicable to
the Options and such shares. In the event of any conflict between this
Agreement and the Plan, the terms of the Plan shall control. In the event of
any conflict between this Agreement or the Plan and the Management Stockholder's
Agreement, the terms of the Management Stockholder's Agreement shall control.
SECTION 5.7 - AMENDMENT
This Agreement may be amended only by a writing executed by the
parties hereto which specifically states that it is amending this Agreement.
SECTION 5.8 - GOVERNING LAW
The laws of the State of Texas (or if the Company reincorporates in
another state, the laws of that state) shall govern the interpretation, validity
and performance of the terms of this Agreement regardless of the law that might
be applied under principles of conflicts of laws.
SECTION 5.9 - JURISDICTION
Any suit, action or proceeding against the Optionee with respect to
this Agreement, or any judgment entered by any court in respect of any thereof,
may be brought in any court of competent jurisdiction in the State of Texas (or
if the Company reincorporates in another state, in that state) or New York, as
the Company may elect in its sole discretion, and the Optionee hereby submits to
the non-exclusive jurisdiction of such courts for the purpose of any such suit,
action, proceeding or judgment. The Optionee hereby irrevocably waives any
objections which he may now or hereafter have to the laying of the venue of any
suit, action or proceeding arising out of or relating to this Agreement brought
in any court of competent jurisdiction in the State of Texas (or if the Company
reincorporates in another state, in that state) or New York, and hereby further
irrevocably waives any claim that any such suit, action or proceeding brought in
any such court has been brought in any inconvenient forum. No suit, action or
proceeding against the Company with respect to this Agreement may be brought in
any court, domestic or foreign, or before any similar domestic or foreign
authority other than in a court of competent jurisdiction in the State of Texas
(or if the
<PAGE>
13
Company reincorporates in another state, in that state) or New York, and the
Optionee hereby irrevocably waives any right which he may otherwise have had to
bring such an action in any other court, domestic or foreign, or before any
similar domestic or foreign authority. The Company hereby submits to the
jurisdiction of such courts for the purpose of any such suit, action or
proceeding.
<PAGE>
14
IN WITNESS WHEREOF, this Agreement has been executed and delivered by
the parties hereto.
RANDALL'S FOOD MARKETS, INC.
By _____________________________
Its Chief Executive Officer
_________________________________ Aggregate number of shares
____________ of Common Stock for which
Optionee the Time Option granted
hereunder is exercisable (50% of total
number of shares):
__________________
Aggregate number of shares
of Common Stock for which
___________________________ the Performance Option granted
hereunder is exercisable (50% of total
number of shares):
___________________________ __________________
Address
Optionee's Taxpayer
Identification Number:
___________________________
<PAGE>
Schedule I
Plan Year Ebitda Target
--------- -------------
1998
1999
2000
2001
2002
<PAGE>
Exhibit 4.6
FORM OF SALE PARTICIPATION AGREEMENT
__________ __, 1997
[NAME OF EMPLOYEE]
[TITLE]
Randall's Food Markets, Inc.
3663 Briarpark
Houston, Texas 77042
Dear [NAME OF EMPLOYEE]:
You have entered into a Management Stockholder's Agreement, dated as
of __________ __, 199_ between Randall's Food Market, Inc., a Texas corporation
("the Company"), and you (the "Stockholder's Agreement") relating to the
purchase from the Company of shares of the common stock, par value $.25 per
share, of the Company (the "Common Stock"). The undersigned, KKR Partners II,
L.P., a Delaware limited partnership ("KKR Partners"), and RFM Acquisition LLC,
a Delaware limited liability company ("RFM Acquisition"), also have purchased
shares of Common Stock and hereby agree with you as follows, effective upon such
purchase of Common Stock by you:
1. In the event that at any time KKR Partners, or RFM Acquisition, as
the case may be (each, a "KKR Stockholder" and collectively, the "KKR
Stockholders"), proposes to sell for cash or any other consideration any shares
of Common Stock owned by it, in any transaction other than a Public Offering (as
defined in the Stockholder's Agreement) or a sale to an affiliate of KKR
Partners or RFM Acquisition, as the case may be, the KKR Stockholders will
notify you or your Purchaser's Estate or Purchaser's Trust (as such terms are
defined in Section 2 of the Stockholder's Agreement), as the case may be, in
writing (a "Notice") of such proposed sale (a "Proposed Sale") and the material
terms of the Proposed Sale as of the date of the Notice (the "Material Terms")
promptly, and in any event not less than 15 days prior to the consummation of
