<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15 (D) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): February 29, 2000
EAGLE FOOD CENTERS, INC.
(Exact name of registrant as specified in the charter)
Commission File Number 0-17871
DELAWARE 36-3548019
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
RT. 67 & KNOXVILLE RD., MILAN, ILLINOIS 61264
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (309) 787-7700
ITEM 3. BANKRUPTCY OR RECEIVERSHIP.
(a) On February 29, 2000, the Registrant, Eagle Food Centers, Inc.
filed a Voluntary Petition under Chapter 11 of the Bankruptcy Code (the
"Petition") with the United States Bankruptcy Court for the District of Delaware
- -IN RE EAGLE FOOD CENTERS, INC., DEBTOR, Chapter 11, Case No. 00-01311. The
directors and officers of Eagle Food Centers, Inc. are expected to remain in
possession during the proceedings, subject to the supervision of the Bankruptcy
Court. As of the date of this report, no plan of reorganization has been filed
by the Registrant and no trustee has been appointed.
On February 29, 2000 Eagle Food Centers, Inc. issued a press release in
which it announced: (i) the filing of the Petition, (ii) the negotiation of a
$50 million debtor in possession ("DIP") credit facility with its current
largest secured lender, Congress Financial Corporation (Central), (a copy of
which is attached hereto as Exhibit 99.1 and incorporated herein by reference);
and (iii) that the largest identifiable unsecured institutional holders of its 8
5/8% Senior Notes due April 15, 2000, representing $29 million of the $100
million issue, had entered into agreements (in the form of Exhibit 99.2 attached
hereto and incorporated herein by
<PAGE>
reference) to vote in favor of a proposed plan of reorganization. A copy of the
press release issued on February 29, 2000 is annexed as Exhibit 99.3 hereto and
incorporated herein by reference.
On March 2, 2000 Eagle Food Centers issued a press release in the form
of Exhibit 99.4 attached hereto and incorporated herein by reference, announcing
that it had obtained the Bankruptcy Court's approval of interim debtor in
possession financing, payment of certain prepetition claims and certain other
requests, scheduling a hearing on March 21, 2000 to consider its request for
final approval of the $50 million DIP and to pay prepetition claims of its
remaining trade creditors, and scheduling a confirmation hearing on a plan of
reorganization on May 17, 2000.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(c) Exhibits:
99.1 Congress Financial Debtor-in-Possession
Credit Facility dated March 1, 2000.
99.2 Form of Noteholder agreements to vote for
Plan of Reorganization.
99.3 Press release dated February 29, 2000.
99.4 Press release dated March 2, 2000.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
EAGLE FOOD CENTERS, INC.
(Registrant)
By: /s/ S. Patric Plumley
---------------------------------
S. Patric Plumley
Senior Vice President-
Chief Financial Officer and Secretary
Dated: March 15, 2000
<PAGE>
INDEX TO EXHIBITS
Exhibit No. Description:
99.1 Congress Financial Debtor-in-Possession Credit Facility dated
March 1, 2000.
99.2 Form of Noteholder agreements to vote for Plan of
Reorganization.
99.3 Press Release dated February 29, 2000.
99.4 Press Release dated March 2, 2000.
<PAGE>
Exhibit 99.1
CONVERSION AGREEMENT AND
AMENDMENT TO FINANCING AGREEMENTS
THIS CONVERSION AGREEMENT AND AMENDMENT TO FINANCING AGREEMENTS is
made and entered into as of March 1, 2000 (the "Conversion and Amendment"), by
and between EAGLE FOOD CENTERS, INC., as debtor-in-possession ("Debtor") and
CONGRESS FINANCIAL CORPORATION (CENTRAL), as lender ("Congress").
RECITALS
A. Eagle Food Centers, Inc., as pre-petition debtor, and Congress
are the parties to that certain Loan and Security Agreement dated as of May 25,
1995, as previously amended (the "Pre-Petition Credit Agreement"), and the other
Financing Agreements, as defined in the Pre-Petition Credit Agreement (all such
Financing Agreements, together with the Pre-Petition Credit Agreement, in each
case prior to this Amendment or any other amendment executed on or after the
date hereof, collectively, the "Original Financing Agreements"). Capitalized
terms used herein and not otherwise defined herein shall have the meanings set
forth in the Pre-Petition Credit Agreement, as amended hereby.
B. Debtor has filed a petition for relief under chapter 11 of title
11 of the United States Code 11 U.S.C. section 101, et seq. (the "Bankruptcy
Code"), in the United States Bankruptcy Court for the District of Delaware (the
"Bankruptcy Court"), on February 29, 2000 (the "Petition Date"), Case No.
00-1311 (RRM) (the "Case").
C. The commencement of the Case constituted an Event of Default
under the Pre-Petition Credit Agreement
D. In order to continue its operation as a debtor-in-possession
under the Bankruptcy Code pending its reorganization, Debtor has requested that
Congress continue making secured loans in its sole discretion to the Debtor (the
"DIP Financing"). Congress is willing to continue the $50,000,000 line of credit
for the Debtor only if, among other things, the Original Financing Agreements
are amended as hereinafter set forth and the Bankruptcy Court enters an interim
and final order approving this Conversion and Amendment and otherwise in form
and substance satisfactory to Congress (the "Interim Order", and the "Final
Order," respectively).
NOW, THEREFORE, in consideration of the premises, and for other good
and valuable consideration, the receipt and adequacy of which are hereby
acknowledged, the parties hereto agree as follows:
1. Amendments. The parties hereby amend the Financing Agreements as
follows:
1
<PAGE>
(a) From and after the date hereof, all references in the Financing
Agreements to "Eagle Food Centers, Inc.," "Eagle," "Borrower," "Grantor,"
"Mortgagor," the "Company" and all other references to Eagle Food Centers, Inc.
in any capacity shall be deemed to be references to Eagle Food Centers, Inc.
both before the Petition Date, as pre-petition debtor, and on and after the
Petition Date, as debtor-in-possession in the Case.
(b) Section 1 of the Pre-Petition Credit Agreement is hereby amended
by adding in their proper alphabetical order the definitions of "Conversion and
Amendment," "Bankruptcy Code," "Bankruptcy Court," "Case," "DIP Financing,"
"Original Financing Agreements," "Petition Date," and "Pre-Petition Credit
Agreement," set forth in the recitals of this Amendment.
(c) Section 1 of the Pre-Petition Credit Agreement is hereby further
amended by adding the following definitions in their proper alphabetical order
(to the extent such terms are not already defined in the Pre-Petition Credit
Agreement) and by substituting the following definitions for the existing
definitions of such terms (to the extent such terms are currently defined in the
Pre-Petition Credit Agreement):
"Agreement" shall mean the Loan and Security Agreement, dated
as of May 25, 1995, as previously amended or otherwise modified
including as amended by the Conversion and Amendment and as the
foregoing may hereafter be extended, amended or supplemented,
including pursuant to any order of the Bankruptcy Court.
"Debtor" shall mean Eagle Food Centers, Inc. as debtor and
debtor-in-possession in the Case under the Bankruptcy Code.
"Final Order" shall mean either (i) the Interim Order which
has become final pursuant to the terms of ordering paragraph 27 of
the Interim Order; or (ii) an order of the Bankruptcy Court entered
in the Case after the Final Hearing as defined in the Interim Order,
inter alia, authorizing the Debtor, as debtor-in-possession, to
incur secured indebtedness pursuant to Section 364 of the Bankruptcy
Code, which order shall be in form and substance satisfactory to
Congress in its sole discretion.
"Financing Agreements" shall mean the Loan and Security
Agreement dated as of May 25, 1995, and all amendments thereto, as
extended, amended and supplemented by the Conversion and Amendment,
the Interim Order, the Final Order, and all security agreements,
financing statements, lease assignments, guaranties, lockbox and/or
blocked account agreements, letters of credit and other agreements,
instruments, documents and written indicia of contractual
obligations between Debtor and Lender, any Affiliate of Debtor and
Lender, any Person owning Collateral and Lender, and/or any Person
guaranteeing all or any portion of the Obligations and Lender, in
connection with the transactions contemplated
2
<PAGE>
hereby, whether pre-petition or post-petition, as each such document
has been and may from time to time be amended or supplemented.
"Interim Order" shall mean the order of the Bankruptcy Court
entered in the Case pursuant to Sections 363 and 364 of the
Bankruptcy Code, inter alia, authorizing Debtor, as
debtor-in-possession, to enter into that certain Conversion and
Amendment by and among Debtor and Lender, which order shall be in
form and substance satisfactory to Lender.
"Maturity Date" shall mean the date on which the Agreement
ceases to continue in full force and effect pursuant to Section
12.1(a) of the Agreement.
"Revolving Loans" shall mean any loan or extension of credit,
whether made before or after the Petition Date, by Lender pursuant
to the Financing Agreements.
(d) The definition of "Availability Reserves" as contained in
Section 1 of the Pre-Petition Credit Agreement is amended by inserting in the
first line thereof following the phrase "shall mean," the following:
"an amount equal to all outstanding principal under the Pre-Petition
Credit Agreement and all interest, charges, fees, costs and expenses
as of the commencement of the case, including any amounts
attributable to the foregoing that Congress may from time to time
assert and including the amount of the "Carve-Out" as set forth in
Section 10.1(h), plus"
(e) Section 4.2 of the Pre-Petition Credit Agreement is amended by
deleting the "and" at the end of subsection (a), by replacing the final period
at the end of subsection (b) with a semi-colon, and by adding, in their proper
order as subsections (c) and (d) thereto, the following:
"(c) upon the making of any Loans or the provision of any Letter of
Credit Accommodations to Borrower after the Petition Date, which
amounts are not concurrently collected by Lender pursuant to section
6 hereof; the Borrower shall have previously or contemporaneously
delivered to Lender a detailed budget setting forth the projected
requirements for funding the Borrower's continued operations from
the date of the funding through the confirmation of the Case (the
"Budget"); and
(d) if, after giving effect to the making of such Loans or the
provision of such Letter of Credit Accommodations to Borrower, the
aggregate principal amount of the Loans plus the aggregate Letter of
Credit Accommodations would exceed $30,000,000, the Lender shall
have entered into one or more agreements, in a form and substance
satisfactory to Lender in its sole discretion, providing for the
participation by one or
3
<PAGE>
more Persons in the Loans and the Letter of Credit Accommodations in
an amount acceptable to Lender in its sole discretion."
(f) Section 5 of the Pre-Petition Credit Agreement is amended by
adding the following language following the phrase "and wherever located" and
immediately prior to the final parenthetical:
",whether arising or acquired before, on or after the Petition Date"
(g) The Pre-Petition Credit Agreement is amended by adding the
following as Section 6.7 thereof:
"Application of Payments. Debtor and Lender agree that, only
if the failure to apply such amounts to the Obligations arising
before the Petition Date would result in such Obligations being
undersecured, Lender may apply all amounts received by Lender after
the Petition Date to payment of the Obligations arising before the
Petition Date before applying any such amounts to Obligations
arising on or after the Petition Date. Otherwise all such amounts
shall be applied to the Obligations arising after the Petition Date
only. Debtor hereby irrevocably agrees that, subject to the
preceding limitations, Lender shall have the continuing exclusive
right to apply and to reverse and reapply any and all payments
received at any time or times hereafter against the Obligations in
such manner as Lender may deem advisable notwithstanding any entry
by Lender upon any of its books and records."
(h) Section 7.1 of the Pre-Petition Credit Agreement is amended by
replacing subsection (c) thereof with the following:
"(c) at all times that the Excess Loan Availability is less than or
equal to $20,000,000, Debtor shall furnish Lender on each Friday of
each week (or if any such Friday is not a Business Day, the next
Business Day) a report setting forth (i) daily cash flow results for
the four week period ending on the immediately preceding Friday and
also a reconciliation comparing actual expenses paid to the Budget
as contemplated by section 4.3(c) hereto, (ii) daily cash flow
projections for the four week period beginning on the immediately
preceding Saturday, (iii) the actual and projected amount of the
Value of Eligible Inventory (i.e., Inventory, Slow Moving Inventory
and Collateral) as of the prior Business Day, (iv) in the case of
each such report required to be delivered on the last Friday of each
month, monthly cash flow projections for each of the next four
months; and (d) such other reports as to Collateral and such other
financial and operating information as Lender may reasonably request
from time to time."
