Post-effective Amendment No. 1 to Registration No. 333-44157
As filed with the Securities and Exchange Commission on January 19, 1999
Registration No. 333-
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
___________________
REGISTRATION STATEMENT
ON FORM S-8
UNDER
THE SECURITIES ACT OF 1933
___________________
RANDALL'S FOOD MARKETS, INC.
(Exact Name of Registrant as Specified in Its Charter)
Texas 74-213-4840
(State or Other Jurisdiction of (I.R.S. Employer Identification
Incorporation or Organization) Number)
3663 Briarpark
Houston, Texas 77042
(Address, including Zip Code, of Registrant's Principal Executive Offices)
Amended and Restated 1997 Stock
Purchase and Option Plan for
Randall's Food Markets, Inc. and Subsidiaries
(Full Title of the Plan)
___________________
R. Randall Onstead
Chairman 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
___________________
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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
Maximum Proposed Maximum Amount of
Amount to be Offering Price Aggregate Offering Registration
Title of Securities to be Registered Registered Per Share (a) Price (a) Fee <FN#1>
----------------------------------------------- ------------- ------------- ----------------- --------------
<S> <C> <C> <C> <C>
Common Stock, $.25 par value per share 350,000 shares $12.96 $4,536,000 $1,261.01
<FN>
<FN#1> 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.
</TABLE>
Pursuant to Rule 429 of the Rules and Regulations of the Securities and
Exchange Commission under the Securities Act of 1933, as amended, this
Registration Statement contains a combined prospectus that also relates to
Registration Statement No. 333-44157.
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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.
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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") are hereby incorporated by reference in this
Registration Statement:
(a) The Company's Annual Report on Form 10-K for the year ended
June 27, 1998; and
(b) The Company's Quarterly Report on Form 10-Q for the quarter
ended October 17, 1998.
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 of the Management
Stockholder's Agreement, filed as part of this Registration Statement as
Exhibit 4.4, and the Outside Director's Stockholder Agreement, filed as part
of this Registration Statement as Exhibit 4.5.
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 17, 1998,
there were (i) 29,628,679 shares of Common Stock outstanding; (ii) no shares
of Class A Preferred Stock or Serial Preferred Stock issued or outstanding;
(iii) 1,096,940 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) 1,991,499
shares of Common Stock issuable upon exercise of outstanding stock options
(with an average exercise price of $13.47).
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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 on Common Stock 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 common shareholders
after payment of all prior obligations of the Company.
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
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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:
(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
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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.
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as
amended, 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 19th day of January, 1999.
RANDALL'S FOOD MARKETS, INC.
(Registrant)
By/s/ R. RANDALL ONSTEAD, JR.
R. Randall Onstead, Jr.
Chairman and Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints R. Randall Onstead, Jr., Michael M. Calbert
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.
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Pursuant to the requirements of the Securities Act of 1933, as
amended, this Registration Statement has been signed below by the following
persons in the capacities and on the date indicated.
Signature Title Date
--------- ----- ----
Chairman and Chief January 19, 1999
/s/ R. RANDALL ONSTEAD, JR. Executive Officer
R. Randall Onstead, Jr. (Principal Executive
Officer)
Chief Financial January 19, 1999
/s/ MICHAEL M. CALBERT Officer and Senior
Michael M. Calbert Vice President
(Principal Financial
Officer and Principal
Accounting Officer)
Director January , 1999
Henry R. Kravis
/s/ GEORGE R. ROBERTS Director January 19, 1999
George R. Roberts
Director January , 1999
Paul E. Raether
/s/ JAMES H. GREENE, JR. Director January 19, 1999
James H. Greene, Jr.
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Signature Title Date
--------- ----- ----
Director January , 1999
Nils P. Brous
/s/ ROBERT R. ONSTEAD Director January 19, 1999
Robert R. Onstead
/s/ A. BENTON COCANOUGHER Director January 19, 1999
A. Benton Cocanougher
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INDEX TO EXHIBITS
Exhibit
Number Description
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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 (File No. 333-35457) and incorporated herein by
reference).
4.2 By-laws of the Company (filed as Exhibit 3.2 to the Company's
Registration Statement on Form S-4 (File No. 333-35457) and
incorporated herein by reference).
4.3 Amended and Restated 1997 Stock Purchase and Option Plan for
Randall's Food Markets, Inc. and Subsidiaries
4.4 Form of Management Stockholder's Agreement (filed as Exhibit
4.4 to the Registration Statement on Form S-8 (File No. 333-
44157) on January 13, 1998 and incorporated herein by
reference).
4.5 Form of Outside Director's Stockholder Agreement
4.6 Form of Non-Qualified Stock Option Agreement (filed as Exhibit
4.5 to the Registration Statement on Form S-8 (File No. 333-
44157) on January 13, 1998 and incorporated herein by
reference).
4.7 Form of Director's Non-Qualified Stock Option Agreement
4.8 Form of Sale Participation Agreement (filed as Exhibit 4.6 to
the Registration Statement on Form S-8 (File No. 333-44157) on
January 13, 1998 and incorporated herein by reference).