the Proposed Sale and not more than 5 days after the execution of the definitive
agreement relating to the Proposed Sale, if any (the "Sale Agreement"). If
within 10 days of your or your Purchaser's Estate's or Purchaser's Trust's, as
the case may be, receipt of such Notice the KKR Stockholder receives from you or
your Purchaser's Estate or Purchaser's Trust, as the case may be, a written
request (a "Request") to include Common Stock held by you or your Purchaser's
Estate or Purchaser's Trust, as the case may be, in the Proposed Sale (which
Request shall be irrevocable unless (a) there shall be a material adverse change
in the Material Terms or (b) if otherwise mutually agreed to in writing by you
or your Purchaser's Estate or Purchaser's Trust, as the case may be, and
<PAGE>
2
the KKR Stockholder), the Common Stock held by you will be so included as
provided herein; provided that only one Request, which shall be executed by you
or your Purchaser's Estate or Purchaser's Trust, as the case may be, may be
delivered with respect to any Proposed Sale for all Common Stock held by you or
your Purchaser's Estate or Purchaser's Trust. Promptly after the consummation
of the transactions contemplated thereby, the KKR Stockholder will furnish you,
your Purchaser's Trust or your Purchaser's Estate with a copy of the Sale
Agreement, if any. In the event that both KKR Partners and RFM Acquisition
propose to sell shares of Common Stock in the Proposed Sale, the term "KKR
Stockholder" shall refer only to RFM Acquisition and not to KKR Partners.
2. The number of shares of Common Stock which you or your Purchaser's
Estate or Purchaser's Trust, as the case may be, will be permitted to include in
a Proposed Sale pursuant to a Request will be the lesser of (a) the sum of the
number of shares of Common Stock then owned by you or your Purchaser's Estate or
Purchaser's Trust, as the case may be, plus all shares of Common Stock which you
are then entitled to acquire under an unexercised option to purchase shares of
Common Stock, to the extent such option is then vested or would become vested as
a result of the consummation of the Proposed Sale and (b) the sum of the shares
of Common Stock then owned by you or your Purchaser's Estate or Purchaser's
Trust, as the case may be, plus all shares of Common Stock which you are
entitled to acquire under an unexercised option to purchase shares of Common
Stock, whether or not fully vested, multiplied by a percentage calculated by
dividing the aggregate number of shares of Common Stock which KKR Partners and
RFM Acquisition propose to sell in the Proposed Sale by the total number of
shares of Common Stock owned by the KKR Stockholder or, in the case both KKR
Partners and RFM Acquisition propose to sell in the Proposed Sale, KKR Partners
and RFM Acquisition. If one or more holders of shares of Common Stock who have
been granted the same rights granted to you or your Purchaser's Estate or
Purchaser's Trust, as the case may be, hereunder elect not to include the
maximum number of shares of Common Stock which such holders would have been
permitted to include in a Proposed Sale (the "Eligible Shares"), KKR Partners or
RFM Acquisition, or such remaining holders of shares of Common Stock, or any of
them, may sell in the Proposed Sale a number of additional shares of Common
Stock owned by any of them equal to their pro rata portion of the number of
Eligible Shares not included in the Proposed Sale, based on the relative number
of shares of Common Stock then held by each such holder, and such additional
shares of Common Stock which any such holder or holders propose to sell shall
not be included in any calculation made pursuant to the first sentence of this
Paragraph 2 for the purpose of determining the number of shares of Common Stock
which you or your Purchaser's Estate or Purchaser's Trust, as the case may be,
will be permitted to include in a Proposed Sale. KKR Partners and RFM
Acquisition, or any of them, may sell in the Proposed Sale additional shares of
Common Stock owned by any of them equal to any remaining Eligible
<PAGE>
3
Shares which will not be included in the Proposed Sale pursuant to the
foregoing.
3. Except as may otherwise be provided herein, shares of Common Stock
subject to a Request will be included in a Proposed Sale pursuant hereto and in
any agreements with purchasers relating thereto on the same terms and subject to
the same conditions applicable to the shares of Common Stock which the KKR
Stockholder proposes to sell in the Proposed Sale. Such terms and conditions
shall include, without limitation: the sale price; the payment of fees,
commissions and expenses; the provision of, and representation and warranty as
to, information requested by the KKR Stockholder; and the provision of requisite
indemnifications; PROVIDED that any indemnification provided by you, your
Purchaser's Estate or your Purchaser's Trust shall be pro rata in proportion
with the number of shares of Common Stock to be sold.