4
<PAGE>
(i) The Pre-Petition Credit Agreement is amended by replacing
Section 10.1(a), (d), (e), (f), (g), (h), (i), (j), (k), (l) and (m) thereof
with the following, and by addition new subsections corresponding to new Section
10.1(n), (o), (p) and (q) below:
"(a) Debtor fails to pay when due any of the Obligations in
accordance with the terms of the Financing Agreements or fails to
perform any or all of the terms, covenants, conditions or provisions
contained in the Financing Agreements;
(d) Conversion of the Case to a case under Chapter 7 of the
Bankruptcy Code;
(f) appointment of a trustee or an examiner in the Case or
Debtor's application for, consent to, or acquiescence in, any such
appointment;
(g) failure of Debtor to obtain a Final Order (in form and
substance satisfactory to Lender) within 45 days after the Petition
Date, or such later date as Lender may consent to in writing after
the date hereof;
(h) except as expressly permitted in the Interim Order or the
Final Order, which permission shall include the request for a
$250,000 carve-out for professional fees and disbursements as set
forth in the Interim Order (the "Carve Out"), the filing by Debtor,
as debtor-in-possession, of any application for approval or
allowance of, or the entry of any order approving or allowing, any
administrative expense claim in the Case having any priority over,
or being pari passu with, the administrative priority of the DIP
Indebtedness (as defined in the Interim Order or the Final Order);
(i) the entry of an order in the Case granting relief from the
automatic stay of Section 362 of the Bankruptcy Code to any holder
or holders of a lien or security interest on any material Collateral
and allowing such holder or holders to foreclose or otherwise
realize upon such liens and security interests;
(j) any stay, reversal, modification or other amendment in any
respect (except to the extent acceptable to Lender) of the Interim
Order or the Final Order;
(k) any of the Financing Agreements shall cease to be in full
force and effect, or any liens and security interests granted to
Lender under the Financing Agreements shall cease to be in full
force and effect, or any liens and security interests granted to
Lender under the Financing Agreements shall cease to be valid;
5
<PAGE>
(l) Debtor, as debtor-in-possession, voluntarily or
involuntarily dissolves or is dissolved, terminates or is
terminated, liquidates or is liquidated or ceases the operation of
any material portion of its business, other than the 19 store
closings to which Congress has previously consented;
(m) (A) the filing of any motion or proceeding with the
Bankruptcy Court, which is not dismissed, denied with prejudice or
otherwise resolved to the satisfaction of Lender within 45 days of
such filing, challenging or seeking otherwise to modify, limit,
subordinate or avoid the priority of any Obligations or the
perfection or priority of Lender's pre-petition or post-petition
liens on any material portion of the Collateral, or seeking to
impose, surcharge or assess against Lender, its claims or its
Collateral any costs or expenses, whether pursuant to Section 506(c)
of the Bankruptcy Code or otherwise, or (B) the entry of any order
having any such effect;
(n) any violation by Debtor, as debtor-in-possession, of any
material term or provision of the Interim Order or the Final Order;
(o) the filing of any motion or application with the
Bankruptcy Court seeking the entry of, or the entry of, an order
approving any subsequent debtor-in-possession facility for borrowed
money unless such subsequent facility and such court order expressly
provide for the final payment in full to Lender of all Obligations
prior to or simultaneously with any initial borrowings under such
subsequent facility;
(p) any event or circumstance shall occur or exist and such
event or circumstance is likely, in the Lender's reasonable
judgment, to have a Material Adverse Effect; or
(q) there shall be a default or an event of default under any
of the other Financing Agreements."
(j) The Pre-Petition Credit Agreement is amended by replacing
Section 12.1(a) thereof with the following:
"(a) This Agreement and the other Financing Agreements shall
be effective as of the date set forth on the first page hereof and
shall continue in full force and effect until the earliest to occur
of the following, at which time (and except as Lender may otherwise
agree in writing in its sole discretion), this Agreement shall
immediately and automatically terminate and all Obligations shall be
immediately due and payable (such date of termination being the
"Maturity Date"):
(i) April 15, 2002;
6
<PAGE>
(ii) the date of final payment and satisfaction in full
of the Obligations and termination of the DIP
Financing pursuant to this Agreement;
(iii) the effective date of any confirmed plan of
reorganization in the Case;
(iv) the dismissal of the Case; or
(v) Lender's election, in its sole discretion, to
terminate this Agreement upon the occurrence of
any Event of Default.
The parties agree that Lender shall have the right in its sole
discretion to determine whether to grant any extensions to the
Maturity Date set forth in subparagraph (i) above. No
termination of this Agreement shall relieve or discharge
Debtor of its duties, obligations and covenants hereunder
until all Obligations have been indefeasibly paid and
satisfied in full in cash, and Lender's continuing security
interest in the Collateral shall remain in effect until such
duties, obligations, and covenants have been fully discharged
and Lender's claim has been fully and finally allowed by order
of the Bankruptcy Court. Upon the effective date of
termination or non-renewal of the Financing Agreements,
Borrower shall pay to Lender, in full, all outstanding and
unpaid Obligations and shall furnish cash collateral to Lender
in such amounts as Lender determines are reasonably necessary
to secure Lender from loss, cost, damage or expense, including
attorneys' fees and legal expenses, in connection with any or
all issued and outstanding Letter of Credit Accommodations and
checks or other payments provisionally credited to the
Obligations and/or as to which Lender has not yet received
final and indefeasible payment. Such cash collateral shall be
remitted by wire transfer in U.S. funds to such bank account
of Lender, as Lender may, in its discretion, designate in
writing to Borrower for such purpose. Interest shall be due
until and including the next Business Day, if the amounts so
paid by Borrower to the bank account designated by Lender are
received in such bank account later than 12:00 noon, Chicago
time."
2. Debtor's Agreement to Assume Certain Obligations and be Bound and
Confirmation of Security Interest. The Debtor as debtor-in-possession in the
Case, hereby (a) agrees to be bound by the terms of the Financing Agreement as
if all references therein to "Eagle Food Centers, Inc.," "Eagle," "Borrower,"
"Debtor," "Grantor," "Mortgagor," the "Company" and all other references to
Debtor in any other capacity included a reference to it as debtor-in-possession,
(b) specifically confirms that the security interests described in the Original
Financing Agreements include a duly authorized grant by it of security interests
in its assets, whether arising or acquired before or after the Petition Date, to
secure payment of the
7
<PAGE>
Obligations arising both before and after the Petition Date, and (c) grants
Liens in favor of Congress on the post-petition assets of Debtor of the type in
which Congress was granted a pre-petition security interest under the Original
Financing Agreements; provided, however, that the provisions of clauses (b) and
(c) shall be subject to the provisions of ordering paragraph 6 of the Interim
Order (Limitations on Cross-Collateralization and Liens).
3. Exclusion of Pre-Petition Debt. Other than as provided in
ordering paragraphs J,5 and 6 of the Interim Order and as set forth in Paragraph
2(b) and (c) above, this Agreement (a) is not intended nor shall it be
interpreted to effect an assumption of the Debtor's Obligations under the
Pre-Petition Credit Agreement which arise from any pre-petition principal,
interest, charges, fees, costs or expenses, and (b) is not intended nor shall it
be interpreted to prejudice in any way the rights of Congress to assert such
Obligations as pre-petition claims in the Case.
4. Entire Agreement and Acknowledgements of the Parties. Congress
and the Debtor agree that the amendments set forth in this Conversion and
Amendment as modified by the Interim Order constitute the entire agreement of
the parties with respect to the matters set forth herein, shall be limited
precisely as written and shall not be deemed to be a consent to any waiver,
amendment or modification of any other term or condition of any of the Financing
Agreements.
5. Conditions Precedent. The effectiveness of this Conversion and
Amendment shall be subject to satisfaction of the following conditions (any one
or all of which may be waived by Congress in its sole discretion):
(a) Receipt by Congress of counterparts of this Conversion and
Amendment, duly executed by Congress and the Debtor;
(b) Entry by the Bankruptcy Court of the Interim Order in form
and substance satisfactory to Congress; and
(c) Receipt by Congress of any and all further agreements,
certificates or documents as Congress shall reasonably request together
with any consents from third party creditors of Debtor deemed necessary by
Congress.
6. References in Other Documents. All references to any of the
original Financing Agreements shall be deemed to be a reference to such
Financing Agreement as amended.
7. Miscellaneous.
(a) To induce Congress to enter into this Conversion and
Amendment, Debtor hereby represents and warrants to Congress that Debtor
has full corporate power and authority to enter into this Conversion and
Amendment, that this Conversion and Amendment has been duly authorized,
executed and delivered by Debtor, and that this
8
<PAGE>
Conversion and Amendment constitutes a legal, valid and binding obligation
of Debtor, enforceable against Debtor in accordance with its terms.
(b) This Conversion and Amendment may be signed in any number
of counterparts, each of which constitutes an original, but all of which,
taken together, shall constitute one and the same instrument.
(c) It is the parties' intention that this Conversion and
Amendment be interpreted in such a way that it is valid and effective
under applicable law; however, if one or more of the provisions of this
Conversion and Amendment shall for any reason be found to be invalid or
unenforceable, the remaining provisions of this Conversion and Amendment
shall be unimpaired.
8. Choice-of-Law. Any dispute between Congress and Debtor arising
out of, connected with, related to, or incidental to the relationship
established between them in connection with this Conversion and Amendment, and
whether arising in contract, tort, equity or otherwise, shall be resolved in
accordance with the internal laws and not the conflicts of law provisions of the
State of Illinois.
[THIS SPACE INTENTIONALLY LEFT BLANK]
9
<PAGE>
IN WITNESS WHEREOF, the parties have duly executed and delivered
this Conversion and Amendment as of the day and year first above written.
EAGLE FOOD CENTERS, INC.,
as debtor-in-possession
By: /s/ S. Patric Plumley
------------------------------
Name: S. Patric Plumley
----------------------------
Title: Sr. VP-CFO
----------------------------
CONGRESS FINANCIAL (CENTRAL)
CORPORATION
By: /s/ Steven Linderman
------------------------------
Name: Steven Linderman
----------------------------
Title: First Vice President
----------------------------
[Conversion Agreement and Amendment to Financing Agreements]
10
<PAGE>
Exhibit 99.2
Eagle Food Centers, Inc.
Route 67 at Knoxville Road
Milan, Illinois 61264
February __, 2000
To the Holders of 8 5/8% Senior Notes due
April 15, 2000 of Eagle Food Centers, Inc.
Identified on the Signature Page Hereof:
This letter agreement (this "Agreement") sets forth the terms on
which you have agreed to vote in favor of a plan of reorganization to be filed
by Eagle Food Centers, Inc. (the "Company"), in connection with their
anticipated Chapter 11 bankruptcy filing, under which the Company will propose
to modify the payment terms and obligations under the 8 5/8% Senior Notes due
April 15, 2000 (the "Old Notes"), on behalf of all of your interests in the Old
Notes, according to terms substantially similar to those set forth herein and/or
in the exhibits and schedule attached hereto.
In exchange for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the Company and the undersigned
beneficial owner of, or holder of investment authority over, the Old Notes (the
"Noteholder"), intending to be legally bound, hereby agree as follows:
(i) The Note Restructuring. The Company intends to file a
prepackaged, prearranged, prenegotiated or traditional voluntary case (the
"Bankruptcy Case") under Chapter 11 of Title 11 of the United States Code (the
"Bankruptcy Code"). In connection with the Bankruptcy Case, the Company intends
to file a plan of reorganization (the "Plan") that provides for a modification
of the terms under the Old Notes by replacing the Old Notes with replacement
notes (the "New Notes"), which New Notes will have the material terms set forth
in Schedule A hereto and in all other respects will have terms substantially
identical with the terms of the Old Notes.