4.9 Registration Rights Agreement, dated June 18, 1997, between
Randall's Food Markets, Inc. and RFM Acquisition LLC (filed as
Exhibit 10.4 to the Company's Registration Statement on Form
S-4 (File No. 333-35457) 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 hereto)
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24 Power of Attorney (included in Part II of this Registration
Statement)
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Exhibit 4.3
PLAN DOCUMENT
AMENDED AND RESTATED 1997 STOCK PURCHASE AND OPTION PLAN FOR
RANDALL'S FOOD MARKETS, INC. AND SUBSIDIARIES
1. Purpose of Plan
The Amended and Restated 1997 Stock Purchase and Option Plan for
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 a
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.
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(e) "Common Stock" or "Share" means common stock of the Corporation
which may be authorized but unissued, or issued and reacquired.
(f) "Director" means any member of the Board of Directors.
(g) "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.
(h) "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
(i) "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.
(j) "Participant" means an Employee, Director, or other person having a
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.
(k) "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.
(l) "Stock Options" means options to purchase Common Stock which are
not stock options("Incentive Stock Options")within the meaning of Section 422
of the Internal Revenue Code of 1986, as amended (the "Code").
(m) "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. All of the
members of the Committee and any other Directors shall be eligible to be
selected for Grants under the Plan; 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
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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.
(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, Directors or other persons having a 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. 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) Stock Options - These are options to purchase Common Stock which
are not Incentive Stock Options. At the time of the Grant the Committee
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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(d) by the Optionee. Payment of the option price shall be made in
cash or in shares of Common Stock (provided, that such Shares have been held
by the Participant for no less than six months (or such other period as
established by the Committee from time to time)), 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) 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). 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 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.
(c) 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 the par value of the Common
Stock. 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
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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.
(d) 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, Stock Options.
(e) 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.
(f) 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 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.
(g) 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.
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(h) 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(c)) 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.
6. Limitations and Conditions
(a) The number of Shares available for Grants under this Plan shall be
2.75 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.
(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.
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(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
"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.
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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 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.
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.
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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 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 original
approval by the Board of Directors of the Corporation and shall terminate ten
years later, subject to earlier termination by the Board of Directors
pursuant to Paragraph 10.
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Exhibit 4.5
FORM OF OUTSIDE DIRECTOR'S STOCKHOLDER AGREEMENT
This Outside Director's Stockholder Agreement (this "Agreement") is
entered into as of _____________ __, 1999 among RANDALL'S FOOD MARKETS, INC.,
a Texas corporation (the "Company"), and [NAME OF DIRECTOR] ("Stockholder")
(the Company and Stockholder being hereinafter collectively referred to as
the "Parties").
To implement the foregoing and in consideration of the mutual
agreements contained herein, the Parties agree as follows:
1. Purchase of Stock; Stock Options.
(a) Subject to the terms and conditions hereinafter set forth,
Stockholder hereby subscribes for and shall purchase, and the Company shall
sell to Stockholder, [ _______] shares of the Company's common stock, par
value $.25 per share (the "Common Stock"), at a price of $12.96 per share
(the "Per Share Purchase Price", and such shares of Common Stock, the
"Purchase Stock") on _____________ ____, 1998 (the "Purchase Date"). The
Company shall have no obligation to sell any Purchase Stock to any person who
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.
(b) The aggregate price for the Purchase Stock shall be $[_____]
(such amount hereinafter sometimes referred to as the "Purchase Price"). As
soon as practicable after the Purchase Date, in consideration of receipt of
the Purchase Price, the Company will deliver to Stockholder a certificate,
registered in Stockholder's name, for the Purchase Stock, which shall be
subject to the terms and conditions hereinafter set forth.
(c) In addition to the foregoing, the Company may also grant to
Stockholder an option or options to purchase shares of Common Stock (the
"Options") pursuant to the terms of the Amended and Restated 1997 Stock
Purchase and Option Plan for Randall's Food Markets, Inc. and Subsidiaries
(attached hereto as Exhibit A) and a Director's Non-Qualified Stock Option
Agreement (the form of which is attached as Exhibit B hereto) (collectively,
the "Plan").
2. Stockholder's Representations, Warranties and Agreements.
(a) Stockholder hereby represents and warrants that he is
acquiring the Purchase Stock (collectively, and, together with any other
shares of Common Stock beneficially owned by Stockholder hereafter acquired,
whether by exercise of an Option or otherwise, the "Stock") for investment
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for his own account and not with a view to, or for resale in connection with,
the distribution or other disposition thereof. Stockholder agrees and
acknowledges that he will not, directly or indirectly, offer, transfer, sell,
assign, pledge, hypothecate or otherwise dispose of any shares of the Stock
unless such offer, transfer, sale, assignment, pledge, hypothecation or other
disposition complies with this Agreement, including Section 3 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 OUTSIDE DIRECTOR'S STOCKHOLDER AGREEMENT
DATED AS OF _______________ __ 1999, BETWEEN RANDALL'S FOOD
MARKETS, INC. (THE "COMPANY") AND THE STOCKHOLDER NAMED ON THE
FACE HEREOF (A COPY OF WHICH IS ON FILE WITH THE SECRETARY OF
THE COMPANY)."