4. Upon delivering a Request, you or your Purchaser's Estate or
Purchaser's Trust, as the case may be, will, if requested by the KKR
Stockholder, execute and deliver a custody agreement and power of attorney in
form and substance satisfactory to the KKR Stockholder with respect to the
shares of Common Stock which are to be sold by you or your Purchaser's Estate or
Purchaser's Trust, as the case may be, pursuant hereto (a "Custody Agreement and
Power of Attorney"). The Custody Agreement and Power of Attorney will provide,
among other things, that you or your Purchaser's Estate or Purchaser's Trust, as
the case may be, will deliver to and deposit in custody with the custodian and
attorney-in-fact named therein a certificate or certificates representing such
shares of Common Stock (duly endorsed in blank by the registered owner or owners
thereof) and irrevocably appoint said custodian and attorney-in-fact as your or
your Purchaser's Estate's or Purchaser's Trust's, as the case may be, agent and
attorney-in-fact with full power and authority to act under the Custody
Agreement and Power of Attorney on your or your Purchaser's Estate's or
Purchaser's Trust's, as the case may be, behalf with respect to the matters
specified therein.
5. Your or your Purchaser's Estate's or Purchaser's Trust's, as the
case may be, right pursuant hereto to participate in a Proposed Sale shall be
contingent on your or your Purchaser's Estate's or Purchaser's Trust's, as the
case may be, strict compliance with each of the provisions hereof and your or
your Purchaser's Estate's or Purchaser's Trust's or, as the case may be,
willingness to execute such documents in connection therewith as may be
reasonably requested by the KKR Stockholder.
6. In the event of a Proposed Sale pursuant to Section 1 hereof, the
KKR Stockholders may elect, by so specifying in the Notice, to require you or
your Purchaser's Estate or Purchaser's Trust, as the case may be, to, and you or
your Purchaser's Estate or Purchaser's Trust, as the case may be, will,
participate in
<PAGE>
4
such Proposed Sale in accordance with the terms and provisions of Section 2, 3
and 4 hereof.
7. The obligations of KKR Partners and RFM Acquisition hereunder shall
extend only to you or your Purchaser's Estate or Purchaser's Trust, as the case
may be, and no other of your or your Purchaser's Estate's or Purchaser's
Trust's, as the case may be, successors or assigns shall have any rights
pursuant hereto.
8. This Agreement shall terminate and be of no further force and
effect on the fifth anniversary of the first occurrence of a Public Offering (as
defined in the Stockholder's Agreement).
9. All notices and other communications provided for herein shall be
in writing and shall be deemed to have been duly given when delivered to the
party to whom it is directed:
(a) If to KKR Partners or RFM Acquisition, to it at the
following address:
c/o Kohlberg Kravis Roberts & Co.
9 West 57th Street
New York, New York 10019
Attn: Nils P. Brous
with a copy to:
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, New York 10017
Attn: David J. Sorkin, Esq.
(b) If to you, to you at the address first set forth above
herein;
(c) If to your Purchaser's Estate or Purchaser's Trust, at the
address provided to such partnerships by such entity;
or at such other address as any of the above shall have specified by notice in
writing delivered to the others by certified mail.
10. The laws of the State of Texas (or if the Company reincorporates
in another state, of that state) shall govern the interpretation, validity and
performance of the terms of this Agreement. No suit, action or proceeding with
respect to this Agreement may be brought in any court or before any similar
authority other than in a court of competent jurisdiction in the State of Texas
(or if the Company reincorporates in another state, of that state), as the KKR
Stockholders may elect in their sole discretion, and you hereby submit to the
non-exclusive jurisdiction of such courts for the purpose of such suit,
proceeding or judgment. You hereby
<PAGE>
5
irrevocably waive any right which you may have had to bring such an action in
any other court, domestic or foreign, or before any similar domestic or foreign
authority.
11. If KKR Partners or RFM Acquisition transfers its interest in the
Company to an affiliate of KKR Partners or RFM Acquisition, as the case may be,
such affiliate shall assume the obligations hereunder of KKR Partners or RFM
Acquisition, as the case may be.