(ii) Representations of Noteholder. Noteholder hereby represents and
warrants to the Company as follows:
(a) Noteholder is duly organized, validly existing and in good
standing under the laws of Noteholder's state of organization;
<PAGE>
(b) Noteholder has the requisite power and authority to
execute and deliver this Agreement and to perform its obligations hereunder;
(c) the execution and delivery of this Agreement and the
performance by Noteholder of its obligations hereunder have been duly authorized
by all necessary action;
(d) this Agreement has been duly executed and delivered by
Noteholder and constitutes the valid and binding obligation of Noteholder,
enforceable against Noteholder in accordance with its terms;
(e) as of the date hereof, Noteholder is the beneficial owner
of, or holder of investment authority over, Old Notes in the aggregate principal
amount set forth below such Noteholder's name on the signature page hereof (the
"Noteholder's Old Notes"), and beneficially owns, or has investment authority
over, no other Old Notes, and the registered holder and custodial party for the
Noteholder's Old Notes are as set forth on the signature page hereof;
(f) Noteholder has received and reviewed this Agreement and
all schedules and exhibits hereto, and, assuming the representations of the
Company herein to be true and correct, has received all such information as it
deems necessary and appropriate to enable it to evaluate the financial risk
inherent in the New Notes;
(iii) Representations of The Company. The Company hereby represents
and warrants to Noteholder as follows: (i) the Company is a corporation duly
organized, validly existing and in good standing under the laws of Delaware;
(ii) the Company has the requisite power and authority to execute and deliver
this Agreement and to perform its obligations hereunder; (iii) the execution and
delivery of this Agreement and the performance by the Company of its obligations
hereunder have been duly authorized by all necessary action; (iv) this Agreement
has been duly executed and delivered by the Company and constitutes the valid
and binding obligation of the Company, enforceable against the Company in
accordance with its terms; (v) the financial and other information concerning
the Company which the Company or its representatives have made available to
Noteholder (other than any projected financial information included therein) was
complete and correct in all material respects when delivered and did not contain
any untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein not misleading in light of the
circumstances under which such statements were made, and the projected financial
information concerning the Company, which the Company or its representatives
made available to Noteholder was prepared in
2
<PAGE>
good faith and on the basis of assumptions which, in light of the circumstances
under which they were made, were reasonable; and (vi) the Company does not own
(beneficially or otherwise) or control any Old Notes.
(iv) Agreement to Forbear. Noteholder agrees during the term of this
Agreement (i) to neither take any action to accelerate the indebtedness due
under the Old Notes nor direct the trustee (the "Trustee") under the indenture
for the Old Notes (the "Old Indenture") to pursue any right or remedy under the
Old Indenture or otherwise; and (ii) not to initiate, or have initiated on its
behalf, any litigation or proceeding of any kind against the Company, its
subsidiaries and/or its affiliates other than to enforce this Agreement.
Notwithstanding the foregoing, the Noteholder reserves and retains, and does not
waive, any rights or remedies it may have against the Company under the
Indenture or otherwise except as such rights or remedies may be modified in a
confirmed Plan.
(v) Agreement to Vote in Favor of Plan of Reorganization. Noteholder
hereby agrees to vote in favor of the Plan, whether it is prepackaged,
prearranged, prenegotiated or traditional. Noteholder's agreements with respect
to the Plan, and Noteholder's vote in favor of the Plan, shall be conditioned on
the terms of the Plan and all related documents being consistent in all material
respects with the terms set forth on Schedule A and being in form and substance
reasonably acceptable to the Noteholder. If the Company files the Plan and has
complied with this Agreement, Noteholder agrees not to object to, and to fully
support, the Plan, provided, however, that such agreement and all other
obligations of Noteholder under this Agreement shall terminate if (i) the
Bankruptcy Case is not commenced prior to March 8, 2000 and (ii) the Plan is not
confirmed within 90 days after commencement of the Bankruptcy Case. Noteholder
also agrees to execute and deliver to the Company, within three business days
after solicitation materials are delivered to the Noteholder and the
solicitation is commenced, a ballot in a form reasonably acceptable to the
Noteholder indicating Noteholder's acceptance of the Plan. Notwithstanding any
other provision of this Agreement, the Plan will provide that if the order
confirming the Plan is not substantially consistent with the Plan, it shall be a
condition to confirmation that the order be satisfactory to Noteholder and that
any amendment of the Plan or waiver of conditions to confirmation and
effectiveness shall require the consent of the Noteholder. Noteholder further
agrees not to oppose the Company's request for the entry of customary first day
orders after to commencement of the Bankruptcy Case.
(vi) Interest. All interest unpaid and accrued under the Old
Indenture through and including the effective date of the Plan contemplated by
this Agreement, shall be paid, in cash, at the effective date of such plan. In
the event the Plan
3
<PAGE>
contemplated by this Agreement is not confirmed, there is no assurance or
promise by the Company that such interest will be paid.
(vii) Certain Conditions. In addition to the other conditions to
Noteholder's obligations set forth herein, each obligation and liability of
Noteholder under this Agreement is conditioned in its entirety upon (a) the
truth of the representations and warranties of the Company set forth herein and
performance by the Company of its agreements and covenants herein contained, (b)
the terms and conditions of the treatment of the Old Notes under the Plan not
materially differing from those set forth herein, (c) the Plan containing no
material conditions other than those described in this Agreement, (d) the
Agreement not having been terminated pursuant to Section (viii) hereof, and (e)
the Plan being consistent in all material respects with the terms and provisions
of this Agreement.
(viii) Termination of Agreement. In the event that (a) the
Bankruptcy Case is not commenced by March 8, 2000, or (b) the Plan,
substantially in a form consistent with this Agreement, shall not have been
confirmed within 90 days of the commencement date of the Bankruptcy Case, then
this Agreement shall automatically terminate.
(ix) No Third-Party Beneficiaries. This Agreement shall be solely
for the benefit of the parties hereto and the Noteholders who have entered into
agreements with the Company substantially identical to this Agreement and no
other person or entity shall be a third-party beneficiary hereof.
(x) Not an Amendment or Waiver. It is acknowledged and agreed that
(except as expressly provided for herein, including without limitation in the
exhibits hereto) entering into this Agreement, negotiating with respect to the
Old Notes or the Plan or any other action taken by Noteholder does not
constitute a full or partial amendment or waiver of any of such Noteholder's
rights or remedies under the Old Indenture or at law or otherwise, and
Noteholder hereby reserves such rights and remedies.
(xi) Additional Old Notes Subject. Nothing in this Agreement shall
be deemed to limit or restrict the ability or right of any Noteholder to acquire
any additional Old Notes ("Additional Old Notes") or other claims against the
Company or any affiliate of the Company; provided, however, that in the event
any Noteholder acquires any such Additional Old Notes after the date hereof
(other than any such Old Notes that are already subject to the provisions of an
agreement with the Company substantially similar to this Agreement, which Old
Notes shall remain subject to the provisions of such agreement), such Additional
Old Notes shall
4
<PAGE>
immediately upon such acquisition become subject to the terms of this Agreement.
Noteholder shall as promptly as practicable notify the Company of such
acquisition, and Noteholder agrees to execute and deliver within five business
days of the closing of such acquisition any additional documents that the
Company shall reasonably request to evidence that such Additional Old Notes are
subject to the provisions of this Agreement as of the date of acquisition.
(xii) No Transfer. Except as set forth below, Noteholder hereby
agrees, without the prior written consent of the Company, not to (i) sell,
transfer, assign, pledge or otherwise dispose of any of the Noteholder's Old
Notes, unless the transferee accepts such Old Notes subject to the terms of this
Agreement, or (ii) grant any proxies, deposit any of the Noteholder's Old Notes
into a voting trust or enter into a voting agreement with respect to any of the
Noteholder's Old Notes, unless such arrangement provides for compliance
herewith. In the event that a Noteholder transfers such Old Notes prior to the
Closing Date, such transferee shall comply with and be subject to all the terms
of this Agreement, including, but not limited to, such Noteholder's obligations
to tender the Old Notes and vote in favor of the Plan, and shall as a condition
precedent to such transfer, execute a letter agreement on terms substantially
identical to the terms hereof and a Ballot indicating its acceptance of the
Plan. Noteholder shall, within three business days of any transfer of Old Notes,
notify in writing S. Patric Plumley at the address of the Company set forth on
the first page hereof of such transfer and provide therewith the executed
documents as provided for in this paragraph.
(xiii) Payment of Professional Fees. The Company agrees to promptly
pay the reasonable professional fees and expenses of Noteholder in connection
with this Agreement and the Bankruptcy Case, including the fees and expenses of
its counsel, Cadwalader, Wickersham & Taft ("CWT"). The Company further agrees
to pay a retainer of $20,000 to CWT prior to the filing of the Bankruptcy Case
on account of such reasonable fees and expenses.
(xiv) Entire Agreement. This Agreement constitutes the entire
agreement between the parties hereto with respect to the subject matter hereof
and supersedes all other prior agreements and understandings, both written and
oral, between the parties with respect to the subject matter hereof. This
Agreement shall not be amended, altered or modified in any manner whatsoever,
except by a written instrument executed by the parties hereto.
(xv) Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York (without giving
effect to the provisions thereof relating to conflicts of law).
5
<PAGE>
(xvi) Remedies. The parties hereto acknowledge and agree that any
breach of the terms of this Agreement would give rise to irreparable harm for
which money damages would not be an adequate remedy and accordingly the parties
hereto agree that, in addition to any other remedies, each party shall be
entitled to enforce the terms of this Agreement by a decree of specific
performance or injunctive relief without the necessity of proving the inadequacy
of money damages as a remedy or posting a bond or other security.
(xvii) Jurisdiction. The Company and Noteholder each hereby
irrevocably and unconditionally submit to the nonexclusive jurisdiction of any
New York State court or Federal court of the United States of America sitting in
New York City or Delaware, and any appellate court from any thereof, in any
action or proceedings arising out of or relating to this Agreement, or for
recognition or enforcement of any judgment. All claims in respect of any such
action or proceeding shall be heard and determined in such New York State or, to
the extent permitted by law, in such Federal court. Each of the parties hereto
agrees that a final judgment in any such action or proceeding shall be
conclusive and may be enforced in other jurisdictions by suit on the judgment or
in any other manner provided by law.
(xviii) Counterparts. This Agreement may be executed in any number
of counterparts and by different parties hereto in separate counterparts, with
the same effect as if all parties had signed the same document. All such
counterparts shall be deemed an original, shall be construed together and shall
constitute one and the same instrument.
(xix) Severability. Any term or provision of this Agreement, which
is invalid or unenforceable in any jurisdiction, shall, as to that jurisdiction,
be ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction. If any provision of this
Agreement is so broad as to be unenforceable, the provision shall be interpreted
to be only so broad as is enforceable.
6
<PAGE>
Please sign in the space provided below to indicate your agreement
and consent to the terms hereof.
Very truly yours,
EAGLE FOOD CENTERS, INC.
By:__________________________
Name:
Title:
Accepted and Agreed to:
Name of Noteholder:
Alliance Capital Management L.P.,
as investment advisor
- ---------------------------------
By: /s/ Katalin E. Kutasi
----------------------------
Name: Katalin E. Kutasi
Title: Senior Vice President
$12,550,000
- --------------------------------
Principal Amount of Old Notes
Held as Follows:
<TABLE>
<CAPTION>
Amount Registered Holder Custodian
------ ----------------- ---------
<S> <C> <C>
$3,750,000 The Equitable Life Chase
$4,500,000 Assurance Society Chase
$_________ of the United States
$3,000,000 Alliance DHO, Limited Chase Bank of Texas
$1,300,000 Alliance Global Chase Bank of Texas
Diversified Holdings
Limited
</TABLE>
Schedule A
<PAGE>
Please sign in the space provided below to indicate your agreement
and consent to the terms hereof.
Very truly yours,
EAGLE FOOD CENTERS, INC.
By:__________________________
Name:
Title:
Accepted and Agreed to:
Name of Noteholder:
__________________________________
By: ______________________________
Name:
Title:
$__________________________________
Principal Amount of Old Notes
Held as Follows:
<TABLE>
<CAPTION>
Amount Registered Holder Custodian
------ ----------------- ---------
<S> <C> <C>
$_________ ______________________ ______________________
$_________ ______________________ ______________________
$_________ ______________________ ______________________
$_________ ______________________ ______________________
$_________ ______________________ ______________________
</TABLE>
<PAGE>
Schedule A
Eagle Food Centers, Inc.