(c) The Stockholder 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 certificate
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.
(d) Stockholder represents and warrants that (i) he has received
and reviewed the documents 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 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 he has relied solely on such information.
(e) Stockholder 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) all
information which he has provided to the Company concerning himself and his
financial position is correct and complete as of the date of this Agreement,
(iv) he understands and has taken cognizance of all risk factors related to
the purchase of the Stock, and (v) his knowledge and experience in financial
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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.
3. Transfers of Stock.
(a) Restrictions. From and after the Purchase Date, Stockholder
hereby agrees not to sell, transfer, assign, pledge, hypothecate, encumber or
otherwise dispose of, or enter into any contract, option or other arrangement
or understanding with respect to the sale, transfer, assignment, pledge,
hypothecation, encumbrance or other disposition of, any of or any interest in
the Stock during the term of this Agreement, except for (i) a transfer made
pursuant to this Agreement, (ii) a transfer upon the death or permanent
disability of Stockholder to Stockholder's executors, administrators,
testamentary trustees, legatees or beneficiaries, (iii) a transfer by
Stockholder made in compliance with the federal securities laws to a trust or
custodianship the beneficiaries of which may include only Stockholder, his or
her spouse or lineal descendants; (iv) a bona fide pledge or pledges to a
financial institution of, in the aggregate, not more than 25% of the Stock
and (v) a transfer upon the death of Stockholder by Stockholder's executors,
administrators or testamentary trustees ("Stockholder's Representatives") to
pay estate and similar taxes and costs; provided, that prior to any transfer
described in clause (v) above, the Stockholder's Representatives shall have
offered the Company the right of first refusal described in Section 3(c); and
provided, further, in no event shall any transfer under any clause of this
Section 3 be made to any Person who has a right to require the transferred
Shares to be repurchased by the Company, either immediately or upon the
happening of any contingency; and provided, further, that prior to any
transfer or pledge described in clause (ii), (iii), (iv) or (v) above, the
applicable transferee or pledgee shall have agreed in writing to be bound by
the terms of this Agreement as if such transferee were a "Stockholder"
hereunder and shall have acknowledged in writing that such transferee or
pledgee is not a Person who has any rights described in the immediately
preceding proviso. No transfer of any shares of Stock in violation hereof
shall be made or recorded on the books of the Company and any such transfer
shall be void and of no effect.
(b) Permanent Disability. For purposes of this Agreement,
Stockholder shall be deemed to have a "permanent disability" if Stockholder
is unable to engage in the activities required by Stockholder's position on
the Board of Directors of the Company by reason of any medically determined
physical or mental impairment which can be expected to result in death or
which has lasted or can be expected to last for a continuous period of not
less than 12 months.
(c) Right of First Refusal. Prior to effecting any transaction
described in clause (v) of Section 3(a), the Stockholder's Representatives
shall cause any bona fide offer to purchase any or all of the shares of Stock
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held by the Stockholder's Representatives (an "Offer") received by the
Stockholder's Representatives and which the Stockholder's Representatives
wish to accept to be reduced to writing, and the Stockholder's
Representatives shall notify the Company in writing that the Stockholder's
Representatives wish to accept the Offer. The notice shall contain an
irrevocable offer to sell such shares of Stock to the Company or its designee
(in the manner set forth below) at a purchase price 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 third
party who has made the Offer (the "Offeror")). At any time within 30 days
after the date of the receipt by the Company of such notice, the Company
shall have the right and option to purchase, or to arrange for a third party
to purchase, all of the shares of Stock covered by the Offer either (i) at
the same price and on the same terms and conditions as the Offer 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
a duly authorized compensation committee of the Board of Directors of the
Company, by delivering a certified or bank check in the appropriate amount to
the Stockholder's Representatives against delivery of certificates
representing the shares of Stock so purchased, appropriately endorsed by the
Stockholder's Representatives. If at the end of such 30 day period, the
Company or such third party has not tendered the purchase price for such
shares of Stock in the manner set forth above, the Stockholder's
Representatives may during the succeeding 30 day period sell not less than
all of the shares of Stock covered by the Offer to the Offeror at a price and
on terms no less favorable to such Stockholder's Representatives than those
contained in the Offer. Promptly after such sale, such Stockholder's
Representatives 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 such shares of Stock, such Stockholder's
Representatives have not completed the sale of such shares of Stock as
aforesaid, all the restrictions on sale, transfer or assignment contained in
this Agreement shall again be in effect with respect to such shares of Stock.
(d) Other Sales to the Company. Notwithstanding anything to the
contrary contained in Section 3(c) and notwithstanding the absence of an
Offer, the parties hereto acknowledge that any Stockholder's Representatives
may approach the Company at any time regarding the sale of shares of Stock
held by such Stockholder's Representatives to the Company or its designee,
provided that the Company shall have no obligation to purchase such shares of
Stock.
4. "Tag-Along Rights" and "Drag-Along" Rights.