<PAGE>
6
It is the understanding of the undersigned that you are aware that no
Proposed Sale presently is contemplated and that such a sale may never occur.
If the foregoing accurately sets forth our agreement, please
acknowledge your acceptance thereof in the space provided below for that
purpose.
Very truly yours,
KKR PARTNERS II, L.P.
By: KKR Associates L.P.,
General Partner
By:
-----------------------------
General Partner
RFM ACQUISITION LLC
By: KKR 1996 GP FUND L.P.,
Member
By: KKR ASSOCIATES 1996 L.P.,
General Partner
By: KKR 1996 GP L.L.C.,
General Partner
By:
-----------------------------
Member
Accepted and agreed to:
By:
------------------------
[NAME OF EMPLOYEE]
<PAGE>
EXHIBIT 5
January 5, 1998
Randall's Food Markets, Inc.
3663 Briarpark
Houston, Texas 77042
Gentlemen:
We have acted as counsel for Randall's Food Markets, Inc., a Texas
corporation (the "Company"), and have advised the Company in connection with the
preparation and filing by the Company with the Securities and Exchange
Commission under the Securities Act of 1933, as amended (the "Securities Act"),
of a Registration Statement on Form S-8 (the "Registration Statement") relating
to the issuance by the Company of 2,400,000 shares of the Company's Common
Stock, par value $.25 per share (the "Shares"), pursuant to the 1997 Stock
Purchase and Option Plan for Key Employees of the Company and its subsidiaries
(the "1997 Plan").
We have reviewed the corporate action of the Company in connection with the
issuance and sale of the Shares and have examined, and have relied as to matters
of fact, upon originals or copies, certified or otherwise identified to my
satisfaction, of such corporate records, agreements, documents and other
instruments and such certificates or comparable documents or oral statements of
public officials and of officers and representatives of the Company, and have
made such other and further investigations as we have deemed relevant and
necessary as a basis for the opinions hereinafter set forth. In such
examination, we have assumed the genuineness of all signatures, the legal
capacity of natural persons, the authenticity of all documents submitted to us
as originals, the conformity to original documents of all documents submitted to
us as certified or photostatic copies, and the authenticity of the originals of
such latter documents.
Based upon the foregoing and subject to the qualifications and limitations
stated herein, we hereby advise you that in our opinion the issuance of the
Shares has been duly authorized and, when issued and sold as contemplated by the
1997 Plan, such Shares will be validly issued, fully paid and non-assessable.
We are members of the Bar of the State of Texas and do not express any
opinions herein concerning any law other than the federal laws of the United
States, the internal law of the State of Texas and the Texas Business
Corporation Act.
This opinion is rendered to you in connection with the above described
transactions. This opinion may not be relied upon by you for any other purpose,
or relied upon by, or furnished to, any other person, firm or corporation
without our prior written consent.
We hereby consent to the filing of this opinion of counsel as Exhibit 5 to
the Registration Statement.
Very truly yours,
/s/ VINSON & ELKINS L.L.P.
Vinson & Elkins L.L.P.
<PAGE>
EXHIBIT 23.1
INDEPENDENT AUDITOR'S CONSENT
We consent to the incorporation by reference in this Registration Statement
of Randall's Food Markets, Inc. on Form S-8 of our report dated August 15, 1997,
appearing in Randall's Food Markets, Inc. Registration Statement on Form S-4
(File No. 333-35457).
We also consent to the reference to us under the headings "Selected
Financial Data" and "Experts" in the Registration Statement on Form S-4 (File
No. 333-35457).
/s/ DELOITTE & TOUCHE LLP
DELOITTE & TOUCHE LLP
January 7, 1998
<PAGE>
EXHIBIT 23.2
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in this Registration Statement of our report dated September 19, 1996
(except with respect to the matter discussed in the eighth paragraph of Note 5,
as to which the date is June 27, 1997), with respect to the consolidated balance
sheet of Randall's Food Markets, Inc. and subsidiaries as of June 29, 1996, and
the related consolidated statements of operations, redeemable stock and
stockholders' equity and cash flows for the years ended June 29, 1996 and June
24, 1995, and to all references to our firm included in this Registration
Statement.
ARTHUR ANDERSEN LLP
Houston, Texas
January 7, 1998