Summary Term Sheet
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Company Eagle Food Centers, Inc. (the "Company").
- --------------------------------------------------------------------------------
<S> <C>
Transaction Restructuring of the Company's 8 5/8%
Senior Notes due April 15, 2000 (the
"Notes") to include an extension of
maturity, increase in coupon, reduction in
principal, and receipt of equity.
- --------------------------------------------------------------------------------
Maturity Extension 5 years (to April 15, 2005).
- --------------------------------------------------------------------------------
New Interest Rate 11% per annum.
- --------------------------------------------------------------------------------
Reduction in Principal $15 million in the aggregate for the Notes.
- --------------------------------------------------------------------------------
Optional Redemption The Company may, at its option, redeem the
Notes at 100% of the principal amount,
at any time.
- --------------------------------------------------------------------------------
Covenants Substantially similar to the Company's
existing Notes except that the Company
may complete sale leaseback transactions
with its existing stores that are owned and
any new stores opened; provided however,
that at least 25% of the sale leaseback
proceeds be used to pay down the New Notes.
- --------------------------------------------------------------------------------
Interest Upon the effective date of the Plan, as
contemplated by this Agreement, there shall
be a cash payment to the Noteholders for
the accrued and unpaid interest under Old
Indenture.
- --------------------------------------------------------------------------------
Consent Payment None.
- --------------------------------------------------------------------------------
1
<PAGE>
- --------------------------------------------------------------------------------
Equity 15% of the fully-diluted common and voting
stock of the Company subject to the
following:
o If the Company is sold or the debt is
retired prior to October 15, 2001 (1.5
years), the Company may clawback 10% of
the equity previously distributed to
bondholders (i.e. bondholders retain 5%
ownership).
o If the Company is sold or the debt is
retired prior to October 15, 2002 (2.5
years), the Company may clawback 5% the
equity previously distributed to
bondholders (i.e. bondholders retain 10%
ownership).
o The Company will not be able to clawback
any of the equity after October 15, 2002.
- --------------------------------------------------------------------------------
Rating The Company will, within 30 days of the
Plan's effective date (the "Effective
Date"), use its best efforts to cause the
New Notes to be rated by one of
Moody's Investor Service, Inc. and
Standard and Poors.
- --------------------------------------------------------------------------------
Other Conditions Payment by the Company of all professional
fees incurred by bondholders.
- --------------------------------------------------------------------------------
</TABLE>
2
<PAGE>
Eagle Food Centers, Inc.
Route 67 at Knoxville Road
Milan, Illinois 61264
February __, 2000
To the Holders of 8 5/8% Senior Notes due
April 15, 2000 of Eagle Food Centers, Inc.
Identified on the Signature Page Hereof:
This letter agreement (this "Agreement") sets forth the terms on
which you have agreed to vote in favor of a plan of reorganization to be filed
by Eagle Food Centers, Inc. (the "Company"), in connection with their
anticipated Chapter 11 bankruptcy filing, under which the Company will propose
to modify the payment terms and obligations under the 8 5/8% Senior Notes due
April 15, 2000 (the "Old Notes"), on behalf of all of your interests in the Old
Notes, according to terms substantially similar to those set forth herein and/or
in the exhibits and schedule attached hereto.
In exchange for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the Company and the undersigned
beneficial owner of, or holder of investment authority over, the Old Notes (the
"Noteholder"), intending to be legally bound, hereby agree as follows:
(i) The Note Restructuring. The Company intends to file a
prepackaged, prearranged, prenegotiated or traditional voluntary case (the
"Bankruptcy Case") under Chapter 11 of Title 11 of the United States Code (the
"Bankruptcy Code"). In connection with the Bankruptcy Case, the Company intends
to file a plan of reorganization (the "Plan") that provides for a modification
of the terms under the Old Notes by replacing the Old Notes with replacement
notes (the "New Notes"), which New Notes will have the material terms set forth
in Schedule A hereto and in all other respects will have terms substantially
identical with the terms of the Old Notes.
(ii) Representations of Noteholder. Noteholder hereby represents and
warrants to the Company as follows:
(a) Noteholder is duly organized, validly existing and in good
standing under the laws of Noteholder's state of organization;
<PAGE>
(b) Noteholder has the requisite power and authority to
execute and deliver this Agreement and to perform its obligations hereunder;
(c) the execution and delivery of this Agreement and the
performance by Noteholder of its obligations hereunder have been duly authorized
by all necessary action;
(d) this Agreement has been duly executed and delivered by
Noteholder and constitutes the valid and binding obligation of Noteholder,
enforceable against Noteholder in accordance with its terms;
(e) as of the date hereof, Noteholder is the beneficial owner
of, or holder of investment authority over, Old Notes in the aggregate principal
amount set forth below such Noteholder's name on the signature page hereof (the
"Noteholder's Old Notes"), and beneficially owns, or has investment authority
over, no other Old Notes, and the registered holder and custodial party for the
Noteholder's Old Notes are as set forth on the signature page hereof;
(f) Noteholder has received and reviewed this Agreement and
all schedules and exhibits hereto, and, assuming the representations of the
Company herein to be true and correct, has received all such information as it
deems necessary and appropriate to enable it to evaluate the financial risk
inherent in the New Notes;
(iii) Representations of the Company. The Company hereby represents
and warrants to Noteholder as follows: (i) the Company is a corporation duly
organized, validly existing and in good standing under the laws of Delaware;
(ii) the Company has the requisite power and authority to execute and deliver
this Agreement and to perform its obligations hereunder; (iii) the execution and
delivery of this Agreement and the performance by the Company of its obligations
hereunder have been duly authorized by all necessary action; (iv) this Agreement
has been duly executed and delivered by the Company and constitutes the valid
and binding obligation of the Company, enforceable against the Company in
accordance with its terms; (v) the financial and other information concerning
the Company which the Company or its representatives have made available to
Noteholder (other than any projected financial information included therein) was
complete and correct in all material respects when delivered and did not contain
any untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein not misleading in light of the
circumstances under which such statements were made, and the projected financial
information concerning the Company, which the Company or its representatives
made available to Noteholder was prepared in
2
<PAGE>
good faith and on the basis of assumptions which, in light of the circumstances
under which they were made, were reasonable; and (vi) the Company does not own
(beneficially or otherwise) or control any Old Notes.
(iv) Agreement to Forbear. Noteholder agrees during the term of this
Agreement (i) to neither take any action to accelerate the indebtedness due
under the Old Notes nor direct the trustee (the "Trustee") under the indenture
for the Old Notes (the "Old Indenture") to pursue any right or remedy under the
Old Indenture or otherwise; and (ii) not to initiate, or have initiated on its
behalf, any litigation or proceeding of any kind with respect to the Old Notes
against the Company, its subsidiaries and/or its affiliates other than to
enforce this Agreement. Notwithstanding the foregoing, the Noteholder reserves
and retains, and does not waive, any rights or remedies it may have against the
Company under the Indenture, the Old Notes or otherwise except as such rights or
remedies may be modified in a confirmed Plan.
(v) Agreement to Vote in Favor of Plan of Reorganization. Noteholder
hereby agrees to vote in favor of the Plan, whether it is prepackaged,
prearranged, prenegotiated or traditional. Noteholder's agreements with respect
to the Plan, and Noteholder's vote in favor of the Plan, shall be conditioned on
the terms of the Plan and all related documents being consistent in all material
respects with or better than the terms set forth on Schedule A and being in form
and substance reasonably acceptable to the Noteholder, and the Noteholder's
claims being allowed in full. If the Company files the Plan and has complied
with this Agreement, Noteholder agrees not to object to, and to fully support,
the Plan, provided, however, that such agreement and all other obligations of
Noteholder under this Agreement shall terminate if (i) the Bankruptcy Case is
not commenced prior to March 8, 2000 or (ii) the Plan is not confirmed within 90
days after commencement of the Bankruptcy Case. Noteholder also agrees to
execute and deliver to the Company, within seven business days after
solicitation materials are delivered to the Noteholder and the solicitation is
commenced, a ballot in a form reasonably acceptable to the Noteholder indicating
Noteholder's acceptance of the Plan. Notwithstanding any other provision of this
Agreement, the Plan will provide that it shall be a condition to confirmation
that the order confirming the Plan be reasonably satisfactory to Noteholder and
that any amendment of the Plan or waiver of conditions to confirmation and
effectiveness shall require the consent of the Noteholder.
(vi) Interest. All interest unpaid and accrued under the Old
indenture through and including the effective date of the Plan contemplated by
this Agreement, shall be paid, in cash, at the effective date of such plan. In
the event the Plan
3
<PAGE>
contemplated by this Agreement is not confirmed, there is no assurance or
promise by the Company that such interest will be paid.
(vii) Certain Conditions. In addition to the other conditions to
Noteholder's obligations set forth herein, each obligation and liability of
Noteholder under this Agreement is conditioned in its entirety upon (a) the
truth of the representations and warranties of the Company set forth herein and
performance by the Company of its agreements and covenants herein contained, (b)
the terms and conditions of the treatment of the Old Notes under the Plan not
differing from those set forth herein in any manner adverse to the Noteholders,
(c) the Plan containing no material conditions adversely affecting the
Noteholders other than those described in this Agreement, (d) the Agreement not
having been terminated pursuant to Section (viii) hereof, and (e) the Plan being
consistent in all material respects with, or better than, the terms and
provisions of this Agreement.
(viii) Termination of Agreement. In the event that (a) the
Bankruptcy Case is not commenced by March 8, 2000, or (b) the Plan,
substantially in a form consistent with this Agreement, shall not have been
confirmed within 90 days of the commencement date of the Bankruptcy Case, then
this Agreement shall automatically terminate.
(ix) No Third-Party Beneficiaries. This Agreement shall be solely
for the benefit of the parties hereto (including those parties indicated as
registered holders on the signature page hereto) and the Noteholders who have
entered into agreements with the Company substantially identical to this
Agreement and no other person or entity shall be a third-party beneficiary
hereof.
(x) Not an Amendment or Waiver. It is acknowledged and agreed that
(except as expressly provided for herein, including without limitation in the
exhibits hereto) entering into this Agreement, negotiating with respect to the
Old Notes or the Plan or any other action taken by Noteholder does not
constitute a full or partial amendment or waiver of any of such Noteholder's
rights or remedies under the Old Indenture or at law or otherwise, and
Noteholder hereby reserves such rights and remedies.
(xi) Additional Old Notes Subject. Nothing in this Agreement shall
be deemed to limit or restrict the ability or right of any Noteholder to acquire
any additional Old Notes ("Additional Old Notes") or other claims against the
Company or any affiliate of the Company; provided, however, that in the event
any Noteholder acquires any such Additional Old Notes after the date hereof
(other than any such Old Notes that are already subject to the provisions of an
agreement with the Company substantially similar to this Agreement, which Old
Notes shall remain subject to the provisions of such agreement), such Additional
Old Notes shall
4
<PAGE>
immediately upon such acquisition become subject to the terms of this Agreement.
Noteholder shall as promptly as practicable notify the Company of such
acquisition, and Noteholder agrees to execute and deliver within five business
days of the closing of such acquisition any additional documents that the
Company shall reasonably request to evidence that such Additional Old Notes are
subject to the provisions of this Agreement as of the date of acquisition.
(xii) No Transfer. Except as set forth below, Noteholder hereby
agrees, without the prior written consent of the Company, not to (i) sell,
transfer, assign, pledge or otherwise dispose of any of the Noteholder's Old
Notes, unless the transferee accepts such Old Notes subject to the terms of this
Agreement, or (ii) grant any proxies, deposit any of the Noteholder's Old Notes
into a voting trust or enter into a voting agreement with respect to any of the
Noteholder's Old Notes, unless such arrangement provides for compliance
herewith. In the event that a Noteholder transfers such Old Notes prior to the
Closing Date, such transferee shall comply with and be subject to all the terms
of this Agreement, including, but not limited to, such Noteholder's obligations
to tender the Old Notes and vote in favor of the Plan, and shall as a condition
precedent to such transfer, execute a letter agreement on terms substantially
identical to the terms hereof and a Ballot indicating its acceptance of the
Plan. Noteholder shall, within three business days of any transfer of Old Notes,
notify in writing S. Patric Plumley at the address of the Company set forth on
the first page hereof of such transfer and provide therewith the executed
documents as provided for in this paragraph.