(a) "Tag-Along" Right With Respect to Private Sales by KKR
Holders. (i) Private Sales of Shares by KKR Holders. Subject to the last
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sentence of Section 4(c)(i), with respect to any proposed Private Sale (as
defined in Section 5) of any Buyer Shares (as defined in Section 5) by a KKR
Holder (as defined in Section 5) during the term of this Agreement to a
Person (a "Proposed Purchaser"), other than pursuant to an Exempt Transaction
(as defined in Section 5), each Stockholder shall have the right and option,
but not the obligation, to participate in such sale, on the same terms and
subject to the same conditions as the sale by the KKR Holder (a KKR Holder),
for the number of shares of Stock owned by Stockholder equalling the number
derived by multiplying the total number of Buyer Shares (as defined in
Section 5) which the KKR Holder proposes to sell (the "Proposed Number of
Shares") by a fraction, the numerator of which is the total number of shares
of Stock held by Stockholder and the denominator of which is the sum of (A)
the total number of shares of Stock held by Stockholder, (B) the total number
of Buyer Shares, and (C) the total number of shares of Common Stock
(determined on a fully diluted basis) owned by other Persons entitled to the
benefits of "tag-along" rights (including under this Agreement) arising as a
result of such sale.
(ii) Notices. The KKR Holder shall notify, or cause to be
notified, Stockholder in writing of each proposed Private Sale that is
subject to Section 4(a)(i) above. Such notice shall set forth: (1) the
Proposed Number of Shares, (2) the name and address of the Proposed
Purchaser, (3) the proposed amount of consideration, the material terms and
conditions of such sale (and if the proposed consideration is not cash, the
notice shall describe the terms of the proposed consideration) and the
proposed closing date of such sale, (4) the total number of Buyer Shares and
the total number of shares of Common Stock (determined on a fully diluted
basis) owned by Persons entitled to the benefits of any other "tag-along"
rights arising as a result of such sale and (5) an indication that the
Proposed Purchaser has been informed of the "tag-along" right provided for in
this Section 4(a) and has agreed to purchase shares of Stock held by
Stockholder in accordance with the terms hereof. The "tag-along" right may
be exercised by Stockholder by delivery of a written notice from such
Stockholder to the KKR Holder (the "Tag-Along Notice") within 10 days
following receipt of the notice specified in the preceding sentence. The
Tag-Along Notice shall state the number of shares of Stock that Stockholder
proposes to include in such Private Sale to the Proposed Purchaser. If
Stockholder delivers a Tag-Along Notice to the KKR Holder, Stockholder shall
(1) prior to the closing of any such sale, execute and deliver (or cause to
be executed and delivered) any purchase agreement or other documentation
required by the Proposed Purchaser to consummate the sale (including all
legal opinions, cross-receipts and certificates), which purchase agreement
and other documentation shall be on terms no less favorable in respect of any
material term to Stockholder than those executed by the KKR Holder and (2) at
the closing of any such sale, deliver to the Proposed Purchaser the
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certificate or certificates representing the shares of Stock to be sold
pursuant to such sale by Stockholder, duly endorsed for transfer with
signatures guaranteed, against receipt of the purchase price thereof.
(iii) Number of Shares to be Sold. If a Tag-Along Notice is
received pursuant to Section 4(a)(ii), Stockholder shall be permitted to sell
to the Proposed Purchaser up to the number of Shares determined as set forth
in Section 4(a)(i) above (the "Proposed Shares"), and the KKR Holder shall be
permitted to sell to the Proposed Purchaser up to a number of shares of
Common Stock (the "Proposed Buyer Shares") equal to the Proposed Number of
Shares less the aggregate number of Proposed Shares and all other shares of
Common Stock being sold to such Proposed Purchaser in such transaction
pursuant to tag-along rights arising as a result of such sale; provided, that
the KKR Holder shall have the right to sell a number of additional shares of
Common Stock up to the excess of the Proposed Number of Shares over the
number of Proposed Buyer Shares, if the Proposed Purchaser wishes to purchase
such additional shares. If no Tag-Along Notice is received by the KKR Holder
pursuant to Section 4(a)(ii), such KKR Holder shall have the right for a 120-
day period to sell to the Proposed Purchaser up to the Proposed Number of
Shares on terms and conditions no more favorable in any material respect to
the KKR Holder than those stated in the Tag-Along Notice.
(b) "Tag-Along" Right With Respect to Public Sales by KKR Holders.
(i) Public Sales of Shares by KKR Holders. Subject to the last sentence of
Section 4(c)(i), with respect to any proposed sale of any Buyer Shares by a
KKR Holder during the term of this Agreement in a Public Offering,
Stockholder shall have the right and option, but not the obligation, to
participate in such Public Offering on the same terms and subject to the same
conditions as the sale by the KKR Holder, for the number of Shares owned by
Stockholder as determined pursuant to Section 4(b)(iii) below.