(xiii) Payment of Professional Fees. The Company agrees to promptly
pay the reasonable professional fees and expenses of Noteholder in connection
with this Agreement and the Bankruptcy Case, including the fees and expenses of
its counsel, Cadwalader, Wickersham & Taft ("CWT"). The Company further agrees
to pay a retainer of $20,000 to CWT prior to the filing of the Bankruptcy Case
on account of such reasonable fees and expenses.
(xiv) Entire Agreement. This Agreement constitutes the entire
agreement between the parties hereto with respect to the subject matter hereof
and supersedes all other prior agreements and understandings, both written and
oral, between the parties with respect to the subject matter hereof. This
Agreement shall not be amended, altered or modified in any manner whatsoever,
except by a written instrument executed by the parties hereto.
(xv) Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York (without giving
effect to the provisions thereof relating to conflicts of law).
5
<PAGE>
(xvi) Remedies. The parties hereto acknowledge and agree that any
breach of the terms of this Agreement would give rise to irreparable harm for
which money damages would not be an adequate remedy and accordingly the parties
hereto agree that, in addition to any other remedies, each party shall be
entitled to enforce the terms of this Agreement by a decree of specific
performance or injunctive relief without the necessity of proving the inadequacy
of money damages as a remedy or posting a bond or other security.
(xvii) Jurisdiction. The Company and Noteholder each hereby
irrevocably and unconditionally submit to the nonexclusive jurisdiction of any
New York State court or Federal court of the United States of America sitting in
New York City or Delaware, and any appellate court from any thereof, in any
action or proceedings arising out of or relating to this Agreement, or for
recognition or enforcement of any judgment. All claims in respect of any such
action or proceeding shall be heard and determined in such New York State or, to
the extent permitted by law, in such Federal court. Each of the parties hereto
agrees that a final judgment in any such action or proceeding shall be
conclusive and may be enforced in other jurisdictions by suit on the judgment or
in any other manner provided by law.
(xviii) Counterparts. This Agreement may be executed in any number
of counterparts and by different parties hereto in separate counterparts, with
the same effect as if all parties had signed the same document. All such
counterparts shall be deemed an original, shall be construed together and shall
constitute one and the same instrument.
(xix) Severability. Any term or provision of this Agreement, which
is invalid or unenforceable in any jurisdiction, shall, as to that jurisdiction,
be ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction. If any provision of this
Agreement is so broad as to be unenforceable, the provision shall be interpreted
to be only so broad as is enforceable.
6
<PAGE>
Please sign in the space provided below to indicate your agreement
and consent to the terms hereof.
Very truly yours,
EAGLE FOOD CENTERS, INC.
By:__________________________
Name:
Title:
Accepted and Agreed to subject to
initialization and agreement to all
handwritten changes:
Name of Noteholder:
Morgan, Stanley, Dean Witter Advisers
- -------------------------------------
By: /s/ Peter Avalar
----------------------------
Name: Peter Avalar
Title: Vice President
$11,595,000
- --------------------------------
Principal Amount of Old Notes
Held as Follows:
<TABLE>
<CAPTION>
Amount Registered Holder Custodian
------ ----------------- ---------
<S> <C> <C>
$9,185,000 MSDW High Yield Securities Bank of New York
$ 500,000 MSDW High Income Advantage Trust Bank of New York
$ 650,000 MSDW High Income Advantage Trust II Bank of New York
$ 260,000 MSDW High Income Advantage Trust III Bank of New York
$1,000,000 MSDW Diversified Income Trust Bank of New York
</TABLE>
<PAGE>
Schedule A
Eagle Food Centers, Inc.
Summary Term Sheet
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Company Eagle Food Centers, Inc. (the "Company").
- --------------------------------------------------------------------------------
<S> <C>
Transaction Restructuring of the Company's 8 5/8%
Senior Notes due April 15, 2000 (the
"Notes") to include an extension of
maturity, increase in coupon, reduction in
principal, and receipt of equity.
- --------------------------------------------------------------------------------
Maturity Extension 5 years (to April 15, 2005).
- --------------------------------------------------------------------------------
New Interest Rate 11% per annum.
- --------------------------------------------------------------------------------
Reduction in Principal $15 million in the aggregate for the Notes.
- --------------------------------------------------------------------------------
Optional Redemption The Company may, at its option, redeem the
Notes at 100% of the principal amount,
at any time.
- --------------------------------------------------------------------------------
Covenants Substantially similar to the Company's
existing Notes except that the Company
may complete sale leaseback transactions
with its existing stores that are owned and
any new stores opened; provided however,
that at least 25% of the sale leaseback
proceeds be used to pay down the New Notes.
- --------------------------------------------------------------------------------
Interest Upon the effective date of the Plan, as
contemplated by this Agreement, there shall
be a cash payment to the Noteholders for
the accrued and unpaid interest under Old
Indenture.
- --------------------------------------------------------------------------------
Consent Payment None.
- --------------------------------------------------------------------------------
1
<PAGE>
- --------------------------------------------------------------------------------
Equity 15% of the fully-diluted common and voting
stock of the Company subject to the
following:
o If the Company is sold or the debt is
retired prior to October 15, 2001 (1.5
years), the Company may clawback 10%
the equity previously distributed to
bondholders (i.e. bondholders retain 5%
ownership).
o If the Company is sold or the debt is
retired prior to October 15, 2002 (2.5
years), the Company may clawback 5% the
equity previously distributed to
bondholders (i.e. bondholders retain 10%
ownership).
o The Company will not be able to clawback
any of the equity after October 15, 2002.
- --------------------------------------------------------------------------------
Rating The Company will, within 30 days of the
Plan's effective date (the "Effective
Date"), use its best efforts to cause the
New Notes to be rated by one of
Moody's Investor Service, Inc. and
Standard and Poors.
- --------------------------------------------------------------------------------
Other Conditions Payment by the Company of all professional
fees incurred by bondholders.
- --------------------------------------------------------------------------------
</TABLE>
2
<PAGE>
Eagle Food Centers, Inc.
Route 67 at Knoxville Road
Milan, Illinois 61264
February 29, 2000
To the Holders of 8 5/8% Senior Notes due
April 15, 2000 of Eagle Food Centers, Inc.
Identified on the Signature Page Hereof:
This letter agreement (this "Agreement") sets forth the terms on
which you have agreed to vote in favor of a plan of reorganization to be filed
by Eagle Food Centers, Inc. (the "Company"), in connection with their
anticipated Chapter 11 bankruptcy filing, under which the Company will propose
to modify the payment terms and obligations under the 8 5/8% Senior Notes due
April 15, 2000 (the "Old Notes"), on behalf of all of your interests in the Old
Notes, according to terms substantially similar to those set forth herein and/or
in the exhibits and schedule attached hereto.
In exchange for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the Company and the undersigned
beneficial owner of, or holder of investment authority over, the Old Notes (the
"Noteholder"), intending to be legally bound, hereby agree as follows:
(i) The Note Restructuring. The Company intends to file a
prepackaged, prearranged, prenegotiated or traditional voluntary case (the
"Bankruptcy Case") under Chapter 11 of Title 11 of the United States Code (the
"Bankruptcy Code"). In connection with the Bankruptcy Case, the Company intends
to file a plan of reorganization (the "Plan") that provides for a modification
of the terms under the Old Notes by replacing the Old Notes with replacement
notes (the "New Notes"), which New Notes will have the material terms set forth
in Schedule A hereto and in all other respects will have terms substantially
identical with the terms of the Old Notes.
(ii) Representations of Noteholder. Noteholder hereby represents and
warrants to the Company as follows:
(a) Noteholder is duly organized, validly existing and in good
standing under the laws of Noteholder's jurisdiction of organization;
<PAGE>
(b) Noteholder has the requisite power and authority to
execute and deliver this Agreement and to perform its obligations hereunder;
(c) the execution and delivery of this Agreement and the
performance by Noteholder of its obligations hereunder have been duly authorized
by all necessary action;
(d) this Agreement has been duly executed and delivered by
Noteholder and constitutes the valid and binding obligation of Noteholder,
enforceable against Noteholder in accordance with its terms;
(e) as of the date hereof, Noteholder is the beneficial owner
of, or holder of investment authority over, Old Notes in the aggregate principal
amount set forth below such Noteholder's name an the signature page hereof (the
"Noteholders Old Notes"), and beneficially owns, or has investment authority
over, no other Old Notes, and the registered holder and custodial party for the
Noteholder's Old Notes are as set forth on the signature page hereof;
(f) Noteholder has received and reviewed this Agreement and
all schedules and exhibits hereto, and, assuming the representations of the
Company herein to be true and correct, has received all such information as it
deems necessary and appropriate to enable it to evaluate the financial risk
inherent in the New Notes;
(iii) Representations of The Company. The Company hereby represents
and warrants to Noteholder as follows: (i) the Company is a corporation duly
organized, validly existing and in good standing under the laws of Delaware;
(ii) the Company has the requisite power and authority to execute and deliver
this Agreement and to perform its obligations hereunder; (iii) the execution and
delivery of this Agreement and the performance by the Company of its obligations
hereunder have been duty authorized by all necessary action; (iv) this Agreement
has been duly executed and delivered by the Company and constitutes the valid
and binding obligation of the Company, enforceable against the Company in
accordance with its terms; (v) the financial and other information concerning
the Company which the Company or its representatives have made available to
Noteholder (other than any projected financial information included therein) was
complete and correct in all material respects when delivered and did not contain
any untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein not misleading in light of the
circumstances under which such statements were made, and the projected financial
information concerning the Company, which the Company or its representatives
made available to Noteholder was prepared in
2
<PAGE>
good faith and on the basis of assumptions which, in light of the circumstances
under which they were made, were reasonable; and (vi) the Company does not own
(beneficially or otherwise) or control any Old Notes.
(iv) Agreement to Forbear. Noteholder agrees during the term of this
Agreement (i) to neither take any action to accelerate the indebtedness due
under the Old Notes nor direct the trustee (the "Trustee") under the indenture
for the Old Notes (the "Old Indenture") to pursue any right or remedy under the
Old Indenture or otherwise; and (ii) not to initiate, or have initiated on its
behalf, any litigation or proceeding of any kind against the Company, its
subsidiaries and/or its affiliates other than to enforce this Agreement.
Notwithstanding the foregoing, the Noteholder reserves and retains, and does not
waive, any rights or remedies it may have against the Company under the
Indenture or otherwise except as such rights or remedies may be modified in a
confirmed Plan.
(v) Agreement to Vote in Favor of Plan of Reorganization. Noteholder
hereby agrees to vote in favor of the Plan, whether it is prepackaged,
prearranged, prenegotiated or traditional. Noteholder's agreements with respect
to the Plan, and Noteholder's vote in favor of the Plan, shall be conditioned on
the terms of the Plan and all related documents being consistent in all material
respects with the terms set forth on Schedule A and being in form and substance
reasonably acceptable to the Noteholder. If the Company files the Plan and has
complied with this Agreement, Noteholder agrees not to object to, and to fully
support, the Plan, provided, however, that such agreement and all other
obligations of Noteholder under this Agreement shall terminate if (i) the
Bankruptcy Case is not commenced prior to March 8, 2000 and (ii) the Plan is not
confirmed within 90 days after commencement of the Bankruptcy Case. Noteholder
also agrees to execute and deliver to the Company, within three business days
after solicitation materials are delivered to the Noteholder and the
solicitation is commenced, a ballot in a form reasonably acceptable to the
Noteholder indicating Noteholder's acceptance of the Plan. Notwithstanding any
other provision of this Agreement, the Plan will provide that if the order
confirming the Plan is not substantially consistent with the Plan, it shall be a
condition to confirmation that the order be satisfactory to Noteholder and that
any amendment of the Plan or waiver of conditions to confirmation and
effectiveness shall require the consent of the Noteholder. Noteholder further
agrees not to oppose the Company's request for the entry of customary first day
orders after to commencement of the Bankruptcy Case.
(vi) Interest. All interest unpaid and accrued under the Old
Indenture through and including the effective date of the Plan contemplated by
this Agreement, shall be paid, in cash, at the effective date of such plan. In
the event the Plan
3
<PAGE>
contemplated by this Agreement is not confirmed, there is no assurance or
promise by the Company that such interest will be paid.
(vii) Certain Conditions. In addition to the other conditions to
Noteholder's obligations set forth herein, each obligation and liability of
Noteholder under this Agreement is conditioned in its entirety upon (a) the
truth of the representations and warranties of the Company set forth herein and
performance by the Company of its agreements and covenants herein contained, (b)
the terms and conditions of the treatment of the Old Notes under the Plan not
materially differing from those set forth herein, (c) the Plan containing no
material conditions other than those described in this Agreement, (d) the
Agreement not having been terminated pursuant to Section (viii) hereof, and (e)
the Plan being consistent in all material respects with the terms and provisions
of this Agreement.
(viii) Termination of Agreement. In the event that (a) the
Bankruptcy Case is not commenced by March 8, 2000, or (b) the Plan,
substantially in a form consistent with this Agreement, shall not have been
confirmed within 90 days of the commencement date of the Bankruptcy Case, then
this Agreement shall automatically terminate.
(ix) No Third-Party Beneficiaries. This Agreement shall be solely
for the benefit of the parties hereto and the Noteholders who have entered into
agreements with the Company substantially identical to this Agreement and no
other person or entity shall be a third-party beneficiary hereof.
(x) Not an Amendment or Waiver. It is acknowledged and agreed that
(except as expressly provided for herein, including without limitation in the
exhibits hereto) entering into this Agreement, negotiating with respect to the
Old Notes or the Plan or any other action taken by Noteholder does not
constitute a full or partial amendment or waiver of any of such Noteholder's
rights or remedies under the Old Indenture or at law or otherwise, and
Noteholder hereby reserves such rights and remedies.
(xi) Additional Old Notes Subject. Nothing in this Agreement shall
be deemed to limit or restrict the ability or right of any Noteholder to acquire
any additional Old Notes ("Additional Old Notes") or other claims against the
Company or any affiliate of the Company; provided, however, that in the event
any Noteholder acquires any such Additional Old Notes after the date hereof
(other than any such Old Notes that are already subject to the provisions of an
agreement with the Company substantially similar to this Agreement, which Old
Notes shall remain subject to the provisions of such agreement), such Additional
Old Notes shall
4
<PAGE>
immediately upon such acquisition become subject to the terms of this Agreement.
Noteholder shall as promptly as practicable notify the Company of such
acquisition, and Noteholder agrees to execute and deliver within five business
days of the closing of such acquisition any additional documents that the
Company shall reasonably request to evidence that such Additional Old Notes are
subject to the provisions of this Agreement as of the date of acquisition.
(xii) No Transfer. Except as set forth below, Noteholder hereby
agrees, without the prior written consent of the Company, not to (i) sell,
transfer, assign, pledge or otherwise dispose of any of the Noteholder's Old
Notes, unless the transferee accepts such Old Notes subject to the terms of this
Agreement, or (ii) grant any proxies, deposit any of the Noteholder's Old Notes
into a voting trust or enter into a voting agreement with respect to any of the
Noteholder's Old Notes, unless such arrangement provides for compliance
herewith. In the event that a Noteholder transfers such Old Notes prior to the
Closing Date, such transferee shall comply with and be subject to all the terms
of this Agreement, including, but not limited to, such Noteholder's obligations
to tender the Old Notes and vote in favor of the Plan, and shall as a condition
precedent to such transfer, execute a letter agreement on terms substantially
identical to the terms hereof and a Ballot indicating its acceptance of the
Plan. Noteholder shall, within three business days of any transfer of Old Notes,
notify in writing S. Patric Plumley at the address of the Company set forth on
the first page hereof of such transfer and provide therewith the executed
documents as provided for in this paragraph.
(xiii) Payment of Professional Fees. The Company agrees to promptly
pay the reasonable professional fees and expenses of Noteholder in connection
with this Agreement and the Bankruptcy Case, including the fees and expenses of
its counsel, Cadwalader, Wickersham & Taft ("CWT"). The Company further agrees
to pay a retainer of $20,000 to CWT prior to the filing of the Bankruptcy Case
on account of such reasonable fees and expenses.
(xiv) Entire Agreement. This Agreement constitutes the entire
agreement between the parties hereto with respect to the subject matter hereof
and supersedes all other prior agreements and understandings, both written and
oral, between the parties with respect to the subject matter hereof. This
Agreement shall not be amended, altered or modified in any manner whatsoever,
except by a written instrument executed by the parties hereto.
(xv) Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York (without giving
effect to the provisions thereof relating to conflicts of law).
5
<PAGE>
(xvi) Remedies. The parties hereto acknowledge and agree that any
breach of the terms of this Agreement would give rise to irreparable harm for
which money damages would not be an adequate remedy and accordingly the parties
hereto agree that, in addition to any other remedies, each party shall be
entitled to enforce the terms of this Agreement by a decree of specific
performance or injunctive relief without the necessity of proving the inadequacy
of money damages as a remedy or posting a bond or other security.
(xvii) Jurisdiction. The Company and Noteholder each hereby
irrevocably and unconditionally submit to the nonexclusive jurisdiction of any
New York State court or Federal court of the United States of America sitting in
New York City or Delaware, and any appellate court from any thereof, in any
action or proceedings arising out of or relating to this Agreement, or for
recognition or enforcement of any judgment. All claims in respect of any such
action or proceeding shall be heard and determined in such New York State or, to
the extent permitted by law, in such Federal court. Each of the parties hereto
agrees that a final judgment in any such action or proceeding shall be
conclusive and may be enforced in other jurisdictions by suit on the judgment or
in any other manner provided by law.
(xviii) Counterparts. This Agreement may be executed in any number
of counterparts and by different parties hereto in separate counterparts, with
the same effect as if all parties had signed the same document. All such
counterparts shall be deemed an original, shall be construed together and shall
constitute one and the same instrument.
(xix) Severability. Any term or provision of this Agreement, which
is invalid or unenforceable in any jurisdiction, shall, as to that jurisdiction,
be ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction. If any provision of this
Agreement is so broad as to be unenforceable, the provision shall be interpreted
to be only so broad as is enforceable.
6
<PAGE>
Please sign in the space provided below to indicate your agreement
and consent to the terms hereof.
Very truly yours,
EAGLE FOOD CENTERS, INC.
By:__________________________
Name:
Title:
Accepted and Agreed to:
Name of Noteholder:
Delaware Investment Advisers, on behalf of and for the benefit of Atlantic
Global Funding, Ltd.*
- --------------------------------
By: /s/ Paul A. Matlack
----------------------------
Name: Paul A. Matlack *Subject to the additional terms
Title: Vice President/Senior and conditions set forth on the
Portfolio Manager Addendum to Schedule A attached hereto
$ *3,000,000
- --------------------------------
Principal Amount of Notes
Held as Follows:
<TABLE>
<CAPTION>
Amount Registered Holder Custodian
------ ----------------- ---------
<S> <C> <C>
$3,000,000 OBIE & Co. (for Chase Bank
$_________ Atlantic Global of Texas, National
$_________ Funding CBO, Ltd. Association
$_________ _____________________ ______________________
$_________ _____________________ ______________________
</TABLE>
<PAGE>
Schedule A
Eagle Food Centers, Inc.
Summary Term Sheet
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Company Eagle Food Centers, Inc. (the "Company").
- --------------------------------------------------------------------------------
<S> <C>
Transaction Restructuring of the Company's 8 5/8%
Senior Notes due April 15, 2000 (the
"Notes") to include an extension of
maturity, increase in coupon, reduction in
principal, and receipt of equity.
- --------------------------------------------------------------------------------
Maturity Extension 5 years (to April 15, 2005).
- --------------------------------------------------------------------------------
New Interest Rate 11% per annum.
- --------------------------------------------------------------------------------
Reduction in Principal $15 million in the aggregate for the Notes.
- --------------------------------------------------------------------------------
Optional Redemption The Company may, at its option, redeem the
Notes at 100% of the principal amount,
at any time.
- --------------------------------------------------------------------------------
Covenants Substantially similar to the Company's
existing Notes except that the Company
may complete sale leaseback transactions
with its existing stores that are owned and
any new stores opened; provided however,
that at least 25% of the sale leaseback
proceeds be used to pay down the New Notes.
- --------------------------------------------------------------------------------
Interest Upon the effective date of the Plan, as
contemplated by this Agreement, there shall
be a cash payment to the Noteholders for
the accrued and unpaid interest under Old
Indenture.
- --------------------------------------------------------------------------------
Consent Payment None.
- --------------------------------------------------------------------------------
1
<PAGE>
- --------------------------------------------------------------------------------
Equity 15% of the fully-diluted common and voting
stock of the Company subject to the
following:
o If the Company is sold or the debt is
retired prior to October 15, 2001 (1.5
years), the Company may clawback 10% of
the equity previously distributed to
bondholders (i.e. bondholders retain 5%
ownership).
o If the Company is sold or the debt is
retired prior to October 15, 2002 (2.5
years), the Company may clawback 5% the
equity previously distributed to
bondholders (i.e. bondholders retain 10%
ownership).
o The Company will not be able to clawback
any of the equity after October 15, 2002.
- --------------------------------------------------------------------------------
Rating The Company will, within 30 days of the
Plan's effective date (the "Effective
Date"), use its best efforts to cause the
New Notes to be rated by one of
Moody's Investor Service, Inc. and
Standard and Poors.
- --------------------------------------------------------------------------------
Other Conditions Payment by the Company of all professional
fees incurred by bondholders.
- --------------------------------------------------------------------------------
</TABLE>
2
<PAGE>
ADDENDUM TO SCHEDULE A
ON BEHALF OF ATLANTIC GLOBAL FUNDING CBO, LIMITED
EAGLE FOOD CENTERS, INC.
SUMMARY TERM SHEET
Delaware Investment Advisers, on behalf of and for the benefit of Atlantic
Global Funding CBO, Limited, has signed the letter agreement dated February 29,
2000 between Eagle Food Centers, Inc. and Delaware Investment Advisers (the
"Letter Agreement") subject to Delaware Investment Advisers' understanding that
the following terms and conditions will be included within the Note
Restructuring described in the Letter Agreement and Schedule A attached thereto,
as if such terms and conditions were included in and made a part of the Letter
Agreement and Schedule A:
1) The New Notes and the Equity will be fully registered and freely
tradeable.
2) The $15 million aggregate amount of principal reduction described in the
Term Sheet under the heading Principal Reduction, shall be accomplished by
means of a cash payment to the holders of the Old Notes upon the effective
date of the Plan.
3) The Company will, within 30 days of the Effective Date, use its best
efforts to cause the New Notes to be rated by Moody's Investor Service,
Inc.
Capitalized terms used in this Addendum to Schedule A shall have the same
meanings assigned to them in the Letter Agreement and/or Schedule A thereto.
B: /s/ Paul A. Matlack
Name: Paul A. Matlack
Title: Vice President/Senior
Portfolio Manager
<PAGE>
Eagle Food Centers, Inc.
Route 67 at Knoxville Road
Milan, Illinois 61264
February __, 2000
To the Holders of 8 5/8% Senior Notes due
April 15, 2000 of Eagle Food Centers, Inc.
Identified on the Signature Page Hereof:
This letter agreement (this "Agreement") sets forth the terms on
which you have agreed to vote in favor of a plan of reorganization to be filed
by Eagle Food Centers, Inc. (the "Company"), in connection with their
anticipated Chapter 11 bankruptcy filing, under which the Company will propose
to modify the payment terms and obligations under the 8 5/8% Senior Notes due
April 15, 2000 (the "Old Notes"), on behalf of all of your interests in the Old
Notes, according to terms substantially similar to those set forth herein and/or
in the exhibits and schedule attached hereto.