(ii) Notices. The KKR Holder shall notify, or cause to be
notified, Stockholder in writing of each proposed Public Offering that is
subject to Section 4(b)(i) above (a "Proposed Registration"). Such notice
may be given before the filing of such registration statement and need not
specify any price or other terms or conditions of such sale. If within 5
days of the delivery of such notice to Stockholder, the KKR Holder receives
from Stockholder a written request (a "Request"), which Request shall be
irrevocable, to register Shares held by Stockholder, shares of Stock shall be
so registered as and to the extent provided in this Section 4(b) if Buyer
Shares are so registered. If Stockholder delivers a Request to the KKR
Holder, Stockholder shall participate in such Public Offering, if any, at the
same price and on the same terms and conditions as the KKR Holder, which
price and other terms and conditions shall be determined on behalf of the KKR
Holder and Stockholder by the KKR Holder in its sole discretion. Nothing in
this Agreement shall create any obligation on the part of the KKR Holder to
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cause a registration statement to become effective under the Securities Act
or to consummate a Public Offering.
(iii) Number of Shares to be Sold. The maximum number of Shares
which shall be registered pursuant to a Request shall equal the number
derived by multiplying the total number of Shares held by Stockholder by a
fraction, the numerator of which is the total number of Buyer Shares which
the KKR Holder proposes to sell in the Public Offering and the denominator of
which is the total number of Buyer Shares; provided, that in the event that
the aggregate number of shares of Common Stock to be sold in any Public
Offering is increased or decreased including any decrease resulting from the
advice of the managing underwriter in an underwritten offering that, in its
opinion, the number of Buyer Shares which the KKR Holder proposes to sell in
the Public Offering plus the aggregate number of shares of Common Stock
subject to Requests by all other Stockholders of the Company would be likely
to have an adverse effect on the price, timing or distribution of the shares
of Common Stock offered in such Public Offering), then the number of shares
of Stock which Stockholder shall sell in such Public Offering shall be
increased or decreased by the product of (i) the number of shares of Common
Stock by which the total number of shares of Common Stock in such Public
Offering is increased or decreased and (ii) a fraction, the numerator of
which equals the number of shares of Stock subject to the Request and the
denominator of which is the total number of shares of Common Stock originally
to be so registered.
(iv) Upon delivery of a Request, Stockholder will, if requested by
the KKR Holder, execute and deliver to the KKR Holder a custody agreement and
power of attorney in form and substance reasonably satisfactory to the KKR
Holder with respect to the Shares to be registered pursuant to this Section
4(b) (a "Custody Agreement and Power of Attorney"). The custodian and
attorney-in-fact under the Custody Agreement and Power of Attorney shall be
the KKR Holder or its designee. The Custody Agreement and Power of Attorney
shall provide, among other things, that Stockholder shall 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 Stockholder's agent and attorney-in-fact with full power
and authority to act under the Custody Agreement and Power of Attorney on
Stockholder's behalf with respect to the matters specified therein (including
executing an underwriting agreement and cross-receipts).
(v) Stockholder agrees that, if Stockholder shall make a Request,
Stockholder shall execute and deliver or cause to be executed and delivered
such other agreements and other documents (such as legal opinions, cross-
receipts and certificates) as the KKR Holder itself is delivering or as the
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KKR Holder may otherwise reasonably request to implement the provision of
this Section 4(b).
(vi) Stockholder shall bear a proportionate amount of the expenses
(including filing fees, underwriting discounts and commissions and attorneys
and accountants fees) relating to such Public Offering (based on the relative
number of shares of Common Stock of Stockholder which are covered by the
applicable registration statement relative to the total number of shares
covered by such registration statement).
(vii) If a Proposed Registration involves an underwritten
offering, the investment banker(s), underwriter(s) and manager(s) for such
Public Offering shall be selected by the KKR Holder.
(c) "Drag-Along" Right With Respect to the Shares of Stock.
(i) Sales by KKR Holders. In the event that the KKR Holder determines,
during the term of this Agreement, to transfer either (A) at least 35% of the
shares of Common Stock (including shares issuable upon exercise of a 25-year
option held by RFM (the "Option") in the event that the Option is to be
transferred) then outstanding on a fully diluted basis at the time of such
transfer or (B) at least 15% of the shares of Common Stock (including shares
subject to the Option in the event that the Option is to be transferred) then
outstanding on a fully diluted basis at the time of such transfer (provided
that such percentage set forth in this clause (B) equals 100% of the Buyer
Shares at the time of such transfer) to a Proposed Purchaser in a Private
Sale, other than in an Exempt Transaction (a "Drag-Along Sale"), then upon
the request of the KKR Holder, Stockholder shall transfer to such Proposed
Purchaser, at the same price and upon the same terms and conditions in
respect of any material term as such transfer by the KKR Holder, the
percentage of shares of Stock held by Stockholder that equals the percentage
of shares of Common Stock to be transferred by the KKR Holder (including
shares subject to the Option in the event that the Option is to be
transferred) relative to the number of Buyer Shares. In the event that
Sections 4(a), 4(b) and 4(c) hereto apply to a single transaction, the "drag-
along" rights set forth in this Section 4(c) shall have priority over the
"tag-along" rights set forth in Sections 4(a) and 4(b) above, and the "tag-
along" rights set forth in Sections 4(a) and 4(b) shall not become
exercisable by Stockholder unless the KKR Holder shall have determined not to
exercise its rights under this Section 4(c).
(ii) Notice. Prior to making any Drag-Along Sale, the KKR Holder
shall, if it determines in its sole discretion that Stockholder should
participate in such transfer, provide Stockholder with written notice (the
"Drag-Along Notice") not less than 5 Business Days prior to the proposed date
of the Drag-Along Sale (the "Drag-Along Sale Date"). The Drag-Along Notice
shall set forth: (A) the name and address of the Proposed Purchaser; (B) the
proposed amount and form of consideration to be paid per share of Common
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Stock and the material terms and conditions of the transfer; (C) the Drag-
Along Sale Date and the date upon which Stockholder shall deliver to the KKR
Holder the certificates representing the shares of Common Stock held by such
Stockholder, duly endorsed, and the power of attorney referred to below; and
(D) an indication that the Proposed Purchaser has been informed of the Drag-
Along Sale rights and has agreed to acquire all of the shares of Common Stock
held by Stockholder. Stockholder shall (A) prior to the closing of any such
transfer, execute any purchase agreement or other documentation required by
the Proposed Purchaser to consummate the transfer, which purchase agreement
and other documentation shall be on terms no less favorable in respect of any
material term to Stockholder than those executed by the KKR Holder, and (B)
at the closing of any such transfer, deliver to the Proposed Purchaser the
certificate or certificates representing the shares of Common Stock held by
Stockholder, duly endorsed for transfer with signatures guaranteed, against
receipt of the purchase price thereof.
(iii) Transaction Agreements. In the event that the KKR Holder
owns at least 15% of the shares of Common Stock (including shares subject to
the Option) then outstanding on a fully diluted basis and has signed an
agreement, with respect to all such Buyer Shares, to vote in favor of or
tender in connection with a business combination transaction entered into by
the Company (a "Transaction Agreement"), then, upon the request of the KKR
Holder, Stockholder shall execute a Transaction Agreement with the same terms
and conditions in all material respects as the Transaction Agreement signed
by the KKR Holder. Prior to entering into a Transaction Agreement, the KKR
Holder shall, if it determines in its sole discretion that Stockholder should
execute a Transaction Agreement, provide Stockholder with written notice (the
"Transaction Agreement Notice") not less than 5 Business Days prior to the
proposed date of the execution of the Transaction Agreement (the "Transaction
Agreement Date"). The Transaction Agreement Notice shall set forth: (A) the
name and address of the counter-parties to the Transaction Agreement; (B) the
proposed form of Transaction Agreement; and (C) the material terms and
conditions of the business combination with the Company to which the
Transaction Agreement relates. Stockholder shall, at the signing and closing
of such Transaction Agreement, execute and deliver all other documentation
required by such Transaction Agreement, which documents shall be on terms no
less favorable in respect of any material term to Stockholder than those
executed by the KKR Holder.
(iv) Effect of Drag-Along Sale. If Stockholder receives his
proportionate share of the purchase price from a Drag-Along Sale, but has
failed to deliver certificates representing his shares of Common Stock as
described in this Section 4(c), he shall for all purposes be deemed no longer
to be a Stockholder of Common Stock, shall have no voting rights, shall not
be entitled to any dividends or other distributions with respect to the
Common Stock held by him, and shall have no other rights or privileges
granted to Stockholders under law or this Agreement.
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5. Certain Definitions. For purposes of this Agreement, the
term:
(a) "Buyer Shares" shall mean the sum of the shares of Common
Stock beneficially owned by RFM and its Affiliates as of the date hereof.
(b) "Exempt Transaction" shall mean (i) sales by RFM to any
Affiliate of RFM, (ii) sales by any Affiliate of RFM to another Affiliate of
RFM or to RFM and (iii) transfers by RFM and its respective Affiliates to its
partners or members (and any subsequent sales by such partners or members) in
the form of dividends or distributions (whether upon liquidation or
otherwise); provided, that prior to any transfer described in clauses (i) and
(ii) above, the applicable transferee shall have agreed in writing to be
bound by the terms of this Agreement as if such transferee were "RFM"
hereunder; and provided, further, that prior to any transfer described in
clause (iii) above, if the transferee is an Affiliate of KKR, such transferee
shall have agreed in writing to be bound by the provisions of this Agreement
as if such transferee were "RFM" hereunder.
(c) "KKR" means Kohlberg Kravis Roberts & Co., L.P.
(d) "KKR Holder" shall mean RFM and any Person to whom a KKR
Holder transfers shares of Common Stock which Person is required by this
Agreement to be bound by the provisions of this Agreement.
(e) "Private Sale" shall mean any sale of shares of Common Stock
other than a sale made in a Public Offering.
(f) "Public Offering" shall mean any sale of shares of Common
Stock made in a public distribution pursuant to an effective registration
statement under the Securities Act.
(g) "RFM" means RFM Acquisition LLC, a Delaware limited liability
company.
6. Stock Issued to Purchaser Upon Exercise of Stock Options.
The Company may from time to time grant to the Purchaser, in
addition to the Options, options under the Plan to purchase shares of Common
Stock at the Per Share Purchase Price or at a different option exercise
price.