In exchange for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the Company and the undersigned
beneficial owner of, or holder of investment authority over, the Old Notes (the
"Noteholder"), intending to be legally bound, hereby agree as follows:
(i) The Note Restructuring. The Company intends to file a
prepackaged, prearranged, prenegotiated or traditional voluntary case (the
"Bankruptcy Case") under Chapter 11 of Title 11 of the United States Code (the
"Bankruptcy Code"). In connection with the Bankruptcy Case, the Company intends
to file a plan of reorganization (the "Plan") that provides for a modification
of the terms under the Old Notes by replacing the Old Notes with replacement
notes (the "New Notes"), which New Notes will have the material terms set forth
in Schedule A hereto and in all other respects will have terms substantially
identical with the terms of the Old Notes.
(ii) Representations of Noteholder. Noteholder hereby represents and
warrants to the Company as follows:
(a) Noteholder is duly organized, validly existing and in good
standing under the laws of Noteholder's state of organization;
<PAGE>
(b) Noteholder has the requisite power and authority to
execute and deliver this Agreement and to perform its obligations hereunder;
(c) the execution and delivery of this Agreement and the
performance by Noteholder of its obligations hereunder have been duly authorized
by all necessary action;
(d) this Agreement has been duly executed and delivered by
Noteholder and constitutes the valid and binding obligation of Noteholder,
enforceable against Noteholder in accordance with its terms;
(e) as of the date hereof, Noteholder is the beneficial owner
of, or holder of investment authority over, Old Notes in the aggregate principal
amount set forth below such Noteholder's name on the signature page hereof (the
"Noteholder's Old Notes"), and beneficially owns, or has investment authority
over, no other Old Notes, and the registered holder and custodial party for the
Noteholder's Old Notes are as set forth on the signature page hereof;
(f) Noteholder has received and reviewed this Agreement and
all schedules and exhibits hereto, and, assuming the representations of the
Company herein to be true and correct, has received all such information as it
deems necessary and appropriate to enable it to evaluate the financial risk
inherent in the New Notes;
(iii) Representations of The Company. The Company hereby represents
and warrants to Noteholder as follows: (i) the Company is a corporation duly
organized, validly existing and in good standing under the laws of Delaware;
(ii) the Company has the requisite power and authority to execute and deliver
this Agreement and to perform its obligations hereunder; (iii) the execution and
delivery of this Agreement and the performance by the Company of its obligations
hereunder have been duly authorized by all necessary action; (iv) this Agreement
has been duly executed and delivered by the Company and constitutes the valid
and binding obligation of the Company, enforceable against the Company in
accordance with its terms; (v) the financial and other information concerning
the Company which the Company or its representatives have made available to
Noteholder (other than any projected financial information included therein) was
complete and correct in all material respects when delivered and did not contain
any untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein not misleading in light of the
circumstances under which such statements were made, and the projected financial
information concerning the Company, which the Company or its representatives
made available to Noteholder was prepared in
2
<PAGE>
good faith and on the basis of assumptions which, in light of the circumstances
under which they were made, were reasonable; and (vi) the Company does not own
(beneficially or otherwise) or control any Old Notes.
(iv) Agreement to Forbear. Noteholder agrees during the term of this
Agreement (i) to neither take any action to accelerate the indebtedness due
under the Old Notes nor direct the trustee (the "Trustee") under the indenture
for the Old Notes (the "Old Indenture") to pursue any right or remedy under the
Old Indenture or otherwise; and (ii) not to initiate, or have initiated on its
behalf, any litigation or proceeding of any kind against the Company, its
subsidiaries and/or its affiliates other than to enforce this Agreement.
Notwithstanding the foregoing, the Noteholder reserves and retains, and does not
waive, any rights or remedies it may have against the Company under the
Indenture or otherwise except as such rights or remedies may be modified in a
confirmed Plan.
(v) Agreement to Vote in Favor of Plan of Reorganization. Noteholder
hereby agrees to vote in favor of the Plan, whether it is prepackaged,
prearranged, prenegotiated or traditional. Noteholder's agreements with respect
to the Plan, and Noteholder's vote in favor of the Plan, shall be conditioned on
the terms of the Plan and all related documents being consistent in all material
respects with the terms set forth on Schedule A and being in form and substance
reasonably acceptable to the Noteholder. If the Company files the Plan and has
complied with this Agreement, Noteholder agrees not to object to, and to fully
support, the Plan, provided, however, that such agreement and all other
obligations of Noteholder under this Agreement shall terminate if (i) the
Bankruptcy Case is not commenced prior to March 8, 2000 and (ii) the Plan is not
confirmed within 90 days after commencement of the Bankruptcy Case. Noteholder
also agrees to execute and deliver to the Company, within three business days
after solicitation materials are delivered to the Noteholder and the
solicitation is commenced, a ballot in a form reasonably acceptable to the
Noteholder indicating Noteholder's acceptance of the Plan. Notwithstanding any
other provision of this Agreement, the Plan will provide that if the order
confirming the Plan is not substantially consistent with the Plan, it shall be a
condition to confirmation that the order be satisfactory to Noteholder and that
any amendment of the Plan or waiver of conditions to confirmation and
effectiveness shall require the consent of the Noteholder. Noteholder further
agrees not to oppose the Company's request for the entry of customary first day
orders after to commencement of the Bankruptcy Case.
(vi) Interest. All interest unpaid and accrued under the Old
indenture through and including the effective date of the Plan contemplated by
this Agreement, shall be paid, in cash, at the effective date of such plan. In
the event the Plan
3
<PAGE>
contemplated by this Agreement is not confirmed, there is no assurance or
promise by the Company that such interest will be paid..
(vii) Certain Conditions. In addition to the other conditions to
Noteholder's obligations set forth herein, each obligation and liability of
Noteholder under this Agreement is conditioned in its entirety upon (a) the
truth of the representations and warranties of the Company set forth herein and
performance by the Company of its agreements and covenants herein contained, (b)
the terms and conditions of the treatment of the Old Notes under the Plan not
materially differing from those set forth herein, (c) the Plan containing no
material conditions other than those described in this Agreement, (d) the
Agreement not having been terminated pursuant to Section (viii) hereof, and (e)
the Plan being consistent in all material respects with the terms and provisions
of this Agreement.
(viii) Termination of Agreement. In the event that (a) the
Bankruptcy Case is not commenced by March 8, 2000, or (b) the Plan,
substantially in a form consistent with this Agreement, shall not have been
confirmed within 90 days of the commencement date of the Bankruptcy Case, then
this Agreement shall automatically terminate.
(ix) No Third-Party Beneficiaries. This Agreement shall be solely
for the benefit of the parties hereto and the Noteholders who have entered into
agreements with the Company substantially identical to this Agreement and no
other person or entity shall be a third-party beneficiary hereof.
(x) Not an Amendment or Waiver. It is acknowledged and agreed that
(except as expressly provided for herein, including without limitation in the
exhibits hereto) entering into this Agreement, negotiating with respect to the
Old Notes or the Plan or any other action taken by Noteholder does not
constitute a full or partial amendment or waiver of any of such Noteholder's
rights or remedies under the Old Indenture or at law or otherwise, and
Noteholder hereby reserves such rights and remedies.
(xi) Additional Old Notes Subject. Nothing in this Agreement shall
be deemed to limit or restrict the ability or right of any Noteholder to acquire
any additional Old Notes ("Additional Old Notes") or other claims against the
Company or any affiliate of the Company; provided, however, that in the event
any Noteholder acquires any such Additional Old Notes after the date hereof
(other than any such Old Notes that are already subject to the provisions of an
agreement with the Company substantially similar to this Agreement, which Old
Notes shall remain subject to the provisions of such agreement), such Additional
Old Notes shall
4
<PAGE>
immediately upon such acquisition become subject to the terms of this Agreement.
Noteholder shall as promptly as practicable notify the Company of such
acquisition, and Noteholder agrees to execute and deliver within five business
days of the closing of such acquisition any additional documents that the
Company shall reasonably request to evidence that such Additional Old Notes are
subject to the provisions of this Agreement as of the date of acquisition.
(xii) No Transfer. Except as set forth below, Noteholder hereby
agrees, without the prior written consent of the Company, not to (i) sell,
transfer, assign, pledge or otherwise dispose of any of the Noteholder's Old
Notes, unless the transferee accepts such Old Notes subject to the terms of this
Agreement, or (ii) grant any proxies, deposit any of the Noteholder's Old Notes
into a voting trust or enter into a voting agreement with respect to any of the
Noteholder's Old Notes, unless such arrangement provides for compliance
herewith. In the event that a Noteholder transfers such Old Notes prior to the
Closing Date, such transferee shall comply with and be subject to all the terms
of this Agreement, including, but not limited to, such Noteholder's obligations
to tender the Old Notes and vote in favor of the Plan, and shall as a condition
precedent to such transfer, execute a letter agreement on terms substantially
identical to the terms hereof and a Ballot indicating its acceptance of the
Plan. Noteholder shall, within three business days of any transfer of Old Notes,
notify in writing S. Patric Plumley at the address of the Company set forth on
the first page hereof of such transfer and provide therewith the executed
documents as provided for in this paragraph.
(xiii) Payment of Professional Fees. The Company agrees to promptly
pay the reasonable professional fees and expenses of Noteholder in connection
with this Agreement and the Bankruptcy Case, including the fees and expenses of
its counsel, Cadwalader, Wickersham & Taft ("CWT"). The Company further agrees
to pay a retainer of $20,000 to CWT prior to the filing of the Bankruptcy Case
on account of such reasonable fees and expenses.
(xiv) Entire Agreement. This Agreement constitutes the entire
agreement between the parties hereto with respect to the subject matter hereof
and supersedes all other prior agreements and understandings, both written and
oral, between the parties with respect to the subject matter hereof. This
Agreement shall not be amended, altered or modified in any manner whatsoever,
except by a written instrument executed by the parties hereto.
(xv) Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York (without giving
effect to the provisions thereof relating to conflicts of law).
5
<PAGE>
(xvi) Remedies. The parties hereto acknowledge and agree that any
breach of the terms of this Agreement would give rise to irreparable harm for
which money damages would not be an adequate remedy and accordingly the parties
hereto agree that, in addition to any other remedies, each party shall be
entitled to enforce the terms of this Agreement by a decree of specific
performance or injunctive relief without the necessity of proving the inadequacy
of money damages as a remedy or posting a bond or other security.
(xvii) Jurisdiction. The Company and Noteholder each hereby
irrevocably and unconditionally submit to the nonexclusive jurisdiction of any
New York State court or Federal court of the United States of America sitting in
New York City or Delaware, and any appellate court from any thereof, in any
action or proceedings arising out of or relating to this Agreement, or for
recognition or enforcement of any judgment. All claims in respect of any such
action or proceeding shall be heard and determined in such New York State or, to
the extent permitted by law, in such Federal court. Each of the parties hereto
agrees that a final judgment in any such action or proceeding shall be
conclusive and may be enforced in other jurisdictions by suit on the judgment or
in any other manner provided by law.
(xviii) Counterparts. This Agreement may be executed in any number
of counterparts and by different parties hereto in separate counterparts, with
the same effect as if all parties had signed the same document. All such
counterparts shall be deemed an original, shall be construed together and shall
constitute one and the same instrument.
(xix) Severability. Any term or provision of this Agreement, which
is invalid or unenforceable in any jurisdiction, shall, as to that jurisdiction,
be ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction. If any provision of this
Agreement is so broad as to be unenforceable, the provision shall be interpreted
to be only so broad as is enforceable.
6
<PAGE>
Please sign in the space provided below to indicate your agreement
and consent to the terms hereof.
Very truly yours,
EAGLE FOOD CENTERS, INC.