7. 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
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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.
(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 7(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 7(b) shall be deemed to
limit in any manner the restrictions on sales of Stock contained in this
Agreement.
8. Recapitalizations, etc.
The provisions of this Agreement shall apply, to the full extent
set forth herein with respect to the Stock, 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,
by reason of any stock dividend, split, reverse split, combination,
recapitalization, liquidation, reclassification, merger, consolidation or
otherwise.
9. 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 to Stockholder.
10. 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 3 hereof, such transferee shall be deemed the
Stockholder hereunder; provided, however, that no transferee (including
without limitation, transferees referred to in Section 3 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.
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11. Amendment.
This Agreement may be amended only by a written instrument signed
by the Parties hereto.
12. Closing.
Except as otherwise provided herein, each closing of the purchase
and sale of shares of Stock pursuant to this Agreement shall take place at
the principal office of the Company in a manner and at a time determined by
the Company, in its sole discretion.
13. 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 Stockholder, 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 Stockholder 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 Stockholder, in such other jurisdictions and in such
manner, as may be permitted by applicable law. Stockholder 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 Stockholder
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.
14. 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
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provision of this Agreement shall be declared illegal, void or unenforceable
by any court of competent jurisdiction, the other provisions shall not be
affected, but shall remain in full force and effect.
15. 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 Stockholder, 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.
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16. Covenant Not to Compete; Confidential Information.
(a) In consideration of the Company entering into this Agreement
with Stockholder, Stockholder hereby agrees effective as of the Purchase
Date, until the one-year anniversary of the date Stockholder shall cease to
be a member of the Board of Directors of the Company (the "Non-Compete
Period"), Stockholder shall not, directly or indirectly, without the consent
of the Committee, 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, Stockholder
hereby agrees that during the Non-Compete Period, Stockholder shall not,
directly or indirectly, without the consent of the Committee, 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.
(b) Except as required by law or judicial process, Stockholder
will not disclose or use at any time, any Confidential Information (as
defined below) of which Stockholder 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 Stockholder's performance of
duties, if any, assigned to Stockholder 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, 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 Stockholder
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proposes to disclose or use such information. Stockholder 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
Stockholder while employed by the Company or its subsidiaries belong to the
Company. Stockholder 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 Stockholder's
services are unique and because Stockholder 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).
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IN WITNESS WHEREOF, the Parties have executed this Agreement as of
the date first above written.
RANDALL'S FOOD MARKETS, INC.
By ________________________________
Name: Lee E. Straus
Title: Senior Vice President-Finance,
Secretary & Treasurer
________________________________
[Insert Name of Director]
_____________________________
_____________________________
Address of Stockholder
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Exhibit A
Amended and Restated 1997
Stock Purchase and Option Plan for
Randall's Food Markets, Inc.
and Subsidiaries.
See attached.
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Exhibit B
Form of Director's Non-Qualified Stock Option Agreement
See attached.
Exhibit 4.7
FORM OF DIRECTOR'S NON-QUALIFIED STOCK OPTION AGREEMENT
THIS AGREEMENT, dated as of ________________, 1999 is made by and
between Randall's Food Markets, Inc., a Texas corporation (hereinafter
referred to as the "Company"), and __________________, a member of the board
of directors of the Company (the "Board"), 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 tenure as a Director (as hereinafter defined), and has
advised the Company thereof and instructed the undersigned officers to issue
said Option;
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.
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Section 1.2 - Code
"Code" shall mean the Internal Revenue Code of 1986, as amended.
Section 1.3 - Committee
"Committee" shall mean the Compensation Committee of the Company.
Section 1.4 - Director
"Director" shall mean any member of the Board.
Section 1.5 - Outside Director's Stockholder Agreement
"Outside Director's Stockholder Agreement" shall mean that certain
Outside Director's Stockholder Agreement dated as of __________ between the
Optionee and the Company.
Section 1.6 - Grant Date
"Grant Date" shall mean the date on which the Option provided for
in this Agreement is granted.
Section 1.7 - 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 1.8 - 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 - Option
"Option" shall mean the non-qualified Option to purchase Common
Stock granted under this Agreement.
Section 1.10 - Performance Option
"Performance Option" shall mean an Option with respect to which
the commencement of exercisability is governed by Section 3.1(a) hereof.
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Section 1.11 - Permanent Disability
The Optionee shall be deemed to have a "Permanent Disability" if
the Optionee is unable to engage in the activities required by the Optionee's
position on the Board of Directors of the Company by reason of any medically
determined physical or mental impairment which can be expected to result in
death or which has lasted or can be expected to last for a continuous period
of not less than 12 months.
Section 1.12 - Plan
"Plan" shall mean the Amended and Restated 1997 Stock Purchase and
Option Plan for Randall's Food Markets, Inc. and Subsidiaries, as amended
from time to time.
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 - Secretary
"Secretary" shall mean the Secretary of the Company.
Section 1.15 - 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.
ARTICLE II
GRANT OF OPTION
Section 2.1 - Grant of Option
For good and valuable consideration, on and as of the date hereof
the Company irrevocably grants to the Optionee 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.
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Section 2.2 - Exercise Price
Subject to Section 2.4, the exercise price of the shares of stock
covered by the Option shall be $12.96 per share without commission or other
charge.
Section 2.3 - Consideration to the Company
In consideration of the granting of this Option by the Company, the
Optionee agrees to render service as a member of the Board, with such duties
and responsibilities as the Company shall from time to time require the
Optionee to perform. Nothing in this Agreement or in the Plan shall confer
upon the Optionee any right to remain a Director for any specific period of
time or shall limit the Company's ability to remove the Optionee, in his
capacity as a Director, in accordance with applicable law and the governing
corporate documents of the Company.
Section 2.4 - Adjustments in Option 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 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) The Performance Option shall become exercisable with respect to
33 1/3% 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
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subsequent to a Missed Year, EBITDA exceeds the EBITDA Target and Cumulative
EBITDA exceeds the Cumulative EBITDA Target, then any prior percentage of
Performance Option in respect of prior Missed Years shall become exercisable
(but only to the extent such Option has not otherwise terminated or become
exercisable).
(b) Notwithstanding the foregoing, the Performance Option shall
become immediately exercisable as to 100% of the shares of Common Stock
subject to such Option on the earlier of (i) seven years and 11 months after
the Grant Date (but only to the extent such Option has not otherwise
terminated or become exercisable) and (ii) 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 partnership, limited partnership, syndicate or other group for
the purpose of acquiring, holding or disposing of securities of the Company.
(c) For purposes of Section 3.1(a):
(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 28, 1998 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 June 28, 1998 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
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disposal of discontinued operations and loss from operation of
discontinued operations.
(v) "EBITDA Target" shall have the meaning ascribed to such term
in Schedule I hereto for Plan Years 1999 through 2001 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 28, 1998 to June
26, 1999 with respect to Plan Year 1999 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) 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 Option
The Option may not be exercised to any extent by the Optionee after
the first to occur of the following events:
(a) The first anniversary of the date of the Optionee's ceasing to
be a Director by reason of death or Permanent Disability; or
(b) The first business day which is thirty calendar days after
removal of the Optionee from the Board for cause pursuant to applicable
state law and the governing corporate documents of the Company; or
(c) In any other event, the tenth anniversary of the Grant Date;
or
(d) 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
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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 OPTION
Section 4.1 - Person Eligible to Exercise
Except as otherwise provided in the Outside Director's Stockholder
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
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
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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.
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
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(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. 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 Option. 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 - Option Not Transferable
Except as provided in the Outside Director's Stockholder Agreement,
neither the Option 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.
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Section 5.3 - Shares to Be Reserved
The Company shall at all times during the term of the Option
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
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 Outside Director's Stockholder
Agreement
The Option and the shares of Common Stock issued to the Optionee
upon exercise of the Option shall be subject to all of the terms and
provisions of the Plan and the Outside Director's Stockholder Agreement, to
the extent applicable to the Option 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 Outside Director's Stockholder Agreement, the terms of the Outside
Director's Stockholder 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.
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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 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.
Section 5.10 - Counterparts
This Agreement may be signed in counterparts, each of which shall be an
original, with the same effect as if the signatures thereto and hereto were
upon the same instrument.
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IN WITNESS WHEREOF, this Agreement has been executed and delivered
by the parties hereto as of the date first above written.
RANDALL'S FOOD MARKETS, INC.
By __________________________
Its:
___________________________
Optionee Aggregate number of shares
of Common Stock for which
___________________________ the Performance Option granted
hereunder is exercisable:
___________________________ __________________
Address
Optionee's Taxpayer
Identification Number:
___________________________
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Schedule I
Plan Year EBITDA Target
--------- -------------
1999 $155 million
2000 $210 million
2001 $240 million
EXHIBIT 5
January 15, 1999
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"),
which Registration Statement constitutes Post-Effective Amendment No. 1 to
the Registration Statement on Form S-8 (File No. 333-44157) relating to the
issuance by the Company of an additional 350,000 shares of the Company's
Common Stock, par value $.25 per share (the "Shares"), pursuant to the
Amended and Restated 1997 Stock Purchase and Option Plan for Randall's Food
Markets, Inc. and Subsidiaries, being a plan for employees, directors or
other persons having a relationship with 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.
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This opinion is rendered to you in connection with the Registration
Statement. 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.
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Exhibit 23.1
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Post-Effective Amendment
No. 1 to Registration Statement No. 333-44157 of Randall's Food Market's Inc.
on Form S-8 of our report dated August 26, 1998, appearing in the Annual
Report on Form 10-K of Randall's Food Market's Inc. for the years ended
June 27, 1998 and June 28, 1997.
/s/ DELOITTE & TOUCHE LLP
DELOITTE & TOUCHE
Houston, Texas
January 14, 1999
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 seventh paragraph of
Note 5, as to which the date is June 27, 1997, included in Randall's Food
Markets, Inc. 1998 Form 10-K and to all references to our firm included in
this registration statement.
/S/ ARTHUR ANDERSEN LLP
ARTHUR ANDERSEN LLP
Houston, Texas
January 14, 1999