By:__________________________
Name:
Title:
Accepted and Agreed to:
Name of Noteholder:
Summit Investment Partners
- --------------------------------
By: /s/ Steven R. Sutermeister
----------------------------
Name: Steven R. Sutermeister
Title: Managing Partner
$2,000,000
- --------------------------------
Principal Amount of Notes
Held as Follows:
<TABLE>
<CAPTION>
Amount Registered Holder Custodian
------ ----------------- ---------
<S> <C> <C>
$2,000,000 Carillon Holding Ltd. Chase Texas - Ben Wood
$_________ _____________________ ______________________
$_________ _____________________ ______________________
$_________ _____________________ ______________________
$_________ _____________________ ______________________
</TABLE>
<PAGE>
Schedule A
Eagle Food Centers, Inc.
Summary Term Sheet
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Company Eagle Food Centers, Inc. (the "Company").
- --------------------------------------------------------------------------------
<S> <C>
Transaction Restructuring of the Company's 8 5/8%
Senior Notes due April 15, 2000 (the
"Notes") to include an extension of
maturity, increase in coupon, reduction in
principal, and receipt of equity.
- --------------------------------------------------------------------------------
Maturity Extension 5 years (to April 15, 2005).
- --------------------------------------------------------------------------------
New Interest Rate 11% per annum.
- --------------------------------------------------------------------------------
Reduction in Principal $15 million in the aggregate for the Notes.
- --------------------------------------------------------------------------------
Optional Redemption The Company may, at its option, redeem the
Notes at 100% of the principal amount,
at any time.
- --------------------------------------------------------------------------------
Covenants Substantially similar to the Company's
existing Notes except that the Company
may complete sale leaseback transactions
with its existing stores that are owned and
any new stores opened; provided however,
that at least 25% of the sale leaseback
proceeds be used to pay down the New Notes.
- --------------------------------------------------------------------------------
Interest Upon the effective date of the Plan, as
contemplated by this Agreement, there shall
be a cash payment to the Noteholders for
the accrued and unpaid interest under Old
Indenture.
- --------------------------------------------------------------------------------
Consent Payment None.
- --------------------------------------------------------------------------------
1
<PAGE>
- --------------------------------------------------------------------------------
Equity 15% of the fully-diluted common and voting
stock of the Company subject to the
following:
o If the Company is sold or the debt is
retired prior to October 15, 2001 (1.5
years), the Company may clawback 10%
the equity previously distributed to
bondholders (i.e. bondholders retain 5%
ownership).
o If the Company is sold or the debt is
retired prior to October 15, 2002 (2.5
years), the Company may clawback 5% the
equity previously distributed to
bondholders (i.e. bondholders retain 10%
ownership).
o The Company will not be able to clawback
any of the equity after October 15, 2002.
- --------------------------------------------------------------------------------
Rating The Company will, within 30 days of the
Plan's effective date (the "Effective
Date"), use its best efforts to cause the
New Notes to be rated by one of
Moody's Investor Service, Inc. and
Standard and Poors.
- --------------------------------------------------------------------------------
Other Conditions Payment by the Company of all professional
fees incurred by bondholders.
- --------------------------------------------------------------------------------
</TABLE>
2
<PAGE>
Exhibit 99.3
PRESS RELEASE
FOR IMMEDIATE RELEASE EAGLE FOOD CENTERS
P.O. Box 6700, Rock Island, Illinois 61204-6700
Executive Offices & Distribution Center
Route 67 & Knoxville Road, Milan, Illinois 61264
Telephone: 309-787-7700/Fax: 309-787-7895
Analyst Contact: Pat Hanrahan, Investor Relations
Eagle Food Centers 309-787-7730
Media Contacts: Jacqueline K. Debowski, Public Relations
Eagle Food Centers 309-787-7873
John Digles
The MWW Group 312-853-3131
Email address: [email protected]
EAGLE FOOD CENTERS PURSUES STRATEGIC RESTRUCTURING;
FILES FOR CHAPTER 11
SIGNED DEFINITIVE AGREEMENT WITH LARGEST
INSTITUTIONAL BONDHOLDERS
MILAN, ILLINOIS, February 29, 2000 -- Eagle Food Centers, Inc.,
(NASDAQ: EGLE), a full service, regional supermarket chain operating under the
trade names "Eagle Country Market" and "BOGO's", today filed a voluntary
petition under Title 11 of the United States Code (the "Bankruptcy Code") in
United States Bankruptcy Court for the District of Delaware. The Company stated
that it intends to file a plan of reorganization (The "Plan") to restructure the
Company's capital structure. The critical terms of The Plan were negotiated with
the Company's largest secured lender, Congress Financial, and the largest
identifiable unsecured institutional holders prior to the bankruptcy filing.
Eagle has definitive lock-up agreements from the largest identifiable
institutional holders of their 8 5/8% Senior Notes due April 15, 2000 (the
"Senior Notes"), representing approximately $29 million of the estimated $30
million of institutional holders. The identified institutional holders have
agreed to vote in favor of the Plan as filed today and have accordingly executed
their lock-up agreements. The Plan provides for, among other things, replacement
of the Senior Notes with new notes (the "New Senior Notes") that have the
following material terms and conditions; (i) a maturity date of April 15, 2005,
(ii) an interest rate to 11%, (iii) a $15 million reduction of outstanding
principal by Eagle upon the effective date of the Plan; and (iv) Eagle may, at
its option, redeem the New Senior Notes at 100% of the principal amount
outstanding at the time of redemption. In addition, under the Plan, Eagle
proposes to give 15% of the fully-diluted common stock of Eagle to the holders
of the Senior Notes, some of which can be returned to Eagle (up to 10%) upon the
occurrence of certain conditions.
Eagle has entered into a $50 million interim Debtor-in-Possession (DIP)
financing
<PAGE>
through Congress Financial to ensure its ability to fund continuous operations
and meet ongoing financial commitments to vendors and employees. The Company
will continue operating 64 stores in Illinois and Iowa with forecasted sales of
over $800 million next year after closing 19 underperforming locations.
"The strong capital structure provided by this proposed Plan will
enable us to move forward with a renewed focus on growing sales through an
aggressive marketing campaign supported by ongoing cost-management programs,"
said Jeffrey Little, President and CEO of Eagle Food Centers, Inc. "In
particular, this reorganization will permit Eagle to continue to build, remodel
and replace stores to better compete in the markets we serve."
While the Company has made progress in its turnaround efforts,
management and the Board of Directors have determined that Eagle Food Centers
must take these immediate steps to reorganize its operations and restructure its
debt obligations to ensure the availability of sufficient resources to fund
continued operations. "This action will allow the Company to achieve its
restructuring objectives in a timely and orderly manner," said Robert Kelly,
Chairman of Eagle Food Centers, Inc.
Eagle has retained Jefferies & Co. as financial advisors throughout the
restructuring process.
Eagle Food Centers, Inc., is a leading regional supermarket chain
headquartered in Milan, Illinois, operating 83 stores in central Illinois,
eastern Iowa, and northwestern Indiana.
###
This press release may include statements that constitute
"forward-looking" statements. These statements are made pursuant to the Safe
Harbor provisions of the Private Securities Litigation Reform Act of 1995.
Forward-looking statements inherently involve risks and uncertainties that could
cause actual results to differ materially from the forward-looking statements.
Factors that could cause or contribute to such differences include but are not
limited to, continued acceptance of the Company's products in the marketplace,
competitive factors, dependence upon third-party vendors and other risks
detailed in the Company's periodic report filings with the Securities and
Exchange Commission. By making these forward-looking statements, the Company
undertakes no obligation to update these statements for revisions or changes
after the date of this release.
<PAGE>
Exhibit 99.4
PRESS RELEASE
FOR IMMEDIATE RELEASE EAGLE FOOD CENTERS
P.O. Box 6700, Rock Island, Illinois 61204-6700
Executive Offices & Distribution Center
Route 67 & Knoxville Road, Milan, Illinois 61264
Telephone: 309-787-7700/Fax: 309-787-7895
Analyst Contact: Pat Hanrahan, Investor Relations
Eagle Food Centers 309-787-7730
Media Contacts: Jacqueline K. Debowski, Public Relations
Eagle Food Centers 309-787-7873
John Digles
The MWW Group 312-853-3131
Email address: [email protected]
EAGLE FOOD CENTERS OBTAINS COURT APPROVAL OF INTERIM
FINANCING AND PAYMENT OF EMPLOYEE, TRADE, AND OTHER CLAIMS; THE
COURT SCHEDULES A CONFIRMATION HEARING ON EAGLE'S PLAN OF
REORGANIZATION FOR MAY 17, 2000
MILAN, ILLINOIS, March 2, 2000 -- Yesterday, Eagle Food Centers, Inc.
(NASDAQ: EGLE) successfully obtained Court approval of interim debtor in
possession financing and various "first day" requests for relief from the
Honorable Roderick R. McKelvie of the United States District Court presiding
over Eagle's chapter 11 reorganization case filed on Tuesday, February 29, 2000
in Wilmington, Delaware. In particular, the Court authorized Eagle, among other
things, to pay prepetition claims of employees, utilities, reclamation
claimants, critical trade vendors, and other key constituents. The Court
scheduled a hearing on March 21, 2000 to consider Eagle's request for final
approval of the $50 million debtor-in-possession and to authorize Eagle to pay
the prepetition claims of its remaining trade creditors.
The Court also scheduled a hearing to approve Eagle's disclosure
statement for April 17, 2000 and a confirmation hearing on Eagle's plan of
reorganization on May 17, 2000.
"We are quite pleased with the outcome of yesterday's hearing," said
Jeffrey Little, President and CEO of Eagle Food Centers, Inc. "We have
sufficient liquidity and will now be able to run our business during our short
stay in chapter 11 with minimal disruption to employees, vendors, and other
constituents."
"Eagle and its 6,100 employees sincerely appreciate the continued
support of our suppliers and other creditors during our reorganization," said
Bob Kelly. "Through the reorganization process, we hope to eliminate
unprofitable stores and reject unfavorable leases which will greatly enhance the
profitability of our business. We fully anticipate emerging from chapter 11 in
early June as a stronger company better able to compete in the markets we
serve."
<PAGE>
On February 29, 2000, Eagle filed for protection under chapter 11 in
Wilmington, Delaware to effectuate a pre-negotiated plan of reorganization (the
"Plan"). The Plan has already been agreed to by Eagle's prepetition bank lender
and institutional holders of Eagle's 8 5/8% Senior Notes due April 15, 2000
representing approximately 29% of the $100,000,000 in outstanding Senior Notes.
The primary feature of the Plan will restructure the payment and interest terms
of the Senior Notes through the issuance of replacement notes (the "New Senior
Notes.") THE OUTSTANDING PRINCIPAL AND ALL INTEREST UNDER THE SENIOR NOTES WILL
BE PAID IN FULL UNDER THE TERMS OF THE NEW SENIOR NOTES AND THE PLAN. In
particular, the New Senior Notes will have the following material terms and
conditions: (i) a maturity date of April 15, 2005; (ii) an interest rate of 11%;
and (iii) Eagle may, at its option, redeem the New Senior Notes at 100% of the
principal amount outstanding at the time of redemption. On the effective date of
the Plan, Eagle will also pay: (a) all accrued interest on the Senior Notes
(which will continue to accrue through the duration of the case) and (b) $15
million in cash to reduce the principal amount of the New Senior Notes. On the
effective date of the Plan, Eagle will also distribute 15% of the fully diluted
common stock to Eagle to the holders of the Senior Notes, some of which (up to
10%) will be recoverable by Eagle upon the occurrence of certain conditions.
Eagle Food Centers, Inc. is a leading regional supermarket chain
headquartered in Milan, Illinois, operating 83 stores in central Illinois,
eastern Iowa, and northwestern Indiana.
###
This press release may include statements that constitute
"forward-looking" statements. These statements are made pursuant to the Safe
Harbor provisions of the Private Securities Litigation Reform Act of 1995.
Forward-looking statements inherently involve risks and uncertainties that could
cause actual results to differ materially from the forward-looking statements.
Factors that could cause or contribute to such differences include but are not
limited to, continued acceptance of the Company's products in the marketplace,
competitive factors, dependence upon third-party vendors and other risks
detailed in the Company's periodic report filings with the Securities and
Exchange Commission. By making these forward-looking statements, the Company
undertakes no obligation to update these statements for revisions or changes
after the date of this release.
